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Exhibit 10.57
ITT CORPORATION
2003 EQUITY INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AWARD AGREEMENT (Non Band A)
THIS AGREEMENT (the “Agreement”), effective as of the XX day of ___, 20XX, by
and between ITT Corporation (the “Company”) and name (the “Optionee”),
WITNESSETH:
WHEREAS, the Optionee is now employed by the Company or an Affiliate (as defined
in the Company’s 2003 Equity Incentive Plan, as amended and restated as of
March 1, 2008 (the “Plan”)) as an employee, and in recognition of the Optionee’s
valued services, the Company, through the Compensation and Personnel Committee
of its Board of Directors (the “Committee”), desires to provide an opportunity
for the Optionee to acquire or enlarge stock ownership in the Company, pursuant
to the provisions of the Plan.
Agreement and the provisions of the Plan, a copy of which is attached hereto and
incorporated herein as part of this Agreement, and any administrative rules and
regulations related to the Plan as may be adopted by the Committee, the parties
hereto hereby agree as follows:
1. Grant of Options. In accordance with, and subject to, the terms and
conditions of the Plan and this Agreement, the Company hereby confirms the grant
on (month, day, year) (the “Grant Date”) to the Optionee of the option to
purchase from the Company all or any part of an aggregate of X,XXX shares of
common stock of the Company (the “Option”), at the purchase price of $XX.XX per
share (the “Option Price” or “Exercise Price”). The Option shall be a
Nonqualified Stock Option. 2. Terms and Conditions. It is understood and
agreed that the Option is subject to the following terms and conditions:
(a) Expiration Date. The Option shall expire on (month, day, year) or, if
the Optionee’s employment terminates before that date, on the date specified in
subsection (e) below. (b) Exercise of Option. The Option may not be
exercised until it has become vested. (c) Vesting. Subject to subsections
2(a) and 2(e), the Option shall vest in three installments as follows:
(i) 1/3 of the Option shall vest on (month, day, year), (ii) 1/3 of
the Option shall vest on (month, day, year), and (iii) 1/3 of the Option
shall vest on (month, day year);
2009 Option Agreement-Final-DLB03-09 General-Filed
Subject to subsections 2(a) and 2(e), to the extent not earlier vested
pursuant to paragraphs (i), (ii), and (iii) of this subsection (c), the Option
shall vest in full upon an Acceleration Event (as defined in the Plan). (d)
Payment of Exercise Price and Tax Withholding. Permissible methods for payment
of the Exercise Price and for satisfaction of tax withholding obligations upon
exercise of the Option shall be as described in Section 6.6 and Article 14 of
the Plan, or, if the Plan is amended, successor provisions. In addition to the
methods of exercise permitted by Section 6.6 of the Plan, the Optionee may
exercise the Option by way of a broker-assisted cashless exercise in a manner
consistent with the Federal Reserve Board’s Regulation T, unless the Committee
determines that such exercise method is prohibited by law. (e) Effect of
Termination of Employment. If the Optionee’s employment terminates
before (month, day, year — option expiration date), the Option shall expire on
the date set forth below, as applicable:
(i) Termination Due to Death. If the Optionee’s employment is terminated as
a result of the Optionee’s death, the Option shall expire on the earlier of
(month, day, year — option expiration date), or the date three years after the
termination of the Optionee’s employment due to death. If all or any portion of
the Option is not vested at the time of the Optionee’s termination of employment
due to death, the Option shall immediately become 100% vested.
(ii) Termination Due to Disability. If the Optionee’s employment is
terminated as a result of the Optionee’s Disability (as defined below), the
Option shall expire on the earlier of (month, day, year — option expiration
date), or the date five years after the termination of the Optionee’s employment
due to Disability. If all or any portion of the Option is not vested at the time
of the termination of the Optionee’s employment due to Disability, the Option
shall immediately become 100% vested. (iii) Termination Due to Retirement.
If the Optionee’s employment is terminated as a result of the Optionee’s
Retirement (as defined below), the Option shall expire on the earlier of (month,
day, year — option expiration date), or the date five years after the
termination of the Optionee’s employment due to Retirement. If all or any
portion of the Option is not vested at the time of the Optionee’s termination of
employment due to Retirement, a prorated portion of the unvested portion of the
Option shall immediately vest as of the date of the termination of employment
(see “Prorated Vesting Upon Retirement” below). Any remaining unvested portion
of the Option shall expire as of the date of the termination of the Optionee’s
employment. For purposes of this subsection 2(e)(iii), the Optionee shall be
considered employed during any period in which the Optionee is receiving
severance payments (disregarding any delays required to comply with tax or other
requirements), and the date of the termination of the Optionee’s employment
shall be the last day of any such severance period.
(iv) Cause. If the Optionee’s employment is terminated by the Company (or an
Affiliate, as the case may be) for cause (as determined by the Committee), the
vested and unvested portions of the Option shall expire on the date of the
termination of the Optionee’s employment. (v) Voluntary Termination or
Other Termination by the Company. If the Optionee’s employment is terminated by
the Optionee or terminated by the Company (or an Affiliate, as the case may be)
for other than cause (as determined by the Committee), and not because of the
Optionee’s Retirement, Disability or death, the vested portion of the Option
shall expire on the earlier of (month, day, year — option expiration date), or
the date three months after the termination of the Optionee’s employment. Any
portion of the Option that is not vested (or the entire Option, if no part was
vested) as of the date the Optionee’s employment terminates shall expire
immediately on the date of termination of employment, and such unvested portion
of the Option (the entire Option, if no portion was vested on the date of
termination) shall not thereafter be exercisable. For purposes of this
subsection 2(e)(v), the Optionee shall be considered employed during any period
in which the Optionee is receiving severance payments, and the date of the
termination of the Optionee’s employment shall be the last day of any such
severance period.
Notwithstanding the foregoing, if an Optionee’s employment is terminated
on or after an Acceleration Event (A) by the Company (or an Affiliate, as the
case may be) for other than cause (as determined by the Committee), and not
because of the Optionee’s Retirement, Disability, or death, or (B) by the
Optionee because the Optionee in good faith believed that as a result of such
Acceleration Event he or she was unable effectively to discharge his or her
present duties or the duties of the position the Optionee occupied just prior to
the occurrence of such Acceleration Event, the Option shall in no event expire
before the earlier of the date that is 7 months after the Acceleration Event or
(month, day, year — option expiration date). Retirement. For purposes of
this Agreement, the term “Retirement” shall mean the termination of the
Optionee’s employment if, at the time of such termination, the Optionee is
eligible to commence receipt of retirement benefits under a traditional formula
defined benefit pension plan maintained by the Company or an Affiliate (or would
be eligible to receive such benefits if he or she were a participant in such a
traditional formula defined benefit pension plan). Disability. For
purposes of this Agreement, the term “Disability” shall mean the complete and
permanent inability of the Optionee to perform all of his or her duties under
the terms of his or her employment, as determined by the Committee upon the
basis of such evidence, including independent medical reports and data, as the
Committee deems appropriate or necessary. Prorated Vesting Upon
Retirement. The prorated portion of an Option that vests upon termination of the
Optionee’s employment due to the Optionee’s Retirement shall be determined by
multiplying the total number of unvested shares subject to the Option at the
time of the termination of the Optionee’s employment by a fraction, the
numerator of which is the number of full months
the Optionee has been continually employed since the Grant Date and the
denominator of which is 36. For this purpose, full months of employment shall be
based on monthly anniversaries of the Grant Date, not calendar months.
(f) Compliance with Laws and Regulations. The Option shall not be exercised
at any time when its exercise or the delivery of shares hereunder would be in
violation of any law, rule, or regulation that the Company may find to be valid
and applicable. (g) Optionee Bound by Plan and Rules. The Optionee hereby
acknowledges receipt of a copy of the Plan and this Agreement and agrees to be
bound by the terms and provisions thereof as amended from time to time. The
Optionee agrees to be bound by any rules and regulations for administering the
Plan as may be adopted by the Committee during the life of the Option. Terms
used herein and not otherwise defined shall be as defined in the Plan. (h)
Governing Law. This Agreement is issued, and the Option evidenced hereby is
granted, in White Plains, New York, and shall be governed and construed in
accordance with the laws of the State of New York, excluding any conflicts or
choice of law rule or principle that might otherwise refer construction or
interpretation of this Agreement to the substantive law of another jurisdiction.
By signing a copy of this Agreement, the Optionee acknowledges that s/he has
received a copy of the Plan, and that s/he has read and understands the Plan and
this Agreement and agrees to the terms and conditions thereof. The Optionee
further acknowledges that the Option awarded pursuant to this Agreement must be
exercised prior to its expiration as set forth herein, that it is the Optionee’s
responsibility to exercise the Option within such time period, and that the
Company has no further responsibility to notify the Optionee of the expiration
of the exercise period of the Option.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its
Chairman, President and Chief Executive Officer, or a Vice President, as of the
XX day of (month, year).
Agreed to:
ITT Corporation
Optionee
Dated:
Dated:(month, day, year-grant date)
Enclosures
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SETTLEMENT AND RELEASE AGREEMENT
This Settlement and Release Agreement (the “Agreement”), dated May 31, 2011, for
identification purposes only, is entered into by between SupportSave Solutions,
Inc., a Nevada corporation (“SUPPORTSAVE” or “the Company”) and AINA MAE DUMLAO,
an individual (“DUMLAO”). SUPPORTSAVE and DUMLAO are hereinafter referred to
individually as “Party” and collectively as “Parties.”
RECITALS
WHEREAS, on November 3, 2010, SUPPORTSAVE and DUMLAO entered into a certain
Employment Agreement whereby DUMLAO was to be employed by SUPPORTSAVE as Vice
President and as Amended on March 10, 2011 as Chief Executive Officer (CEO).
WHEREAS, on May 18, 2011, the employment relationship between DUMLAO and
SUPPORTSAVE was mutually terminated.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises contained
herein, it is hereby agreed by and between the Parties as follows:
1. The Employment Agreement was mutually terminated by SUPPORTSAVE and DUMLAO,
effective May 18, 2011.
2. SUPPORTSAVE will purchase from DUMLAO 6,835,425 shares of her common stock in
SUPPORTSAVE at a price of $0.07 per share for a sum of $500,000.00, along with
$16,808.18 of Paid Time Off Credits (PTO), for a total sum of $516,808.18.
Payment Due Dates:
$116,808.18 due May 31, 2011;
$300,000.00 due within 72 hours of the effective date of this Agreement; and
$100,000.00 due within 21 days of the effective date of this Agreement.
DUMLAO acknowledges that it shall be her sole responsibility to report the
income earned under this Agreement and to pay all federal and state taxes due
thereon. DUMLAO unconditionally releases, indemnifies, and saves and holds
SUPPORTSAVE harmless from any and all liability, cost, or expense related or
associated with such tax, worker’s compensation and insurance for the services
rendered hereunder.
3. SUPPORTSAVE warrants and represents that DUMLAO will not suffer any dilution
from her current equity position of 5.8%, which will be her percentage of
ownership after her sale of 6,835,425 shares of common stock as set forth above.
Any future shares issuances shall include a corresponding issuance to DUMLAO, at
no additional cost to DUMLAO, so that her equity in the company shall remain at
5.8% regardless of the number of shares the company has issued and outstanding,
unless this right is waived in writing by DUMLAO.
4. In addition to the stock purchase set forth above, SUPPORTSAVE agrees to
assign to DUMLAO 25% of its ownership interest in SS Media Ventures, LLC (a
Florida Limited Liability Company), resulting in DUMLAO retaining a 10%
ownership interest in SS Media Ventures, LLC.
5. DUMLAO agrees to waive all provisions of her employment agreement related to
change of control requiring SUPPORTSAVE to purchase her shares at market price
or any price at all. DUMLAO understands that SUPPORTSAVE is not responsible for
facilitating any transaction between any third party interested in acquiring
shares or control of the company.
6. DUMLAO, for herself, her heirs, executors, administrators, agents and
assigns, hereby forever releases, waives, discharges and covenants not to sue
SUPPORTSAVE, either individually or collectively, or any of its respective
predecessors, successors, parent entities, subsidiaries, owners, related
entities of any nature, officers, directors, present or former employees, heirs,
executors, administrators, insurers, agents and assigns, with respect to any and
all claims, assertions of claims, debts, demands, actions, suits, expenses,
attorneys’ fees, costs, damages and liabilities of any nature, type and
description, known or unknown, including but not limited to any arising out of
any fact or matter in any way related to or connected with DUMLAO’s employment
at SUPPORTSAVE.
This release specifically includes (but is not limited to) any claims under any
foreign national, federal, state or local employment, wrongful dismissal, fair
employment practices, civil rights or any other laws or regulations, including,
but not limited to, Title VII of the Civil Rights Act of 1964, the Employee
Retirement Income Security Act of 1974, the Civil Rights Act of 1991, the Equal
Pay Act, the United States Constitution, and the Americans with Disabilities
Act, all as amended. This covenant not to sue and to release shall apply to all
known, unknown, suspected, unsuspected, anticipated, and unanticipated claims,
liens, injuries and damages including, but not limited to, claims arising out of
or relating to DUMLAO’s employment relationship with SUPPORTSAVE, the separation
thereof and including, but not limited to, claims sounding in tort or contract,
claims for compensation, benefits or other remuneration or attorneys’ fees,
costs or disbursements, claims for physical or emotional distress or injuries
and claims based upon any other duty or obligation of any kind or description
whether arising in law, under statute, or in equity.
7. SUPPORTSAVE, for itself, its predecessors, successors, parent entities,
subsidiaries, owners, related entities of any nature, officers, directors,
present or former employees, heirs, executors, administrators, insurers, agents
and assigns, hereby forever releases, waives, discharges and covenants not to
sue DUMLAO, or any of her heirs, executors, administrators, agents and assigns,
with respect to any and all claims, assertions of claims, debts, demands,
actions, suits, expenses, attorneys’ fees, costs, damages and liabilities of any
nature, type and description, known or unknown, including but not limited to any
arising out of any fact or matter in any way related to or connected with
DUMLAO’s employment with SUPPORTSAVE. This covenant not to sue and to release
shall apply to all known, unknown, suspected, unsuspected, anticipated, and
unanticipated claims, liens, injuries and damages including, but not limited to
claims sounding in tort or contract, claims for compensation, benefits or other
remuneration or attorneys’ fees, costs or disbursements, claims for physical or
emotional distress or injuries and claims based upon any other duty or
obligation of any kind or description whether arising in law, under statute, or
in equity.
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8. SUPPORTSAVE shall indemnify, protect, defend, and hold harmless DUMLAO, her
heirs, estate, successors, and assigns (including reasonable attorney’s fees and
costs) which she or they may suffer or incur in connection with any actual or
threatened claim, demand, action, or other proceeding, by any third party
(including any governmental authority) arising out of DUMLAO’s conduct,
omissions, or position at any time as a director, shareholder, officer,
employee, or agent of SUPPORTSAVE or any subsidiary thereof; or arising out of
any actions or omissions committed by SUPPORTSAVE, or any of its officers,
directors, employees, agents or servants in connection with SUPPORTSAVE’S
obligations under the law, either civil or criminal
9. DUMLAO acknowledges that by reason of her position with SUPPORTSAVE, she has
been entrusted with intimate knowledge of SUPPORTSAVE and its customers.
Accordingly, DUMLAO agrees as follows:
(a) DUMLAO shall return to SUPPORTSAVE and shall not take or copy in any form or
manner any document that contains information relating to SUPPORTSAVE or any of
its current customers. For purposes of this Agreement, the term “document” means
any written, typewritten, printed, or recorded material whatsoever, including,
but not limited to, notes, memoranda, letters, reports, business records
publications, and computer diskettes and files.
(b) DUMLAO represents, warrants, and promises that she has not used for her own
benefit, or divulged to any competitor or customer or any other person, firm,
corporation, or other entity, any information relating to SUPPORTSAVE and any of
its current customers.
(c) DUMLAO acknowledges and agrees (i) that any violation of this Section would
cause irreparable damage to SUPPORTSAVE and (ii) that determining the amount of
damage caused to SUPPORTSAVE by any such violation would be extremely difficult
or impossible. DUMLAO therefore agrees that SUPPORTSAVE’s remedies at law are
inadequate, and DUMLAO agrees that SUPPORTSAVE shall be entitled to exercise all
remedies available to it, including specific performance and injunctive and
other equitable relief.
10. DUMLAO and SUPPORTSAVE understand and agree that the terms and conditions of
this Agreement and the matters discussed in negotiating its terms, shall remain
confidential as between the parties and DUMLAO shall not disclose them to any
other person unless compelled to do so by a court or a federal or state agency.
Without limiting the generality of the foregoing, DUMLAO and SUPPORTSAVE (or any
of its officers, directors, or employees) specifically agree that they shall not
disclose information regarding this Agreement to any current or former employee
of SUPPORTSAVE. Further, DUMLAO and SUPPORTSAVE shall not reveal, discuss,
publish, or in any way communicate the terms of this Agreement to any person,
organization, or other entity, except to immediate family members and
professional representatives, who shall also be informed of and be bound by this
confidentiality clause. In response to any direct inquiries regarding the
separation of DUMLAO and SUPPORTSAVE, DUMLAO and SUPPORTSAVE agree that they
will respond only that the separation was mutual and that the matter has been
resolved.
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11. DUMLAO and SUPPORTSAVE agree that neither party shall make any disparaging,
uncomplimentary, or negative remarks about the other to anyone including, but
not limited to, current or prospective employees or customers of either Party.
12. In exchange for the covenants undertaken herein, for a period of twelve (12)
months after full execution of this Agreement, DUMLAO agrees that she shall not
induce or attempt to induce any employee of SUPPORTSAVE to leave SUPPORTSAVE’s
employ except with the express written consent of SUPPORTSAVE. Notwithstanding
the foregoing, DUMLAO shall not be prevented from hiring current or former
employees of SUPPORTSAVE if those current of former employees solicit DUMLAO, or
any company in which she is a sole proprietor, partner, Member, shareholder,
director, officer, or employee.
13. In further exchange for the covenants undertaken herein, for a period of
twelve (12) months after full execution of this Agreement, DUMLAO hereby
covenants and agrees that she shall not, directly or indirectly, whether as a
sole proprietor, partner, member, shareholder, employee, director, officer,
guarantor, consultant, independent contractor, or in any other capacity as
principal or agent, or through any person, subsidiary, affiliate, or employee
acting as nominee or agent, except with the consent of the Company:
(a) Solicit, attempt to solicit, or cause to be solicited any
then-current customers of SUPPORTSAVE, any persons or entities who were
customers of the Company within the 180 days preceding the date of this
Agreement, or any prospective customers of the Company to whom bids were
submitted prior to execution of this Agreement. Nothing in this Agreement
prevents DUMLAO from engaging in a competing business, subject to the terms and
Notwithstanding the foregoing, DUMLAO shall not be prevented from working with
current or former customers of SUPPORTSAVE if those customers solicit DUMLAO, or
14. DUMLAO agrees to return all property and tangible items which were purchased
by and belong to SUPPORTSAVE, including but not limited to Daytimers or
organizers, personal digital assistants, Rolodex, and miscellaneous office
supplies and excluding cellphones, laptops and computers.
15. DUMLAO warrants and represents that she has not assigned or transferred to
any person not a party to this Agreement any matter which has been released
under this Agreement, or any part or portion thereof, and she shall defend,
indemnify and hold harmless SUPPORTSAVE from and against any assignment or
transfer made, purported or claimed.
16. DUMLAO and SUPPORTSAVE acknowledge that any employment or contractual
relationship between them ended on May 18, 2011 and that they have no further
employment or contractual relationship except as may arise out of this Agreement
and that DUMLAO waives any right or claim to reinstatement as an employee of
SUPPORTSAVE and will not seek employment in the future with SUPPORTSAVE or any
subsidiary, affiliate, assigns or successors.
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17. This document constitutes and contains the entire agreement and final
understanding concerning DUMLAO’s employment, termination of the same and the
other subject matters addressed herein between the Parties. It is intended by
the Parties as a complete and exclusive statement of the terms of their
agreement. It supersedes and replaces all prior negotiations and all agreements
proposed or otherwise, whether written or oral, concerning the subject matters
hereof. Any representation, promise or agreement not specifically included in
this Agreement shall not be binding upon or enforceable against either Party.
This is a fully integrated agreement.
18. In the event any provision in this Agreement is more restrictive than
allowed by the law of any jurisdiction in which either party seeks enforcement,
such provision shall be deemed amended and shall then be fully enforceable to
the extent permitted by such law. If any provision of this Agreement or the
application thereof is held invalid, the invalidity shall not affect other
provisions or applications of the Agreement which can be given effect without
the invalid provisions or applications and to this end the provisions of this
Agreement are declared to be severable.
19. This Agreement, and the rights and obligations of the parties hereunder
shall be construed and enforced in accordance with, and governed by, the laws of
the State of Nevada without regard to principles of conflict of laws.
20. DUMLAO and SUPPORTSAVE agree that if any action is brought to enforce the
terms, conditions and provisions of this Agreement, the prevailing party will be
entitled to all reasonable costs and attorneys’ fees incurred in enforcing any
of the terms, conditions and provisions hereof.
21. DUMLAO and SUPPORTSAVE agree that this Agreement may be used as evidence in
a subsequent proceeding in which any of the parties allege a breach of this
Agreement.
22. Each Party has cooperated in the drafting and preparation of this Agreement.
Hence, in any construction to be made of this Agreement, the same shall not be
construed against any Party on the basis that the Party was the drafter.
23. This Agreement may be executed in counterparts, and each counterpart, when
executed, shall have the efficacy of a signed original. Photographic copies of
such signed counterparts may be used in lieu of the originals for any purpose.
24. No waiver of any breach of any term or provision of this Agreement shall be
construed to be, or shall be, a waiver of any other breach of this Agreement. No
waiver shall be binding unless in writing and signed by the party waiving the
breach.
25. In entering this Agreement, the Parties represent that they have relied upon
the advice of their attorney, or have had the opportunity to rely upon the
advice of an attorney of their own choice, and that the terms of this Agreement
have been completely read and explained to them by their attorneys, and that
those terms are fully understood and voluntarily accepted by them.
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26. All Parties agree to cooperate fully and to execute any and all
supplementary documents and to take all additional actions that may be necessary
or appropriate to give full force to the basic terms and intent of this
Agreement and which are not inconsistent with its terms.
27. DUMLAO expressly acknowledges and agrees that, by entering into this
Agreement, she is waiving any and all rights or claims that she may have arising
under the Age Discrimination in Employment Act of 1967, as amended, which have
arisen on or before the date of execution of this Agreement. DUMLAO further
expressly acknowledges and agrees that:
(a) She was orally advised by SUPPORTSAVE and is advised in writing by this
Agreement to consult with an attorney before signing this Agreement;
(b) She was given a copy of this Agreement on May 31, 2011, and informed that
she had up to 21 days within which to consider the Agreement;
28. The effective date of this Agreement shall be the date that DUMLAO signs
this Agreement.
I HAVE READ THE FOREGOING AGREEMENT AND I ACCEPT AND AGREE TO THE PROVISIONS IT
CONTAINS AND HEREBY EXECUTE IT VOLUNTARILY WITH FULL UNDERSTANDING OF ITS
CONSEQUENCES.
Date: /s/ Aina Dumlao AINA DUMLAO /s/Christopher Johns Date: SUPPORTSAVE
SOLUTIONS, INC. Name: Chief Executive Officer Title: CEO
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Exhibit 10.2
DEFERRED STOCK AWARD AGREEMENT
UNDER THE DIAMONDROCK HOSPITALITY COMPANY
2004 STOCK OPTION AND INCENTIVE PLAN
Name of Grantee: John L. Williams
No. of Shares: 105,000
Purchase Price per Share: $0.00
Grant Date: June 1, 2005
Final Acceptance Date: August 1, 2005
This Deferred Stock Award Agreement (the “Agreement”), made as of the 1st day of
June, 2005 (the “Grant Date”) by and between DiamondRock Hospitality Company
(the “Company”), and John L. Williams (the “Grantee”), evidences the grant by
the Company of certain shares of Deferred Stock set forth above (the “Award”) to
the Grantee on such date and the Grantee’s acceptance of the Award in accordance
with the provisions of the DiamondRock Hospitality Company 2004 Stock Option and
Incentive Plan (the “Plan”). The Company and the Grantee agree as follows:
1. Basis for Award. This Award is made in accordance with Section 8 of the Plan.
2. Deferred Stock Awarded.
(a) The Company hereby awards to the Grantee, in the aggregate the number of
shares of Deferred Stock set forth above.
(b) The Company shall in accordance with the Plan establish and maintain an
account (the “Deferred Stock Account”) for the Grantee, and such account shall
be credited with the number of shares of Deferred Stock granted to the Grantee.
(c) Until the payment of Deferred Stock awarded to the Grantee, the Deferred
Stock and any related securities, dividends or other property nominally credited
to a Deferred Stock Account shall not be sold, transferred, or otherwise
disposed of and shall not be pledged or otherwise hypothecated.
(d) Upon the payment of any dividends (or other distribution) by the Company,
the Company shall, on the day such dividend (or other distribution) is paid,
credit the Deferred Stock Account with additional shares (or a fraction of a
share) of Deferred Stock equal to the fair market value of the Stock (determined
as of the close of the New York Stock Exchange on such payment date) in lieu of
paying such dividend or making such other distribution. The determination of
fair market value shall be made by the Administrator acting in good faith. Any
such additional shares of Deferred Stock shall be subject to the same vesting
schedule and deferral as the original Award and such additional shares shall be
paid on the same date that the original Award is paid. On the date that the
Award is paid, all fractional shares shall be eliminated.
3. Vesting and Deferral Period. The Deferred Stock covered by this Agreement
shall vest on the Grant Date. Notwithstanding the foregoing, except as provided
in Section 4
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below, settlement and payment of the Deferred Stock shall automatically be
deferred for a period of five (5) years from the Grant Date (the “Deferral
Period”) and shall be paid in accordance with Section 4 below. Notwithstanding
the foregoing, if Grantee’s service with the Company is terminated for Cause (as
defined below) prior to the expiration of the Deferral Period, all amounts
credited to the Grantee’s Deferred Stock Account shall be forfeited and no
payments shall be made to the Grantee hereunder. For purposes hereof “Cause”
shall mean the occurrence of any of the following events based on a
determination by the Board of Directors of the Company (the “Board”) in good
faith: (i) the conviction or indictment of the Grantee of, or the entry of a
plea of guilty or nolo contendere by the Grantee to, any felony; (ii) fraud,
misappropriation or embezzlement by the Grantee; (iii) the Grantee’s willful
failure or gross negligence in the performance of his assigned duties for the
Company, which failure or gross negligence continues for more than 15 days
following the Grantee’s receipt of written notice of such willful failure or
gross negligence from the Board; (iv) any act or omission of the Grantee that
has a demonstrated and material adverse impact on the Company reputation for
honesty and fair dealing; (v) the breach by the Grantee of his duties under any
agreement he is a party to with the Company or any of its affiliates or any
material term of any such agreements; or (vi) a material violation by Grantee of
the Company’s employment policies which continues for more than 15 days
following written notice of such violation from the Board.
4. Payment. Except as provided in the Plan, upon the earlier to occur of (i) a
Sale Event or (ii) expiration of the Deferral Period, the Grantee’s Deferred
Stock Account shall be paid in full and payment shall be made in the form of
shares of Stock equal to the number of Deferred Stock credited to the Grantee’s
Deferred Stock Account which are being paid and settled. The Administrator shall
cause a stock certificate to be delivered to the Grantee with respect to such
shares of Stock free of all restrictions hereunder, except for applicable
federal securities laws restrictions. Any securities, cash dividends or other
property credited to the Deferred Stock Account other than Deferred Stock shall
be paid in kind, or, in the discretion of the Committee, in cash.
Notwithstanding the foregoing, to the extent that a Grantee is a “specified
employee” as defined under Section 409A of the Code at the time the payments
contemplated hereunder are to be made, any payments of deferred compensation
that may be made as a result of the Grantee’s separation from service shall
commence six (6) months and one day following such separation from service if
earlier payment would be a violation of Section 409A of the Code. In addition,
the timing of certain payment of awards provided for under this Plan may be
revised as necessary for compliance with Section 409A of the Code with or
without a Grantee’s consent. This Section 4 is not intended to accelerate the
payment of deferred compensation within the meaning of Section 409A of the Code
in a manner which would subject the Grantee to any taxes and penalties under
Section 409A of the Code. As such, this Section 4 shall operate only to
accelerate the payment of any Award, if such acceleration does not cause the
Grantee to become subject to taxes and penalties under Section 409A(a)(1)(B) of
the Code or otherwise violate Section 409A(a)(2) of the Code.
5. Compliance with Laws and Regulations. The issuance of shares of Stock upon
the settlement of the Deferred Stock shall be subject to compliance by the
Company and the Grantee with all applicable requirements of securities laws,
other applicable laws and regulations of any stock exchange on which the Shares
may be listed at the time of such issuance or transfer. The Grantee understands
that the Company is under no obligation to register or qualify the Stock with
the United States Securities and Exchange Commission, any state securities
commission or any stock exchange to effect such compliance.
2
6. Tax Withholding. The Grantee agrees that no later than the date as of which
the Deferred Stock vest and/or are settled, the Grantee shall pay to the Company
(in cash or to the extent permitted by the Administrator, shares of Stock
otherwise deliverable to the Grantee hereunder or previously held by the Grantee
whose Fair Market Value on the day preceding the date the Deferred Stock vests
and/or are settled is equal to the amount of the Grantee’s tax withholding
liability) any federal, state or local taxes of any kind required by law to be
withheld, if any, with respect to the Deferred Stock. Alternatively, the Company
or its Subsidiary shall, to the extent permitted by law, have the right to
deduct from any payment of any kind otherwise due to the Grantee (including
payments due when the Deferred Stock vest and/or settled) any federal, state or
local taxes of any kind required by law to be withheld.
7. Nontransferability. Except as provided in the Plan, this Award is not
transferable.
8. No Right to Continued Employment. Nothing in this Agreement shall be deemed
by implication or otherwise to impose any limitation on any right of the Company
or any of its affiliates to terminate the Grantee’s employment at any time, in
the absence of a specific written agreement to the contrary.
9. Representations and Warranties of Grantee. The Grantee represents and
(a) Agrees to Terms of the Plan. The Grantee has received a copy of the Plan and
has read and understands the terms of the Plan and this Agreement, and agrees to
be bound by their terms and conditions. The Grantee acknowledges that there may
be adverse tax consequences upon the vesting and/or settlement of Deferred Stock
or thereafter and that the Grantee should consult a tax adviser prior to such
time. The Company makes no guarantee to the Grantee that the Award granted
hereunder will not be taxable prior to payment or that the Plan and this Award
(b) Cooperation. The Grantee agrees to sign such additional documentation as may
reasonably be required from time to time by the Company.
10. Adjustment Upon Changes in Capitalization. In the event of a Change in Stock
as set forth in Section 3 of the Plan, the Administrator may make appropriate
adjustments to the number and class of shares relating to the Deferred Stock as
it deems appropriate, in its sole discretion, to preserve the value of this
Award. The Committee’s adjustment shall be made in accordance with the
provisions of Section 3 of the Plan and shall be effective and final, binding
and conclusive for all purposes of the Plan and this Agreement.
11. Governing Law; Modification. This Agreement shall be governed by the laws of
the State of Maryland without regard to the conflict of law principles. The
Agreement may not be modified except in writing signed by both parties.
12. Defined Terms. Except as otherwise provided herein, or unless the context
clearly indicates otherwise, capitalized terms used but not defined herein have
the definitions as provided in the Plan. The terms and provisions of the Plan
are incorporated herein by reference. In the event of a conflict or
inconsistency between the non-discretionary terms and provisions of the Plan and
the provisions of this Agreement, the Plan shall govern and control.
3
13. Miscellaneous. The masculine pronoun shall be deemed to include the
feminine, and the singular number shall be deemed to include the plural unless a
different meaning is plainly required by the context.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the 25th
day of July, 2005.
DIAMONDROCK HOSPITALITY COMPANY By:
/s/ Michael D. Schecter
Name: Michael D. Schecter Title: General Counsel and Secretary GRANTEE By:
/s/ John L. Williams
4 |
Exhibit 10.1
CONFIDENTIAL
EXECUTION VERSION
ASSET PURCHASE AGREEMENT
BETWEEN
NETBANK
AND
EVERBANK
Dated as of May 18, 2007
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1
1.1
Certain Definitions
1
1.2
Terms Defined Elsewhere in this Agreement
9
1.3
Other Definitional and Interpretive Matters
13
ARTICLE II
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
14
2.1
14
2.2
Excluded Assets
15
2.3
Assumption of Liabilities
17
2.4
Excluded Liabilities
17
2.5
Further Conveyances and Assumptions; Consent of Third Parties
18
2.6
Bulk Sales Laws
19
2.7
Purchase Price Allocation
19
2.8
Right to Control Payment
20
2.9
Proration of Certain Expenses
20
2.10
Receivables
20
2.11
Assumption of Deposit Liabilities
20
ARTICLE III
CONSIDERATION
22
3.1
Purchase Price
22
3.2
Estimated Purchase Price
22
3.3
Closing Payment
22
3.4
Final Purchase Price
22
3.5
Holdback Amount
23
ARTICLE IV
CLOSING AND TERMINATION
23
4.1
Closing Date
23
4.2
Termination of Agreement
24
4.3
Effect of Termination
24
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
25
5.1
Organization and Good Standing
25
5.2
Authorization of Agreement
25
5.3
Conflicts; Consents of Third Parties
26
5.4
Financial Statements.
26
i
5.5
No Undisclosed Liabilities
27
5.6
Title to Purchased Assets; Sufficiency
27
5.7
Absence of Certain Developments
28
5.8
Taxes
29
5.9
Real Property
29
5.10
Tangible Personal Property
30
5.11
Intellectual Property
30
5.12
Material Contracts
32
5.13
Employee Benefits
34
5.14
Labor
34
5.15
Litigation
35
5.16
35
5.17
Environmental Matters
36
5.18
Insurance
37
5.19
Receivables
37
5.20
Loan Originations
37
5.21
Beacon Loans and Leases
38
5.22
Related Party Transactions
38
5.23
Financial Advisors
39
5.24
Deposits
39
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
40
6.1
Organization and Good Standing
40
6.2
Authorization of Agreement
40
6.3
40
6.4
Litigation
41
6.5
Financial Advisors
41
6.6
Financing
41
ARTICLE VII
COVENANTS
41
7.1
Access to Information
41
7.2
Conduct of Operations Pending the Closing
42
7.3
Consents
43
7.4
Regulatory Approvals
44
7.5
Further Assurances
45
ii
7.6
No Shop
46
7.7
47
7.8
Preservation of Records
48
7.9
Publicity
49
7.10
Notice to Borrowers and Lessees
49
7.11
Use of Name
49
7.12
Net Worth
49
ARTICLE VIII
EMPLOYEES AND EMPLOYEE BENEFITS
50
8.1
Employment
50
8.3
Standard Procedure
52
8.4
Terminated Employees
52
ARTICLE IX
CONDITIONS TO CLOSING
52
9.1
Conditions Precedent to Obligations of Purchaser
52
9.2
Conditions Precedent to Obligations of Seller
55
ARTICLE X
INDEMNIFICATION
55
10.1
55
10.2
Indemnification
56
10.3
Indemnification Procedures
57
10.4
Limitations on Indemnification for Breaches of Representations and Warranties
59
10.5
Tax Treatment of Indemnity Payments
60
ARTICLE XI
TAXES
60
11.1
Transfer Taxes
60
11.2
Prorations
60
11.3
Cooperation on Tax Matters
61
ARTICLE XII
MISCELLANEOUS
61
12.1
Expenses
61
12.2
Submission to Jurisdiction; Consent to Service of Process; Waiver of Jury Trial
61
12.3
Entire Agreement; Amendments and Waivers
61
12.4
Governing Law
62
12.5
Notices
62
12.6
Severability
63
iii
12.7
Binding Effect; Assignment
63
12.8
Knowledge
63
12.9
Disclosure Letter
63
12.10
Parent Agreement and Obligations
64
12.11
Non-Recourse
64
12.12
Counterparts
64
iv
Schedules
1.1(a)
Aggregate Purchased Loan Value
1.1(b)
Deposit Liabilities
1.1(c)
Purchased Contracts
1.1(d)
Purchased Intellectual Property
1.1(e)
Purchased Technology
2.1(a)
NetBank Finance Assets
2.1(b)
Loans Held for Investment
2.1(c)
Leases Held for Investment
2.1(d)(i)
Meritage Loans Held For Investment
2.1(d)(ii)
Meritage Loans Held for Sale
2.1(e)
Beacon Loans
2.2(b)
Excluded Assets
2.2(s)
Mortgage Loans or Beacon Loans Subject to Legal Proceedings
2.3(a)
NetBank Finance Liabilities
2.11(c)
Routing, Transit and BIN Numbers
5.3(a)
Conflicts
5.3(b)
Consents
5.6
Sufficiency of Purchased Assets
5.7
Absence of Certain Developments
5.9(a)
Assumed Real Property Lease
5.10
Personal Property
5.11(a)
Intellectual Property
5.11(b)
Ownership of Intellectual Property
5.11(e)
Intellectual Property Licenses
5.11(i)
Intellectual Property Claims
5.12
Material Contracts
5.15(a)
Litigation
5.15(c)
Orders
5.16(a)
Compliance with Laws
5.17
Environmental
5.19
Receivables
5.20(a)
Agency Terminations
5.20(b)
Mortgage Loan Representations and Warranties
5.20(c)
Georgia Affordable Housing Corporation Loans and Habitat Loan Representations
and Warranties
5.20(d)
HELOC Loans
5.22
Related Party Transactions
5.24(f)
Certificates of Deposit
5.24(i)
Term and Maturity Dates of Certificates of Deposit
6.3
Conflicts
7.5(c)
Employees to Sign Employment Agreements
7.11
Use of Name
8.1(a)
Transferred Employees
v
Exhibits
5.20(b)
Mortgage Loan Representation and Warranties
5.20(c)
Georgia Affordable Housing Corporation and Habitat Loan
5.21
Beacon Representations and Warranties
A
Transition Services Agreement
B
Holdback Agreement
C
Bill of Sale
D
E
Licensing Agreement
vi
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of May 18, 2007 (the “Agreement”), between
EverBank, a federal savings bank chartered under the laws of the United States,
or its designated affiliate (“Purchaser”) and NetBank, a federal savings bank
chartered under the laws of the United States (the Bank” or “Seller”).
BACKGROUND
Seller and its Subsidiaries presently engage in mortgage banking, banking and
related activities and Seller desires to sell, transfer and assign to Purchaser
or Purchaser’s designated Affiliate or Affiliates, and Purchaser desires to (or
to cause its designated Affiliate or Affiliates to) acquire and assume from
Seller, all of the Purchased Assets and Assumed Liabilities, all as more
specifically provided herein. Parent will be a party to this Agreement for the
limited purposes set forth in Section 12.10 only.
agreements hereinafter contained, the parties, intending to be legally bound,
Article I
DEFINITIONS
1.1 Certain Definitions.
For purposes of this Agreement, the following terms shall have the meanings
specified in this Section 1.1:
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person, and the term “control” means the
ownership of voting securities, by contract or otherwise, and the terms
“controlled by” and “under common control with” have correlative meanings.
“Agency” means HUD or the applicable State Agency.
“Aggregate Purchased Loan Value” means the aggregate amount of the value of the
Purchased Loans determined in accordance with the calculations set forth on
Schedule 1.1(a).
“Ancillary Documents” means with respect to any Beacon Loans, Lease, Lease
Agreements, or Loan Agreements, any security agreements, guarantees,
participation agreements, insurance loss payable endorsements, promissory notes,
letters of credit, intercreditor agreements, servicing agreements, credit
agreements, financing statements or similar documents related thereto or
obtained in connection therewith.
“Applicable Requirements” means and includes, as of the time of reference, with
respect to Seller’s and its Subsidiaries’ origination of Mortgage Loans
(including Georgia Affordable Housing Loans and the Habitat Loan), Beacon Loans,
Leases, and all related contractual obligations of Seller and
its Subsidiaries (including any contained in a Mortgage Loan Document, Loan
Agreement, Lease Agreement or Ancillary Document).
“April Balance Sheet” means the unaudited consolidated balance sheet of Parent,
the Bank and the Subsidiaries as at April 30, 2007, as delivered by Seller to
Purchaser.
“Assumed Real Property Lease” means that certain lease, as amended, of the Bank
related to NetBank Finance located at 100 Executive Center Drive, Suite 101,
Columbia, South Carolina 29210.
“Book Value” means the book value (net of any credit reserves, as
applicable) determined in accordance with GAAP applied on a consistent basis
with the same accounting principles and practices used by Seller in the
preparation of the Balance Sheet (but only to the extent consistent with GAAP);
provided, that for purposes of this definition of Book Value, (a) Leases that
are more than 120 days delinquent shall be deemed to have a book value equal to
zero; and (b) accrued interest and principal balance amounts that are 90 days or
more past due and receivable in connection with Mortgage Loans or Beacon Loans
that are 90days or more delinquent shall be deemed to have book value equal to
zero.
“Business Day” means any day of the year, other than a Saturday or a Sunday, on
which federal savings associations in Florida are open to the public for
conducting business and are not required or authorized to close.
“CMC Litigation” shall be defined collectively as the following: (a) Illinois
Union Insurance Co. v. Commercial Money Center, Inc., et al., Case No.
CV-01-0685-KJD-RJJ (United States District Court for Nevada) (“Nevada
Litigation”); (b) the multidistrict litigation In re Commercial Money Center,
Inc., Equipment Lease Litigation, Case No. 1:02-CV-16000 (MDL Docket No.
1490) (United States District Court for the Northern District of Ohio, Eastern
Division) (“MDL Litigation”); (c) the Bankruptcy proceedings of Commercial Money
Center, Inc. styled In re Commercial Money Center, Inc., Bankruptcy Case No.
02-09721 (United States Bankruptcy Court for the Southern District of
California) and the adversary proceeding brought therein, Kipperman v. NetBank
FSB Adversary Proceeding No. 03-90331 (collectively, the “Bankruptcy Matters”);
(d) Clayton v. Commercial Money Center, Inc., Case No. BC 253169 (California
Superior Court, Los Angeles County) (the “LA Litigation”); and (e) all
litigation and other proceedings related to the Nevada Litigation, the MDL
Litigation, the Bankruptcy Matters, and/or the LA Litigation.
“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended.
“Contract” means any contract, agreement, indenture, note, bond, loan,
instrument, lease, commitment or other arrangement or understanding, whether
written or oral.
“Deposit Liabilities” means all of the Bank’s duties, obligations and
liabilities (including accrued but unpaid interest) relating to the deposit
accounts of the Bank as set forth on Schedule 1.1(b) (including, without
limitation, all checking, savings, certificate of deposit, money market, and
time deposit accounts).
“Deposit Conversion Date” means the date on which the processing of all Deposit
Liabilities is transferred to Purchaser’s systems or the systems of a third
party selected by Purchaser.
2
“Documents” means all files, documents, loan files, Mortgage Files, deposit
records, instruments, papers, books, reports, records, tapes, microfilms,
photographs, letters, budgets, forecasts, ledgers, journals, title policies,
customer lists, regulatory filings, operating data and plans, technical
documentation (design specifications, functional requirements, operating
instructions, logic manuals, flow charts, etc.), user documentation
(installation guides, user manuals, training materials, release notes, working
papers, etc.), marketing documentation (sales brochures, flyers, pamphlets, web
pages, etc.), and other similar materials related to NetBank Finance, the
Purchased Assets and the Assumed Liabilities, in each case whether or not in
electronic form.
“Employee” means each individual (including each common law employee,
independent contractor and individual consultant), as of the date hereof, who is
employed by Seller or its Subsidiaries, together with individuals who are hired
by Seller or its Subsidiaries after the date hereof.
“Employee Benefit Plans” means any profit-sharing, pension, severance, thrift,
savings, incentive, change of control, employment, retirement, vacation, bonus,
retention, equity, deferred compensation, life insurance and any medical,
vision, dental or other health plan, flexible spending account, cafeteria plan,
holiday, disability or any other employee benefit plan or fringe benefit plan,
agreement, arrangement or commitment, whether written or unwritten which is
maintained, contributed to or required to be contributed to by Seller or any of
the Subsidiaries.
“Environmental Law” means any foreign, federal, state or local statute,
regulation, ordinance, rule of common law or other legal requirement as now or
hereafter in effect in any way relating to the protection of human health and
safety, the environment or natural resources, including the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et
seq.), the Hazardous Materials Transportation Act (49 U.S.C. App. § 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.),
the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C.
§ 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.),
the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et
seq.), and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), as
each has been or may be amended and the regulations promulgated pursuant
thereto.
“ERISA” means the Employment Retirement Income Security Act of 1974, as amended.
“Excluded Contracts” means any Contract that is not a Purchased Contract.
“Excluded Real Property Leases” means any Real Property Lease other than the
Assumed Real Property Lease.
“Foreclosure” means the process culminating in the acquisition of title to a
Mortgaged Property in a foreclosure sale or by a deed in lieu of foreclosure or
pursuant to any other comparable procedure allowed under applicable Law.
“Furniture and Equipment” means all furniture, fixtures, furnishings, equipment,
vehicles, leasehold improvements and other tangible personal property owned,
leased or used by Seller in the conduct and operations of NetBank Finance,
including all artwork, desks, chairs, tables, Hardware, copiers, telephone lines
and numbers, telecopy machines and other telecommunication equipment, cubicles
and miscellaneous office furnishings and supplies.
“GAAP” means generally accepted accounting principles in the United States.
3
“Georgia Affordable Housing Loan” means a loan that is originated in conjunction
with the Georgia Affordable Housing Corporation and secured by an interest in
real property that consists of more than four dwelling units.
“Governmental Body” means any government or governmental or regulatory body
thereof, or political subdivision thereof, whether foreign, federal, state, or
local, or any agency, instrumentality or authority thereof, or any court or
arbitrator (public or private).
“Habitat Loan” means the line of credit in favor of Habitat for Humanity North
Central Georgia, Inc. under which is pledged to Seller various assignments of
mortgage by mortgagors with respect to owner-occupied residential real property.
“Hardware” means any and all computer and computer-related hardware, including
computers, file servers, facsimile servers, scanners, color printers, laser
printers and networks.
“Hazardous Material” means any substance, material or waste that is regulated,
classified, or otherwise characterized under or pursuant to any Environmental
Law as “hazardous,” “toxic,” “pollutant,” “contaminant,” “radioactive,” or words
of similar meaning or effect, including, without limitation, petroleum and its
by-products, asbestos, polychlorinated biphenyls, radon, mold or other fungi,
and urea formaldehyde insulation.
“HELOC” means a loan that it is a home equity line of credit.
“Holdback Amount” means the sum of the Purchase Price Holdback Amount and the
Indemnification Holdback Amount.
“HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
“HUD” means the United States Department of Housing and Urban Development, or
any successor thereto.
“Indemnification Holdback Amount” means $3,000,000.
“Insurer” means a Person who insures or guarantees all or any portion of the
risk of loss on any Mortgage Loan, including any provider of PMI, standard
hazard insurance, flood insurance, earthquake insurance or title insurance, with
respect to any Mortgage Loan or related Mortgaged Property.
“Intellectual Property” means all right, title and interest in or relating to
intellectual property and industrial property, whether protected, created or
arising under the Laws of the United States or any other jurisdiction,
including: (i) all patents and applications therefor, including all
continuations, divisionals, and continuations-in-part thereof and patents
issuing thereon, along with all reissues, reexaminations and extensions thereof
service names, brand names, trade dress rights, logos, corporate names, trade
styles, logos and other source or business identifiers and general intangibles
of a like nature, together with the goodwill associated with any of the
foregoing, along with all applications, registrations, renewals and extensions
thereof (collectively, “Marks”); (iii) all Internet domain names, URLs and
websites; (iv) all copyrights and all mask work, database and design rights,
whether or not registered or published, all registrations and recordations
thereof and all applications in connection therewith, along with all reversions,
extensions and renewals thereof (collectively, “Copyrights”); (v) Trade Secrets;
(vi) all other intellectual property and
4
industrial property rights arising from or relating to Technology; and (vii) all
Contracts granting any right relating to or under the foregoing.
“Intellectual Property Licenses” means (i) any grant to a third Person of any
right relating to or under the Purchased Intellectual Property and (ii) any
grant to Seller or any Subsidiary of any right relating to or under any third
Person’s Intellectual Property, in each case which is used in connection with
the Purchased Assets, Assumed Liabilities, or NetBank Finance.
“IRS” means the Internal Revenue Service.
“Law” means any federal, state, local, municipal, foreign, international,
multinational, or other constitution, law, rule, standard, requirement,
administrative ruling, order, ordinance, principle of common law, legal
doctrine, code, regulation, statute, treaty or process, including, without
limitation, those relating to consumer credit and mortgage lending or brokering
(including but not limited to the Real Estate Settlement Procedures Act, the
federal Truth in Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act and the Gramm-Leach-Bliley Act) and laws covering predatory
lending, fair housing and unfair and deceptive practices, the Code, any
Environmental Law, ERISA, the Securities Exchange Act of 1934, as amended, and
the Securities Act of 1933, as amended.
“Leases” means all leases that are Purchased Assets, including all rights to
delinquent payments, charge-offs, recoveries claims and judgments related to
such leases.
“Lease Agreements” means all Contracts related to any Leases.
“Legal Proceeding” means any judicial, administrative or arbitral actions,
suits, proceedings (public or private) or claims or any proceedings by or before
a Governmental Body, including any civil, criminal, investigative or informal
actions, audits, demands, claims, hearings, litigations, disputes, inquiries,
investigations or other proceedings of any kind or nature.
“Liability” means any debt, loss, damage, adverse claim, liability or obligation
(whether direct or indirect, known or unknown, asserted or unasserted, absolute
or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to
become due, and whether in contract, tort, strict liability or otherwise), and
including all costs and expenses relating thereto.
“Lien” means any lien, pledge, mortgage, deed of trust, security interest,
claim, lease, charge, option, right of first refusal, easement, servitude,
proxy, voting trust or agreement, transfer restriction under any shareholder or
similar agreement, encumbrance or any other material restriction or limitation
whatsoever.
“Loan Agreements” means all Contracts related to Beacon Loans.
“Market Street” means Market Street Mortgage Corporation.
“Market Street Joint Ventures” means each of NeuMark Mortgage Services, LLC,
First Choice Lending Group, L.P. and H&P Mortgage Financial Group, L.P.
“Material Adverse Effect” means any event, state of facts, circumstances,
developments, change or effect that, individually or in the aggregate with all
other events, states of facts, circumstances, developments, changes and effects,
is materially adverse to (i) the condition (financial or otherwise), assets,
prospects or results of operations of NetBank Finance, the Assumed Liabilities
or the Purchased Assets, taken as a whole, including any material adverse change
in the prospective revenue generation of
5
NetBank Finance, the Assumed Liabilities and the Purchased Assets, or (ii) the
ability of the Seller or Parent to consummate the transactions contemplated
hereby or to perform their respective obligations under this Agreement on a
timely basis provided, that none of the following shall be deemed to constitute
or shall be taken into account in determining whether there has been a “Material
Adverse Effect” pursuant to clause (i) only: any event, circumstance, change or
effect arising out of or attributable to (a) changes in the economy or financial
markets, including, prevailing interest rates and market conditions, generally
in the United States or that are the result of acts of war or terrorism, except
to the extent any of the same disproportionately affects the Seller as compared
to other companies in the industry in which Seller operates; (b) changes that
are caused by factors generally affecting the industry in which Seller operates,
except to the extent any of the same disproportionately affects Seller;
(c) changes in, or in the application of, GAAP; (d) changes in applicable Laws,
except to the extent any of the same materially disproportionately affects
Seller as compared to other companies in the industry in which Seller operates;
and (e) any loss of, or adverse change in, the relationship of Seller with its
employees or suppliers caused by the announcement of the transactions
“Mortgage” means a mortgage, deed of trust or other similar security instrument
that creates a lien on real property.
“Mortgage Loan” means any loan that is, or upon closing or funding, will be,
evidenced by a Mortgage and a Mortgage Note and secured by a Mortgaged Property,
including, without limitation, first lien residential mortgage loans, HELOCs,
junior lien home equity loans, Loans Held for Investment, Meritage Loans Held
for Investment, Meritage Loans Held For Sale, Georgia Affordable Housing Loans
and the Habitat Loan.
“Mortgage Loan Documents” means the documents relating to Mortgage Loans
required by applicable Insurers, Agencies, investors, Law and Applicable
Requirements to originate the Mortgage Loans whether on hard copy, microfiche or
its equivalent or in electronic format and, to the extent required by Applicable
Requirements, credit and closing packages and disclosures.
“Mortgage Note” means, with respect to a Mortgage Loan, a promissory note or
notes, or other evidence of indebtedness, with respect to such Mortgage Loan
secured by a Mortgage or Mortgages, together with any assignment, reinstatement,
extension, endorsement or modification thereof.
“Mortgaged Property” means a fee simple property (or such other estate in real
property as is commonly accepted as collateral for Mortgage Loans that are
subject to secondary mortgage sales or securitizations) that secures a Mortgage
Note and that is subject to a Mortgage.
“Mortgagor” means the obligor(s) on a Mortgage Note or owners of a Mortgaged
Property.
“Order” means any order, injunction, judgment, decree, ruling, writ, assessment
or arbitration award of a Governmental Body.
“Ordinary Course of Business” means the ordinary and usual course of normal
day-to-day operations of Seller and the Subsidiaries through the date hereof
consistent with past practice (including consistent with applicable credit and
underwriting policies).
“Originator” means, with respect to any Mortgage Loan (including any Georgia
Affordable Housing Loan or the Habitat Loan) or Beacon Loan, each entity or
individual that (i) took the relevant loan application or (ii) processed the
relevant loan application.
6
“Overdraft Accounts” means those overdraft lines of credit extended by Seller to
its deposit account customers pursuant to a written agreement that are open as
of the Closing.
“Parent” means NetBank, Inc., a Georgia corporation.
“Permits” means any approvals, authorizations, consents, licenses, permits or
certificates of a Governmental Body.
“Permitted Exceptions” means (i) all defects, exceptions, restrictions,
easements, rights of way and encumbrances disclosed in policies of title
insurance which have been made available to Purchaser; (ii) statutory liens for
current Taxes, assessments or other governmental charges not yet delinquent or
the amount or validity of which is being contested in good faith by appropriate
proceedings provided an appropriate reserve is established therefor against the
carrying amount of the related assets; (iii) mechanics’, carriers’, workers’,
repairers’ and similar Liens arising or incurred in the Ordinary Course of
Business that are not material to the Purchased Assets, operations and financial
condition of the Seller and the Subsidiaries that are not resulting from a
breach, default or violation by Seller or any of the Subsidiaries of any
Contract or Law; (iv) zoning, entitlement and other land use and environmental
regulations by any Governmental Body; provided, that such regulations have not
been violated; and (v) such other imperfections in title, charges, easements,
restrictions and encumbrances which do not materially detract from the value of
or materially interfere with the present use of the Seller.
“Person” means any individual, corporation, partnership, firm, joint venture,
association, joint-stock company, trust, unincorporated organization,
Governmental Body or other entity.
“PMI” means the default insurance provided by private mortgage insurance
companies.
“Purchase Price Holdback Amount” means two percent (2%) of the Book Value of the
Leases Held for Investment.
“Purchased Contracts” means all leases for Furniture and Equipment, leases for
other tangible personal property, the Assumed Real Property Lease, Intellectual
Property Licenses, Leases, Beacon Loans, Loan Agreements, Mortgage Notes, Lease
Agreements, and Ancillary Documents and all other Contracts listed on Schedule
1.1(c).
“Purchased Loans” means the Loans Held for Investment, Meritage Loans Held for
Investment, Meritage Loans Held for Sale and Beacon Loans to be acquired by
Purchaser at the Closing after accounting for adjustments in the aggregate
unpaid balances of such loans between the date of the April Balance Sheet and
the close of business on the date immediately preceding the Closing Date.
“Purchased Intellectual Property” means all Intellectual Property owned or
licensed by Seller or its Affiliates and used in connection with the Purchased
Assets, Assumed Liabilities or NetBank Finance as set forth on Schedule 1.1(d).
“Purchased Technology” means all Technology owned or licensed by Seller or its
Affiliates and used exclusively in connection with the Purchased Assets, Assumed
Liabilities or NetBank Finance as set forth on Schedule 1.1(e).
“Real Property Lease” means real property and interests in real property leased
by Seller or any Subsidiary.
7
“Receivables” means, as of a particular date, amounts due to or accruing for the
benefit of Seller or any Subsidiary as of such date pursuant to any Mortgage
Loan, Beacon Loan or Lease and the related Mortgage Notes, Loan Agreements, and
Lease Agreements, including but not limited to accrued interest receivables and
corporate advances.
“Regulatory Authorities” means, collectively, and as applicable, the Federal
Trade Commission, the United States Department of Justice, the FDIC, the OTS,
the IRS, the NASDAQ Stock Market (“Nasdaq”), the Securities and Exchange
Commission (the “SEC”), the National Labor Relations Board and any other
federal, state or local governmental authority, court, tribunal, agency,
commission, public body or other Person with jurisdiction over the parties and
their respective Subsidiaries.
“Seller Property” means the real property subject to the Assumed Real Property
Lease.
“Seller’s Former Depositors” means those Persons who were depositors of Seller
immediately prior to the Closing and who became customers of Purchaser as a
result of the transactions contemplated by this Agreement.
“Servicing Assets” means all of Seller’s mortgage servicing rights.
“Software” means any and all (i) computer programs, including any and all
source code or object code, (ii) databases and compilations, including any and
all data and collections of data, whether machine readable or otherwise,
formats, firmware, development tools, templates, menus, buttons and icons, and
(iv) all documentation including user manuals and other training documentation
related to any of the foregoing, in each case with respect to clauses
(i) through (iv) to the extent that such Software is related to or used in
connection with Purchased Assets, Assumed Liabilities or NetBank Finance.
“State Agency” means any state agency or other entity with authority to regulate
the activities of Seller or any of its Subsidiaries relating to the origination
or servicing of Mortgage Loans, Beacon Loans or Leases, or to determine the
investment or servicing requirements with regard to mortgage loan origination,
purchasing, servicing, master servicing or certificate administration performed
by Seller or any of its Subsidiaries.
“Subsidiary” means any Person of which a majority of the outstanding voting
securities or other voting equity interests is owned, directly or indirectly, by
the Bank; provided, however, that each of the Market Street Joint Ventures shall
be deemed to be a Subsidiary.
“Tax” or “Taxes” means (i) any and all federal, state, local or foreign taxes,
charges, fees, imposts, levies or other assessments, including, without
limitation, all net income, gross receipts, capital, sales, use, ad valorem,
value added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, property and estimated taxes, customs duties,
fees, assessments and charges of any kind whatsoever; and (ii) all interest,
penalties, fines, additions to tax or additional amounts imposed by any Taxing
Authority in connection with any item described in clause (i), and (iii) any
liability in respect of any items described in clauses (i) and/or (ii) payable
by reason of contract, assumption, transferee liability, operation of law,
Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor thereof
or any analogous or similar provision under law) or otherwise.
8
“Taxing Authority” means the IRS and any other Governmental Body responsible for
the administration of any Tax.
“Tax Return” means any return, report or statement required to be filed with
thereof) including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax, and including, where
permitted or required, combined, consolidated or unitary returns for any group
of entities that includes Seller, any of the Subsidiaries, or any of their
Affiliates.
“Technology” means, collectively, all Software, information, designs, formulae,
algorithms, procedures, methods, techniques, ideas, know-how, research and
development, technical data, programs, subroutines, tools, materials,
whether or not reduced to practice), apparatus, creations, improvements, works
of authorship and other similar materials, and all recordings, graphs, drawings,
reports, analyses, and other writings, and other tangible embodiments of the
foregoing, in any form whether or not specifically listed herein, and all
related technology, that are used in, incorporated in, embodied in, displayed by
or relate to, or are used in connection with the foregoing in each case to the
extent that such Technology is used in connection with Purchased Assets, the
Assumed Liabilities or NetBank Finance.
“Trade Secret” means all information, without regard to form, including, but not
limited to, technical or nontechnical data, a formula, a pattern, a compilation,
a program, a device, a method, a technique, a drawing, a process, financial
data, financial plans, product plans, distribution lists or a list of actual or
potential customers, advertisers or suppliers which is not commonly known by or
available to the public and which information: (i) derives economic value,
actual or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other Persons who can obtain economic value
from its disclosure or use, and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy. Without limiting
the foregoing, Trade Secret means any item of confidential information that
constitutes a “trade secret(s)” under applicable common law or statutory law.
“Transition Services Agreement” means an agreement in substantially the form
attached hereto as Exhibit A, which shall include all necessary schedules or
statements of work that Purchaser deems necessary for its receipt of services
from Seller or Seller’s Affiliates following the Closing and which schedules and
statements of work shall be mutually acceptable to Purchaser and Seller and
pursuant to which Seller will provide, or cause its Affiliates to provide,
certain transition services to Purchaser and its subsidiaries.
“WARN” means the Worker Adjustment and Retraining Notification Act of 1988, as
amended.
1.2 Terms Defined Elsewhere in this Agreement. For purposes of this
Agreement, the following terms have meanings set forth in the sections
indicated:
Term
Section
Acceptable Servicing Procedures
Exhibit 5.20(b)
Acquisition Transaction
7.6(a)
Agreement
Recitals
ACH
2.11(h)
Alt A Mortgage Loan
ALTA
9
Term
Section
Anti-Money Laundering Laws
Exhibit 5.20(c); Exhibit 5.20(b)
Antitrust Laws
7.4(b)
Appraised Value
ARM Loan
Asset Acquisition Statement
2.7
Assignment of Leases and Rents
Exhibit 5.20(c)
Assignment of Mortgage
7.5(e)
Assumed Liabilities
2.3
BPO
Balance Sheet
5.4(a)
Balance Sheet Date
5.4(a)
Balloon Payment
Bank
Recitals
Bankruptcy Matters
1.1 (in CMC Litigation definition)
Basket
10.4(a)
Beacon
2.1(e)
Beacon Loans
2.1(e)
Burdensome Condition
9.1(f)
Business Marks
7.11
Buydown Agreement
Buydown Fund
Buydown Fund Account
Buydown Loan
Cap
10.4(c)
Closing
4.1
Closing Date
4.1
Closing Payment
3.3
Collateral Documents
Collateral File
Commercial Loan
Exhibit 5.20(c)(b)
Confidential Information
7.7(d)
Coop Ownership Interest
Cooperative
Cooperative Apartment
Cooperative Lien Search
Cooperative Loan
Copyrights
1.1 (in Intellectual Property definition)
Credit File
Credit Protection Instruments
2.1
Cut-off Date
Cut-off Date Principal Balance
Delinquent Monthly Payment
Deposit Deductible
10.4(b)
Deposit Liabilities Amount
3.1
Detrimental Conditions
Disclosure Letter
Article V
Due Date
Escrow Payments
Estimated Aggregate Purchased Loan Value
3.2(a)
10
Term
Section
Estimated Closing Statement
3.2(a)
Estimated NetBank Finance Book Value
3.2(a)
Estimated Purchase Price
3.2
Excluded Assets
2.2
Excluded Employee
8.1(b)
Excluded Leases
2.1(c)
Excluded Liabilities
2.4
Executive Order
FDIC
5.3(b)
FEMA
Final Closing Statement
3.4
Final Purchase Price
3.4
Financial Statements
5.4(a)
FIRPTA Affidavit
9.1(g)
Gross Margin
Hazardous Materials
Hedging Instrument
2.2(m)
Holdback Agreement
3.1
Indemnification Claim
10.3(b)
Index
Initial Rate Cap
Interest Only Mortgage Loan
Interest Rate Adjustment Date
Interest Rate Decrease Maximum
Interest Rate Increase Maximum
Investor Contracts
2.2(d)
Knowledge
12.8
Knowledge of Parent
12.8
Knowledge of Seller
12.8
LA Litigation
Leases Held for Investment
2.1(c)
Loans Held for Investment
2.1(b)
Loss, Losses
10.2(a)(i)
LPMI Loan
LPMI Rate
Marks
Material Contracts
5.12(a)
Maturity Date
Maximum Mortgage Interest Rate
MDL Litigation
Meritage
2.1(d)
Meritage Loan
2.1(d)
2.1(d)
2.1(d)
MERS
MERS Loan
MERS® System
MIN
Minimum Mortgage Interest Rate
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Term
Section
Minimum Net Worth
7.2
MOM Loan
Monthly Payment
Mortgage Files
Mortgage Interest Rate
Mortgage Loan Schedule
Nasdaq
1.1 (in Regulatory Authorities definition)
Negative Amortization
Negative Amortization Mortgage Loan
Net Worth
7.12
Nevada Litigation
NetBank Assumed Liabilities
3.1
NetBank Finance Book Value
3.1
NetBank Finance
2.1(a)
NetBank Finance Purchased Assets
3.1
Non Prime Mortgage Loan
Nonassignable Assets
2.5(d)
OFAC
OFAC Regulations
OTS
6.1
Parent
Recitals
Patents
Payment Adjustment Date
Periodic Rate Cap
Personal Property Leases
5.10(b)
Premium
3.1
Preliminary Purchase Price Estimate
3.2(a)
Pricing Adjustment
3.2(b)
Principal Prepayment
Project
Purchased Assets
2.1
Purchase Price
3.1
Purchaser
Recitals
Purchaser 401(k) Plan
8.1(g)
Purchaser Benefit Plans
8.1(d)
Purchaser Disclosure Letter
6.3
Purchaser Documents
6.2
Purchaser Indemnified Parties
10.2(a)
REO
2.2(r)
Real Property Lease
5.9(a)
Refinanced Mortgage Loan
Regulatory Consents
7.4(c)
Representatives
7.6(a)
Restricted Business
7.7(a)
Revised Statements
2.7
S&P
SEC
Security Release Certification
Seller(s)
Recitals
12
Term
Section
Seller Documents
5.2
Seller Indemnified Parties
10.2(b)
Servicing Purchase Agreement
2.2(v)
Survival Period
10.1
Transfer Document(s)
Transfer Taxes
11.1
Transferred Employees
8.1(a)
Unpaid Principal Balance
1.3 Other Definitional and Interpretive Matters.
(a) Unless otherwise expressly provided, for purposes of this
Agreement, the following rules of interpretation shall apply:
Calculation of Time Period. When calculating the period of time before which,
within which or following which any act is to be done or step taken pursuant to
this Agreement, the date that is the reference date in calculating such period
shall be excluded. If the last day of such period is a non-Business Day, the
period in question shall end on the next succeeding Business Day.
Dollars. Any reference in this Agreement to $ shall mean U.S. dollars.
Exhibits/Schedules. The Exhibits and Schedules to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.
All Exhibits and Schedules annexed hereto or referred to herein are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein. Any capitalized terms used in any Schedule or Exhibit but not otherwise
defined therein shall be defined as set forth in this Agreement.
Gender and Number. Any reference in this Agreement to gender shall include all
genders, and words imparting the singular number only shall include the plural
and vice versa.
Headings. The provision of a Table of Contents, the division of this Agreement
into Articles, Sections and other subdivisions and the insertion of headings are
for convenience of reference only and shall not affect or be utilized in
construing or interpreting this Agreement. All references in this Agreement to
any “Section” are to the corresponding Section of this Agreement unless
otherwise specified.
Herein. The words such as “herein,” “hereinafter,” “hereof,” and “hereunder”
refer to this Agreement as a whole and not merely to a subdivision in which such
words appear unless the context otherwise requires.
Including. The word “including” or any variation thereof means “including,
without limitation” and shall not be construed to limit any general statement
that it follows to the specific items immediately following it.
(b) The parties hereto have participated jointly in the negotiation
and drafting of this Agreement and, in the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as jointly
drafted by the parties hereto and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provision
of this Agreement.
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ARTICLE II
2.1 Purchase and Sale of Assets. On the terms and subject to the
conditions set forth in this Agreement, at the Closing, Purchaser shall (or
shall cause its designated Affiliate or Affiliates to) purchase, acquire and
accept from Seller, and Seller shall sell, transfer, assign, convey and deliver
to Purchaser (or its designated Affiliate or Affiliates) all of Seller’s right,
title and interest in, to and under the Purchased Assets, free and clear of all
Liens except, in the case of tangible property, for Permitted Exceptions.
“Purchased Assets” shall mean the following assets, properties, contractual
rights, goodwill, going concern value, rights and claims of Seller, wherever
situated and of whatever kind and nature, real or personal, tangible or
intangible, whether or not reflected on the books and records of Seller:
(a) all of Seller’s assets relating to NetBank Business Finance, a
division of the Bank (“NetBank Finance”), including those set forth on Schedule
2.1(a);
(b) subject to Section 2.1(d), all of Seller’s Mortgage Loans
classified as held for investment as set forth on Schedule 2.1(b) (the “Loans
Held for Investment”);
(c) all of Seller’s Leases classified as held for investment as set
forth on Schedule 2.1(c) (the “Leases Held for Investment”), except for leases
related to any CMC Litigation (“Excluded Leases”);
(d) all loans (i) originated by Meritage Mortgage Corporation
(“Meritage”) and classified as held for investment as set forth on Schedule
2.1(d)(i) (the “Meritage Loans Held for Investment”) and (ii) originated by
Meritage, sold by Meritage or Seller and repurchased by Meritage or Seller and
classified as held for sale as set forth on Schedule 2.1(d)(ii) (the “Meritage
Loans Held For Sale”);
(e) all recreational vehicle, aircraft and other loans originated by
Beacon Credit Services, a division of Seller (“Beacon”), and classified as held
for investment as set forth on Schedule 2.1(e) (the “Beacon Loans”);
(f) all rights of Seller under the Assumed Real Property Lease,
together with all improvements, fixtures and other appurtenances thereto and
rights in respect thereof;
(g) the Purchased Intellectual Property and the Purchased Technology;
(h) all rights of Seller under the Purchased Contracts including all
claims or causes of action with respect to the Purchased Contracts;
(i) all Documents that are owned by Seller and used in or related to
NetBank Finance, the Purchased Assets or the Assumed Liabilities, including
Documents relating to products, services, marketing, advertising, promotional
materials, Purchased Intellectual Property, Intellectual Property Licenses,
Purchased Technology, all files, customer files, and documents (including credit
information), supplier lists, records, literature and correspondence, whether or
not physically located on any of Seller’s premises, but excluding personnel
files for Employees;
(j) all security deposits (including security for rent, electricity,
telephone or otherwise) and prepaid charges and expenses, including any prepaid
rent, prepaid insurance premiums,
14
prepaid utility expenses and interest on subleases, of Seller and the
Subsidiaries under each Purchased Contract;
(k) all Permits, including environmental permits, used by Seller or
any Subsidiary in connection with NetBank Finance, the Assumed Liabilities or
the Purchased Assets and the Bank’s routing and transit numbers and the BIN
Numbers set forth on Schedule 2.11(c), the prefixes for all debit cards issued
by the Bank and outstanding as of the Closing and all rights and incidents of
interest therein;
(l) all supplies owned by Seller and used in connection with NetBank
Finance, the Assumed Liabilities or the Purchased Assets;
(m) all rights of Seller under non-disclosure or confidentiality,
non-compete, or non-solicitation agreements with employees and agents of Seller
or any Subsidiary or with third parties, in each case to the extent relating to
NetBank Finance, the Assumed Liabilities, or the Purchased Assets (or any
portion thereof);
(n) all rights of Seller under or pursuant to all warranties,
representations and guarantees made by suppliers, manufacturers and contractors
to the extent relating to products sold or services provided, to Seller or any
Subsidiary or to the extent affecting the Purchased Assets, Assumed Liabilities
or NetBank Finance;
(o) all third party property and casualty insurance proceeds, and all
rights to third party property and casualty insurance proceeds, in each case to
the extent received or receivable in respect of the Assumed Liabilities, the
Purchased Assets or NetBank Finance;
(p) all Receivables as of the Closing;
(q) all goodwill and other intangible assets associated with the
Assumed Liabilities, the Purchased Assets, or NetBank Finance including customer
and supplier lists, prospective client lists, broker and correspondent lists,
and the goodwill associated with the Purchased Intellectual Property and/or the
Purchased Technology; and
(r) all Overdraft Accounts.
In addition, as a Purchased Asset, Purchaser will become the beneficiary of
credit life, accidental, health and any other insurance written on loans and any
other insurance on credit obligations or collateral securing Mortgage Loans,
Beacon Loans and Leases (collectively “Credit Protection Instruments”) to the
extent such Mortgage Loans, Beacon Loans, and Leases are Purchased Assets.
2.2 Excluded Assets. Nothing herein contained shall be deemed to
sell, transfer, assign or convey the Excluded Assets to Purchaser, and Seller or
its Affiliates shall retain all right, title and interest to, in and under the
Excluded Assets. “Excluded Assets” shall include any and all assets,
properties, contractual rights, goodwill, going concern value, rights and claims
of Seller, wherever situated and of whatever kind and nature, real or personal,
tangible or intangible, whether or not reflected on the books and records of
Seller, which are not Purchased Assets, including, without limitation, the
following:
(a) the Excluded Contracts;
(b) all assets set forth on Schedule 2.2(b);
15
(c) any claims, assets, receivables or potential proceeds arising from
the CMC Litigation and related lease receivables;
(d) any and all Contracts pursuant to which Seller or any Subsidiary
sold any Mortgage Loans, Beacon Loans or Leases to any Person or Persons,
including any amounts due from such Persons pursuant to such Contracts
(“Investor Contracts”);
(e) Mortgage Loans originated or repurchased by Market Street,
including loans held for investment that were originated by Market Street (other
than Loans Held for Investment);
(f) shares of capital stock, units, membership interests or any other
equity interests in Seller or any of its Affiliates;
(g) cash, cash equivalents and restricted cash;
(h) investment securities available for sale;
(i) any assets used by Meritage;
(j) all assets from Seller’s transaction processing segment,
including, without limitation, NetBank Payment Systems, Inc. and Seller’s ATM
services, point of sale transaction processing, online banking programs, payment
and deposit processing and mortgage servicing;
(k) all automobile loans and related contracts, promissory notes,
security agreements, or secondary interests;
(l) all deferred tax assets and tax net operating carryforwards;
(m) all interest rate swaps, caps, floors, collars and option
agreements or other interest rate risk management arrangements (collectively,
“Hedging Instruments”);
(n) all rights in connection with, and assets of, any Employee Benefit
Plan, except to the extent otherwise provided in Article VIII hereof;
(o) Excluded Real Property Leases;
(p) all assets arising out of, under or in connection with the Bank’s
bank-owned life insurance policies;
(q) all of the assets of Market Street;
(r) all real-estate owned property (each a “REO”);
(s) all Mortgage Loans or Beacon Loans subject to any Legal Proceeding
(excluding bankruptcy) or any other proceeding before a Governmental Body, and
except as set forth on Schedule 2.2(s) to the Disclosure Letter;
(t) all minute books, organizational documents, stock registers and
such other books and records of Seller, Parent, or their respective Subsidiaries
(including, without limitation, the Market Street Joint Ventures) as pertain to
ownership, organization or existence of Seller and each Subsidiary and duplicate
copies of such records as are necessary to enable Seller and the Subsidiaries to
file Tax Returns and reports;
16
(u) any Intellectual Property that is not Purchased Intellectual
Property and any Technology that is not Purchased Technology; and
(v) the Servicing Assets which may be purchased pursuant to a separate
servicing purchase agreement (the “Servicing Purchase Agreement”).
2.3 Assumption of Liabilities. On the terms and subject to the
shall cause its designated Affiliate or Affiliates to) assume, effective as of
the Closing, the following Liabilities of Seller (collectively, the “Assumed
Liabilities”):
(a) the Liabilities of NetBank Finance set forth on Schedule 2.3(a);
(b) all of the Deposit Liabilities; and
(c) all Liabilities of Seller under the Purchased Contracts that arise
out of or relate to the period after the Closing Date.
2.4 Excluded Liabilities. Purchaser will not assume or be liable for
any Excluded Liabilities. Seller shall, and shall cause the Subsidiaries to,
timely perform, satisfy and discharge in accordance with their respective terms
all Excluded Liabilities. “Excluded Liabilities” shall mean the Liabilities of
Seller and the Subsidiaries that are not Assumed Liabilities, including, without
limitation:
(a) all Liabilities associated with the Investor Contracts;
(b) all Liabilities associated with the operations of Parent, Seller
and the Subsidiaries, except as set forth in Section 2.3;
(c) all Liabilities in respect of any and all products sold and/or
services performed by Parent, Seller or the Subsidiaries on or before the
Closing Date;
(d) except to the extent specifically provided in Article VIII, all
Liabilities arising out of, relating to or with respect to (i) the employment or
performance of services, or termination of employment or services by Seller or
any of its Affiliates of any individual on or before the Closing Date;
(ii) workers’ compensation claims against Seller or any of its Affiliates that
relate to the period on or before the Closing Date, irrespective of whether such
claims are made prior to or after the Closing or (iii) any Employee Benefit
Plan;
(e) all Liabilities arising out of, under or in connection with the
Excluded Real Property Leases and any Contracts that are not Purchased Contracts
and, with respect to Purchased Contracts, Liabilities in respect of a breach by
or default of Parent, Seller or any Subsidiary accruing under such Contracts
with respect to any period prior to Closing;
(f) all Liabilities arising out of, under or in connection with any
indebtedness of Seller or any of the Subsidiaries for borrowed money or any
other indebtedness of Seller or any of its Subsidiaries (including, without
limitation, any Federal Home Loan Bank indebtedness or indebtedness arising from
the issuance of trust preferred securities);
(g) all Liabilities arising out of, under or in connection with the
Bank’s bank-owned life insurance policies;
17
(h) all Liabilities for (i) Transfer Taxes; (ii) Taxes of Parent,
Seller or the Subsidiaries; (iii) Taxes that relate to the Purchased Assets or
the Assumed Liabilities for taxable periods (or portions thereof) ending on or
before the Closing Date, including Taxes allocable to Seller and the
Subsidiaries pursuant to Section 11.2; and (iv) payments under any Tax
allocation, sharing or similar agreement (whether oral or written);
(i) all Liabilities in respect of any pending or threatened Legal
Proceeding, or any claim arising out of, relating to or otherwise in respect of
(i) the operations of Parent, Seller or the Subsidiaries, including, without
limitation, any claim for preferential payment by a bankruptcy trustee in
respect of payments received by Parent, Seller or the Subsidiaries prior to or
on the Closing Date or (ii) any Excluded Asset or Excluded Liability;
(j) all Liabilities relating to any dispute with any client or
customer of Parent, Seller or the Subsidiaries;
(k) any derivative Liabilities and Liabilities under any Hedging
Instruments;
(l) any amounts payable for securities purchased;
(m) any amounts due to any Affiliate of Seller; and
(n) all of the escrow accounts related to the Servicing Assets, which
accounts may be assumed pursuant to the Servicing Purchase Agreement and all of
the escrow accounts relating to the subservicing of loans of IXIS Real Estate
Capital, Inc.
2.5 Further Conveyances and Assumptions; Consent of Third Parties.
(a) From time to time following the Closing and except as prohibited
by Law, Seller shall, or shall cause its Subsidiaries to, make available to
Purchaser such data in personnel records of Transferred Employees as is
reasonably necessary for Purchaser to transition such employees into Purchaser’s
records.
(b) From time to time following the Closing, Seller and Purchaser
shall, and shall cause their respective Affiliates to, execute, acknowledge and
deliver all such further conveyances, notices, assumptions, releases and
acquittances and such other instruments, and shall take such further actions, as
may be reasonably necessary or appropriate to assure to Purchaser and its
respective successors or assigns, all of the properties, assets, rights, titles,
interests, estates, remedies, powers and privileges intended to be conveyed to
Purchaser under this Agreement and the Seller Documents and to assure to Seller
and its Affiliates and their successors and assigns, the assumption of the
liabilities and obligations intended to be assumed by Purchaser under this
Agreement and the Seller Documents, and to otherwise make effective the
transactions contemplated hereby and thereby.
(c) If the balance due on any Mortgage Loan, Beacon Loan or Lease to
be purchased pursuant to this Agreement has been reduced by Seller as a result
of a payment by check received prior to the Closing, which item is returned
after the Closing, the purchase price applicable to the transferred loan or
lease shall be correspondingly increased, and an amount in cash equal to such
increase shall be paid by Purchaser to Seller promptly upon receipt of funds in
the amount of such returned item.
(d) Nothing in this Agreement nor the consummation of the transactions
contemplated hereby shall be construed as an attempt or agreement to assign any
Purchased Asset, including any Contract, Permit, certificate, approval,
authorization or other right, which by its terms or by
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Law is nonassignable without the consent of a third party or a Governmental Body
or is cancelable by a third party in the event of an assignment or purported
assignment (“Nonassignable Assets”) unless and until such consent shall have
been obtained. Seller shall, and shall cause its Subsidiaries to, use
commercially reasonable efforts to cooperate with Purchaser at its request in
endeavoring to obtain such consents promptly. To the extent permitted by
applicable Law, in the event consents to the assignment thereof cannot be
obtained, such Nonassignable Assets shall be held, as of and from the Closing
Date, by either Seller or the applicable Subsidiary of Seller for the benefit of
Purchaser and the covenants and obligations thereunder shall be performed by
Purchaser in Seller’s or such Subsidiary’s name and all benefits and obligations
existing thereunder shall be for Purchaser’s account. Seller shall take or
cause to be taken at Purchaser’s expense such actions in its name or otherwise
as Purchaser may reasonably request so as to provide Purchaser with the benefits
of the Nonassignable Assets and to effect collection of money or other
consideration that becomes due and payable under the Nonassignable Assets, and
Seller or the applicable Subsidiary of Seller shall promptly pay over to
Purchaser all money or other consideration received by it in respect of all
Nonassignable Assets. As of and from the Closing Date, Seller on behalf of
itself and its Subsidiaries authorizes Purchaser, to the extent permitted by
applicable Law and the terms of the Nonassignable Assets, at Purchaser’s
expense, to perform all the obligations and receive all the benefits of Seller
or its Subsidiaries under the Nonassignable Assets and appoints Purchaser its
attorney-in-fact to act in its name on its behalf or in the name of the
applicable Subsidiary of Seller and on such Subsidiary’s behalf with respect
thereto.
(e) With respect to all Credit Protection Instruments, all coverage
will continue to be the obligation of the current insurer after the Closing Date
and for the duration of such insurance as provided under the terms of the policy
or certificate to the extent permitted under such Credit Protection Instruments
and without further cost to Seller. If Purchaser becomes the beneficiary of the
Credit Protection Instruments, Seller and Purchaser agree to cooperate in good
faith to develop a mutually satisfactory method by which the current insurer
will make rebate payments to and satisfy claims of the holders of such Credit
Protection Instruments after the Closing Date. The parties’ obligations in this
Section 2.5 are subject to any restrictions contained in existing insurance
contracts and to applicable Law.
2.6 Bulk Sales Laws. Purchaser hereby waives compliance by Seller and
the Subsidiaries with the requirements and provisions of any “bulk-transfer”
Laws of any jurisdiction that may otherwise be applicable with respect to the
sale of any or all of the Purchased Assets to Purchaser; provided, that Seller
agrees (i) to pay and discharge when due or to contest or litigate all claims of
creditors which are asserted against Purchaser or the Purchased Assets by reason
of such noncompliance, (ii) to indemnify, defend and hold harmless Purchaser
from and against any and all such claims in the manner provided in Article X and
(iii) to take promptly all necessary action to remove any Lien which is placed
on the Purchased Assets by reason of such noncompliance. Any “bulk-transfer”
Law that addresses Taxes shall be governed by Article XI and not by this Section
2.6.
2.7 Purchase Price Allocation. Not later than 90 days after the
Closing Date, Purchaser shall prepare and deliver to Seller copies of Form 8594
and any required exhibits thereto (the “Asset Acquisition Statement”) allocating
the Purchase Price among the Purchased Assets in accordance with Code Section
1060 and the Treasury Regulations thereunder (and any similar provision of
state, local or foreign Law, as appropriate). Purchaser shall prepare and
deliver to Seller from time to time revised copies of the Asset Acquisition
Statement (the “Revised Statements”) so as to report any matters on the Asset
Acquisition Statement that need updating (including purchase price adjustments,
if any). The Purchase Price paid by Purchaser for the Purchased Assets shall be
allocated in accordance with the Asset Acquisition Statement or, if applicable,
the last Revised Statement provided by Purchaser to Seller, and all income Tax
Returns and reports filed by Purchaser and Seller, or their respective
Affiliates shall be prepared consistently with such allocation. For purposes of
this Section 2.7, the Purchased Assets include the covenant not to compete as
set forth in Section 7.7.
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2.8 Right to Control Payment. Purchaser shall have the right, but not
the obligation, to make any payment due from Seller or the Subsidiaries with
respect to any Excluded Liabilities which are not paid by Seller or the
Subsidiaries within seven Business Days following written request for payment
from Purchaser if Purchaser reasonably believes that such payment is necessary
to protect Purchaser’s interest in the Purchased Assets, NetBank Finance and/or
the Assumed Liabilities; provided, that if Seller or the Subsidiaries advise
Purchaser in writing during such seven Business Day period that a good faith
payment dispute exists or Seller or the Subsidiaries have valid defenses to
non-payment with respect to such Excluded Liability, then Purchaser shall not
have the right to pay such Excluded Liability. Seller and the Subsidiaries
agree to reimburse Purchaser promptly and in any event within seven Business
Days following written notice of such payment by Purchaser for the amount of any
payment made by Purchaser pursuant to this Section 2.8.
2.9 Proration of Certain Expenses. Subject to Section 11.2 with
respect to Taxes, all expenses and other payments in respect of all rents and
other payments due under the Assumed Real Property Lease and any other leases
constituting part of the Purchased Assets shall be prorated between Seller and
the Subsidiaries, on the one hand, and Purchaser, on the other hand, as of the
Closing Date. Seller shall be responsible for all rents (including any
percentage rent, additional rent and any accrued tax and operating expense
reimbursements and escalations), charges and other payments of any kind accruing
during any period under the Assumed Real Property Lease or any such other leases
up to and including the Closing Date; provided, that Seller reserves the right
to dispute any Taxes owed with respect to any computer equipment leases assumed
by Purchaser. Subject to any disputed Tax payments as set forth above,
Purchaser shall be responsible for all such rents, charges and other payments
accruing during any period under the Assumed Real Property Lease or any such
other leases that are Purchased Assets after the Closing Date. Purchaser shall
pay the full amount of any invoices received by it and shall submit a request
for reimbursement to Seller for Seller’s share of such expenses and Seller shall
pay the full amount of any invoices received by it and Purchaser shall reimburse
Seller for Purchaser’s share of such expenses.
2.10 Receivables. Seller shall provide reasonable assistance to
Purchaser in the collection of Receivables. If Seller or any of the
Subsidiaries shall receive payment in respect of Receivables that are included
in the Purchased Assets, then Seller shall promptly forward such payment to
Purchaser.
2.11 Assumption of Deposit Liabilities.
(a) Purchaser agrees to pay in accordance with law and customary
banking practices all properly drawn and presented checks, drafts and withdrawal
orders presented to Purchaser by mail, through automated teller machines, over
the counter or through the check clearing system or any other clearing system of
the banking industry, by depositors of the accounts assumed, whether drawn on
the checks, withdrawal or draft forms provided by Seller or by Purchaser, and in
all other respects to discharge, in the usual course of the banking business,
the duties and obligations of Seller with respect to the balances due and owing
to the depositors whose accounts are assumed by Purchaser.
(b) If, after the Closing Date, any depositor, instead of accepting
the obligation of Purchaser to pay the Deposit Liabilities assumed, shall demand
payment from Seller for all or any part of any such assumed Deposit Liabilities,
Seller shall not be liable or responsible for making such payment; provided,
that, for purposes of maintaining relationships with Seller’s Former Depositors,
if Seller shall pay the same pursuant to mutually agreed upon procedures,
Purchaser agrees to reimburse Seller for any such payments, Seller shall not be
deemed to have made any representations or warranties to Purchaser with respect
to any such checks, drafts or withdrawal orders, and any such representations or
warranties implied by law are hereby expressly disclaimed. Seller and Purchaser
shall make arrangements to provide for the daily settlement with immediately
available funds by Purchaser of checks, drafts, withdrawal
20
orders, returns and other items presented to and paid by Seller within 60 days
after the Closing Date and drawn on or chargeable to accounts that have been
assumed by Purchaser; provided, however, that Seller shall be held harmless and
indemnified by Purchaser for acting in accordance with such arrangements.
(c) Effective as of the Closing Date, Seller shall assign its routing
and transit number and its debit card BIN numbers, each as identified on
Schedule 2.11(c) to the Disclosure Letter, to Purchaser, and Purchaser shall
employ the routing and transit number with respect to the Deposit Liabilities
and transactions relating thereto. Purchaser and Seller agree, at Seller’s cost
and expense to notify Seller’s Former Depositors affected thereby, on or before
the Closing, in a form and on a date mutually acceptable to Seller and
Purchaser, of Purchaser’s assumption of Deposit Liabilities. In addition,
Purchaser and Seller will jointly notify Seller’s affected depositors by letter
of the pending assignment of Seller’s deposit accounts to Purchaser, which
notice shall be at Seller’s cost and expense and in a form mutually agreeable to
Seller and Purchaser. The Purchaser may provide, at its sole expense, such
customers with notices of changes in terms and other information regarding the
transaction contemplated hereby. The parties shall cooperate and coordinate
such notices and shall, to the extent practicable, combine mailings and share
the costs of any combined mailings.
(d) Purchaser agrees to pay promptly to Seller an amount equivalent to
the amount of any checks, drafts or withdrawal orders credited to assumed
Deposit Liabilities as of the Closing that are returned to Seller after the
Closing.
(e) On and after the Deposit Conversion Date, Purchaser will assume
and discharge Seller’s duties and obligations in accordance with the terms and
conditions and Laws, rules and regulations that apply to the certificates,
accounts and other Deposit Liabilities assumed pursuant to this Agreement at
such Closing.
(f) On and after the Deposit Conversion Date, Purchaser will maintain
and safeguard in accordance with applicable Law and sound banking practices, all
account documents, deposit contracts, signature cards, deposit slips, canceled
items and other records related to the Deposit Liabilities assumed under this
Agreement, subject to Seller’s right of access to such records as provided in
this Agreement.
(g) Seller will be entitled to impose normal fees and service charges
on a per item basis through Closing, but Seller will not impose periodic fees or
blanket charges in connection therewith.
(h) After the Closing, Purchaser shall collect from Seller’s Former
Depositors amounts equal to any debit card chargebacks connected with a Deposit
Liability, and any Visa, MasterCard or other debit card chargebacks under the
MasterCard and Visa Merchant Agreements or other chargeback agreements between
Seller and Seller’s Former Depositors or amounts equal to any deposit items
returned to Seller after the Closing which were honored by Seller prior to the
Closing and remit such amounts so collected to Seller. Purchaser agrees to
immediately remit to Seller any funds held in the Depositor’s related
transferred account of Seller’s Former Depositor when the Purchaser receives
such notice from Seller, up to the amount of the charged back or returned item
that had been previously credited by Seller, if such funds are available at the
time of notification by Seller to Purchaser of the charged back or returned
item. Notwithstanding the foregoing, Purchaser shall have not duty to remit
funds for any item or charge that has been improperly returned or charged to
Seller.
(i) Any cash items paid by Seller and not cleared prior to the
Closing Date shall be the responsibility of Seller.
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ARTICLE III
CONSIDERATION
3.1 Purchase Price. The purchase price (the “Purchase Price”) shall
be an amount equal to the sum of (i) the Aggregate Purchased Loan Value; less
(ii) the amount of the Deposit Liabilities (the “Deposit Liabilities Amount”);
plus (iii) the Book Value of the Purchased Assets set forth in Section 2.1(a) as
of the Closing Date and the Book Value of the Leases Held For Investment
(collectively, the “NetBank Finance Purchased Assets”) net of the Assumed
Liabilities set forth in Section 2.3(a) as of the Closing Date (the “NetBank
Assumed Liabilities”) (collectively, the “NetBank Finance Book Value”); plus
(iv) Five Million Dollars ($5,000,000) (the “Premium”). The Purchaser shall
withhold the Holdback Amount, which is being held back pursuant to the holdback
agreement in the form attached hereto as Exhibit B (the “Holdback Agreement”).
3.2 Estimated Purchase Price.
(a) Seller shall furnish to Purchaser, at least 10 days prior to the
Closing, a statement (the “Estimated Closing Statement”) reflecting (i) the
estimated unpaid balances of the Purchased Loans as of the Closing Date and the
estimated Aggregate Purchased Loan Value (the “Estimated Aggregate Purchased
Loan Value”), (ii) the estimated Deposit Liabilities Amount, and (iii) the
estimated NetBank Finance Book Value in a form with sufficient detail to itemize
assets and liabilities (the “Estimated NetBank Finance Book Value”). The Seller
shall furnish to Purchaser a statement detailing the estimated calculation of
the Purchase Price (“Preliminary Purchase Price Estimate”), which shall equal
the sum of (1) the sum of clauses (i) through (iii) in the immediately preceding
sentence; plus (2) the Premium.
(b) On the Closing Date, Seller shall update the Preliminary Purchase
Price Estimate to reflect the Aggregate Purchased Loan Value, the Deposit
Liabilities Amount and the NetBank Finance Book Value each as of the night prior
to Closing after the completion of nightly processing (the “Pricing
Adjustment”). The Estimated Purchase Price shall be the Preliminary Purchase
Price Estimate, as adjusted by the Pricing Adjustment.
3.3 Closing Payment. The closing payment (the “Closing
Payment”) shall be equal to the Estimated Purchase Price less the Holdback
Amount. In the event that the Closing Payment is a positive amount, the Closing
Payment will be paid by Purchaser at the Closing by wire transfer of immediately
available funds to an account of Seller designated to Purchaser at least five
Business Days prior to the Closing. In the event that the Closing Payment is a
negative amount, the Closing Payment will be paid by Seller at the Closing by
wire transfer of immediately available funds to an account of Purchaser
designated to Seller at least five Business Days prior to the Closing.
3.4 Final Purchase Price . As soon as practicable after the Closing,
but in no event later than 45 days after the Closing Date, Purchaser will
prepare (or cause to be prepared) and deliver to Seller a statement as of the
close of business on the Closing Date (the “Final Closing Statement”) based on
updated electronic data files and balance sheet information setting forth
(i) the Aggregate Purchased Loan Value, (ii) the Deposit Liabilities Amount and
(iii) the NetBank Finance Book Value (including changes in the unpaid balances
of the Leases Held for Investment) as of the Closing Date with a calculation of
the Purchase Price based on the sum of (1) the sum of clauses (i) through
(iii) of this sentence, plus (2) the Premium (the “Final Purchase Price”). The
Final Purchase Price will be prepared using the methodologies set forth in this
Agreement including the schedules hereto and, in the case of Book Value
determinations, by applying the same accounting principles and procedures as are
contemplated by the definition of Book Value as contained herein. No later than
five Business Days after the delivery of the Final Closing Statement:
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(a) if the Estimated Purchase Price is greater than the Final Purchase
Price, and the amount of such difference is greater than the Purchase Price
Holdback Amount, then the Purchase Price Holdback Amount shall be reduced to
zero and Seller shall pay to Purchaser the amount by which the difference
between the Estimated Purchase Price and Final Purchase Price exceeds the
Purchase Price Holdback Amount, plus simple interest on the amount of such
difference from the Closing Date to the date of payment at an interest rate
equal to six percent (6.0%) per annum by wire transfer of immediately available
funds to such account or accounts of Purchaser designated pursuant to Section
3.3;
(b) if the Estimated Purchase Price is greater than the Final Purchase
Price, and the amount of such difference is less than the Purchase Price
Holdback Amount, then the Purchase Price Holdback Amount shall be reduced by the
amount of such difference and any remaining Purchase Price Holdback Amount shall
be paid by Purchaser to Seller to such account or accounts of Seller designated
pursuant to Section 3.3; or
(c) if the Final Purchase Price is greater than the Estimated Purchase
Price, then (A) Purchaser shall pay to Seller the amount of the difference
between the Estimated Purchase Price and the Final Purchase Price, plus simple
interest on the amount of such difference from the Closing Date to the date of
payment at an interest rate equal to six percent (6.0%) per annum and (B) the
Purchase Price Holdback Amount shall be disbursed to Seller, in each case by
wire transfer of immediately available funds to such account or accounts of
Seller designated pursuant to Section 3.3.
3.5 Holdback Amount. On the Closing Date, the Purchaser shall
withhold or be paid by Seller in accordance with Section 3.3: (a) the Purchase
Price Holdback Amount for disbursement in accordance with the terms of this
Agreement and which will be held for purposes of adjustment between the
Estimated Purchase Price and the Final Purchase Price, and (b) the
Indemnification Holdback Amount which will be held for purposes of making
indemnification payments pursuant to Article X. Purchaser and Seller agree that
the Holdback Amount is part of the consideration paid to Seller and the
obligation to pay the Holdback Amount to Seller is absolute and unconditional,
subject only to the terms and conditions of this Agreement. The remaining
Indemnification Holdback Amount shall be released to Seller within five Business
Days following the third anniversary of the Closing by wire transfer of
immediately available funds to such account or accounts of Seller as Seller
specifies in writing to Purchaser in the manner specified herein for the
delivery of notices; provided, that if Purchaser has submitted a notice for
indemnification on or prior to the third anniversary of the Closing and such
indemnification claim is not finally determined until after the third
anniversary of the Closing, then the Indemnification Holdback Amount shall
remain subject to indemnification claim and any remaining portion of the
Indemnification Holdback Amount shall not be released to Seller until after such
indemnification claim shall have been finally determined and any indemnification
payments to Purchaser have been made.
ARTICLE IV
CLOSING AND TERMINATION
4.1 Closing Date. Subject to the satisfaction of the conditions set
forth in Sections 9.1 and 9.2 hereof (or the waiver thereof by the party
entitled to waive that condition), the closing of the purchase and sale of the
Purchased Assets and the assumption of the Assumed Liabilities provided for in
Article II hereof (the “Closing”) shall take place at the offices of Alston &
Bird LLP located at the Atlantic Building, 950 F Street N.W. Washington, D.C.
20004 (or at such other place as the parties may designate in writing) at 10:00
a.m. (New York City time) on a date to be specified by the parties, which date
shall be no later than the third Business Day after satisfaction or waiver of
the conditions set forth in Article IX (other than conditions that by their
nature are to be satisfied at the Closing, but subject to the satisfaction or
waiver of such conditions), unless another time or date, or both, are agreed to
in writing by the parties
23
hereto. The date on which the Closing shall be held is referred to in this
Agreement as the “Closing Date.”
4.2 Termination of Agreement. This Agreement may be terminated prior
to the Closing as follows:
(a) At the election of Seller or Purchaser on or after August 31, 2007
if the Closing shall not have occurred by the close of business on such date;
provided, that the terminating party is not in material breach of any of its
representations, warranties, covenants or agreements hereunder;
(b) by mutual written consent of Seller and Purchaser;
(c) by Seller or Purchaser if there shall be in effect a final
nonappealable Order of a Governmental Body of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby, it being agreed that the parties hereto shall
promptly appeal any adverse determination which is appealable (and pursue such
appeal with reasonable diligence);
(d) by Purchaser upon written notice from Purchaser to Seller that
there has been an event, change, occurrence or circumstance that has had or has
a reasonable likelihood of having a Material Adverse Effect;
(e) by Purchaser upon written notice from Purchaser to Seller if
Seller, Parent or Market Street files bankruptcy, becomes insolvent or is the
subject of any involuntary bankruptcy or receivership proceeding;
(f) by Purchaser upon written notice from Seller to Purchaser that
Seller or any of Seller’s Affiliates has executed or entered into an agreement
that would result in an Acquisition Transaction;
(g) by Purchaser, if there shall have been a breach by any Seller of
any representation, warranty, covenant or agreement of such Seller set forth in
this Agreement, which breach would give rise to a failure of a condition set
forth in Sections 9.1(a), or 9.1(b) and is incapable of being cured or, if
capable of being cured, shall not have been cured within ten Business Days
following receipt by Seller of written notice of such breach from Purchaser; or
(h) by Seller, if there shall have been a breach by Purchaser of any
representation, warranty, covenant or agreement of Purchaser set forth in this
Agreement, which breach would give rise to a failure of a condition set forth in
Sections 9.2(a) or 9.2(b) and is incapable of being cured or, if capable of
being cured, shall not have been cured within ten Business Days following
receipt by Purchaser of notice of such breach from Seller.
4.3 Effect of Termination. In the event that this Agreement is
validly terminated as provided herein, then each of the parties shall be
relieved of their duties and obligations arising under this Agreement after the
date of such termination and such termination shall be without liability to
Purchaser or Seller; provided, that (a) if this Agreement is terminated by
Purchaser pursuant to Section 4.2(e) (other than in connection with any
involuntary bankruptcy or receivership), Section 4.2(f) or Section 4.2(g), and
within 12 months after such termination, Seller executes an agreement that would
result in an Acquisition Transaction, then Seller shall, in addition to any
other Liabilities accruing hereunder, pay to Purchaser within five Business Days
of consummation of such Acquisition Transaction (i) the cost of all filing or
other fees paid by Purchaser to any Governmental Body in respect of the
transactions contemplated by
24
this Agreement and (ii) an amount equal to $6,000,000; (b) the obligations of
the parties set forth in this Section 4.3 and Articles X and XII hereof shall
survive any such termination and shall be enforceable hereunder; and (c) nothing
in this Section 4.3 shall relieve Purchaser or Seller of any Liability for a
breach of this Agreement, the representations, warranties or covenants of
Purchaser or Seller contained in this Agreement or in any Seller Documents or
Purchaser Documents prior to the effective date of such termination.
ARTICLE V
Except as set forth in the Disclosure Letter provided by Seller to Purchaser as
of the date of this Agreement (the “Disclosure Letter”), Seller hereby
represents and warrants to Purchaser that:
5.1 Organization and Good Standing.
(a) Seller and Market Street are duly organized, validly existing and
in good standing under the laws of its respective jurisdiction of incorporation
or organization, with full corporate power and authority to conduct its business
as it is now being conducted, to own or use the properties or assets that it
purports to own or use, and, with respect to Seller only, to perform all of its
respective obligations in connection with the Purchased Assets, Assumed
Liabilities, and NetBank Finance. Seller is duly qualified or licensed to do
business as a foreign corporation and is in good standing as a foreign
corporation, in each jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by it,
requires such licensing, qualification or good standing, except for such
failures to so qualify that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Seller.
(b) Seller has made available or delivered to Purchaser a true and
complete copy of its certificates of incorporation and bylaws (or equivalent
organizational documents), each as amended to date, and such documents are in
5.2 Authorization of Agreement. Seller has all requisite corporate
power, authority and legal capacity to execute and deliver this Agreement and
the Seller Documents and Seller has all requisite corporate power, authority and
legal capacity to execute and deliver each other agreement, document, or
instrument or certificate to be executed by Seller and delivered to Purchaser
pursuant to this Agreement (the “Seller Documents”), to perform their respective
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Seller Documents and the consummation of the transactions contemplated
hereby and thereby have been approved by the Board of Directors of Parent and
have been duly authorized by all requisite corporate action on the part of
Seller and no other corporate action is required by Seller and its Affiliates
for the authorization and execution of this Agreement and the Seller Documents
and the transactions contemplated hereby and thereby. This Agreement has been,
and each of the Seller Documents will be at or prior to the Closing, duly and
validly executed and delivered by the Bank and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto) this Agreement
constitutes, and each of the Seller Documents when so executed and delivered
will constitute, legal, valid and binding obligations of Seller, as the case may
be, enforceable against it in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity). The fair value of
the Purchased Assets as of the date of the most recent available financial
information does not exceed two-thirds
25
of the fair value of the assets of Parent on a consolidated basis. The portion
of Parent’s consolidated revenues for the year ended December 31, 2006
represented or produced by the Purchased Assets does not exceed two-thirds of
Parent’s consolidated revenues for the year ended December 31, 2006.
5.3 Conflicts; Consents of Third Parties.
(a) Except as set forth on Schedule 5.3(a) to the Disclosure Letter,
none of the execution and delivery by Seller of this Agreement or by Seller of
the Seller Documents, the consummation of the transactions contemplated hereby
or thereby, or compliance by Seller with any of the provisions hereof or thereof
will conflict with, or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or give rise to any obligation of Seller to make any payment under, or to
the increased, additional, accelerated or guaranteed rights or entitlements of
any Person under, or result in the creation of any Liens upon any of the
properties or assets of Seller or the Subsidiaries under, any provision of:
(i) the certificate of incorporation and by-laws or comparable organizational
documents of a Seller; (ii) any Contract or Permit to which a Seller or any
Subsidiary is a party or by which any of the properties or assets of Seller;
(iii) any Order of any Governmental Body applicable to Seller or by which any of
the properties or assets of Seller are bound; or (iv) any applicable Law.
(b) No consent, waiver, approval, Permit or authorization of, or
filing with, or notification to, any Person or Governmental Body is required on
the part of Seller in connection with (i) the execution and delivery of this
Agreement or the Seller Documents, the compliance by Seller with any of the
provisions hereof or thereof, the consummation of the transactions contemplated
hereby or thereby or the taking by Seller of any other action contemplated
hereby or thereby or (ii) the continuing validity and effectiveness immediately
following the Closing of any Contract or Permit of Seller, except (A) for
(1) filings of applications and notices with, receipt of approvals or
nonobjections from, and expiration of related waiting periods required by the
OTS and the Federal Deposit Insurance Corporation (“FDIC”) and (2) compliance
with the applicable requirements of the HSR Act(1) and (B) as set forth on
Schedule 5.3(b) to the Disclosure Letter.
5.4 Financial Statements.
(a) Seller has delivered to Purchaser copies of (i) the audited
consolidated balance sheet of Parent, the Bank and the Subsidiaries as at
December 31, 2005 and the related audited consolidated statements of income and
of cash flows of Parent, the Bank and the Subsidiaries for the year then ended
and (ii) the unaudited consolidated balance sheets of Parent, the Bank and the
Subsidiaries as at December 31, 2006 and each month end from January 2007
through April 2007 and the related consolidated statements of income and cash
flows of Parent, the Bank and the Subsidiaries for the periods ending
December 31, 2006 and each month end from January 2007 through April 2007 (such
audited and unaudited statements, including the related notes and schedules
thereto, are referred to herein as the “Financial Statements”). Except as
adjustments are required by Parent’s or Seller’s interdependent auditor in
connection with the audited consolidated balance sheets of Parent, the Bank and
the Subsidiaries as of December 31, 2006, each of the Financial Statements is
complete and correct in all material respects, has been prepared in accordance
with GAAP consistently applied without modification of the accounting principles
used in the preparation thereof throughout the periods presented, subject, in
the case of unaudited Financial Statements, to normal recurring year-end
adjustments (the effect of which
(1) HSR Act filing requirement to be discussed with Seller’s counsel.
26
will not, individually or in the aggregate, be material in amount or effect) and
the absence of notes (that, if presented, would not differ materially from those
included in the audited Financial Statements), and presents fairly in all
material respects the consolidated financial position, results of operations and
cash flows of Parent, the Bank and the Subsidiaries as at the dates and for the
periods indicated. As of their respective dates, the Financial Statements did
not, and any financial statements subsequent to the date hereof will not,
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading.
For the purposes hereof, the unaudited consolidated balance sheet of Parent, the
Bank and the Subsidiaries as at March 31, 2007 is referred to as the “Balance
Sheet” and March 31, 2007 is referred to as the “Balance Sheet Date.”
(b) Seller, Parent and Market Street make and keep books, records and
accounts which, in reasonable detail, accurately and fairly reflect the
acquisitions and dispositions of their respective assets. Seller and the
Subsidiaries maintain systems of internal accounting controls sufficient to
provide reasonable assurances that: (i) transactions are executed in accordance
with management’s general or specific authorization; (ii) transactions are
recorded as necessary to permit the preparation of financial statements in
the actual levels at reasonable intervals and appropriate action is taken with
respect to any differences. The Financial Statements were compiled and will be
compiled from and are and will be in accordance with the books and records of
Seller and the Subsidiaries. The books and records (including the books of
account, minute books, stock record books and other records) of Seller and the
Subsidiaries, all of which have been made available to Purchaser, are true and
complete, have been maintained in accordance with sound business practices and
accurately present and reflect in all material respects all of the transactions
and actions therein described. At the Closing, all of those books and records
shall be in the possession of Seller.
(c) The financial projections regarding NetBank Finance provided by
Seller to Purchaser prior to the date hereof were reasonably prepared on a basis
reflecting the best estimates, assumptions and judgments of management of
Seller, at the time provided to Purchaser and as of the date hereof, as to the
future financial performance of NetBank Finance.
(d) Seller has provided to Purchaser copies of all issued auditors’
reports, letters to management regarding accounting practices and systems of
internal control, and responses to such letters from management, in each case to
the extent relating to the Purchased Assets and NetBank Finance and the
operation thereof, whether the same are issued to a Seller or any of its
Affiliates.
(e) Except as contemplated by this Agreement, since April 30, 2007,
there has been no change in the condition (financial or otherwise), business,
operations, assets or liabilities of Seller or any of its Subsidiaries that has
had, or could reasonably be expected to have either individually or in the
5.5 No Undisclosed Liabilities. Seller does not have any
indebtedness, obligations or Liabilities of any kind other than those that do
not arise out of or relate to the Purchased Assets, Assumed Liabilities or
NetBank Finance.
5.6 Title to Purchased Assets; Sufficiency. Seller owns and has good
and marketable title to each of the Purchased Assets, free and clear of all
Liens other than Permitted Exceptions. Except as set forth on Schedule 5.6 to
the Disclosure Letter, the Purchased Assets are sufficient for Purchaser to
27
conduct the business of NetBank Finance from and after the Closing Date without
interruption and in the Ordinary Course of Business.
5.7 Absence of Certain Developments. Except as contemplated by this
Agreement or as set forth on Schedule 5.7 to the Disclosure Letter, since the
Balance Sheet Date (a) Seller has used and operated the Purchased Assets, and
NetBank Finance only in the Ordinary Course of Business and (b) there has not
been any event, change, occurrence or circumstance that has had or has a
reasonable likelihood of having (i) a Material Adverse Effect or (ii) a
materially adverse effect on the condition (financial or otherwise), assets,
prospects or results of operations of Seller, Parent, or Market Street. Without
limiting the generality of the foregoing, except as set forth on Schedule 5.7 to
the Disclosure Letter, since the Balance Sheet Date:
(i) Seller has not incurred any Liabilities of any nature other than
items incurred in the regular and Ordinary Course of Business, consistent with
past practice, or increased (or experienced any change in the assumptions
underlying or the methods of calculating) any bad debt, contingency, or other
reserve;
(ii) there has not been any damage, destruction or loss, whether or
not covered by insurance, with respect to the Seller Property, or the personal
property that comprises the Purchased Assets or NetBank Finance, having a
replacement cost of more than $50,000 for any single loss or $100,000 for all
such losses;
(iii) Seller has not (A) increased the salary, bonus or other
compensation (other than compensation increases not exceeding five percent
(5.0%) per annum and otherwise made in the Ordinary Course of Business) of any
Employee; (B) increased the benefits, waivers or variations for the benefit of
any such Employee, or otherwise amended, or made payments or grants of awards
that were not required, under any Employee Benefit Plan, or adopted or executed
of any new Employee Benefit Plan (other than any such events in the Ordinary
Course of Business); or (C) established, assumed, adopted or amended any
collective bargaining agreement or recognized any labor organization as the
collective bargaining representative of any Employees;
(iv) Seller has not executed any employment, severance, change in
control or similar agreements, other than in the Ordinary Course of Business;
(v) Seller has not made or rescinded any election relating to Taxes,
settled or compromised any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to Taxes, or except as
may be required by applicable Law, made any change to any of its methods of
reporting income or deductions for federal income tax purposes from those
employed in the preparation of its most recently filed Tax Returns, in each
case, to the extent related to the Purchased Assets or NetBank Finance;
(vi) there has not been any material change in the (A) business
organization of NetBank Finance (including all agency, brokerage and similar
relationships of NetBank Finance; (B) services provided by the advisors,
managers, officers, Employees, underwriters, agents, brokers or sales
representatives of NetBank Finance or; (C) relationships and goodwill with
customers, suppliers, correspondents, investors, credit enhancers, attorneys,
licensors, landlords, creditors, employees, agents, brokers, and others having
business relationships with NetBank Finance; or (D) existing levels of insurance
coverage of Seller;
(vii) Seller has not failed to promptly pay and discharge current
Liabilities except for Liabilities not material in amount that are disputed in
good faith by appropriate proceedings;
28
(viii) Seller has not sold, assigned, transferred, conveyed, leased or
otherwise disposed of any assets of Seller or any Subsidiary that were material
to the Purchased Assets or NetBank Finance, except for assets acquired or sold,
assigned, transferred, conveyed, leased or otherwise disposed of in the Ordinary
Course of Business;
(ix) Seller has not written up the value of any Purchased Assets with
a book value on the Balance Sheet in excess of $5,000, determined as collectible
any Receivable in excess of $50,000, or any portion thereof in excess of
$25,000, which were previously considered uncollectible, or written off as
uncollectible any Receivable or any portion thereof, except for write-downs,
write-ups, and write-offs in the Ordinary Course of Business, none of which is
material in amount;
(x) Seller has not instituted or settled any material Legal
Proceeding affecting the Purchased Assets or Assumed Liabilities;
(xi) Seller has not granted any license or sublicense of any rights
under or with respect to any Purchased Intellectual Property;
(xii) Seller has not agreed, committed, arranged or entered into any
understanding to do anything set forth in this Section 5.7.
5.8 Taxes. There are no Liens relating or attributable to Taxes with
respect to, or in connection with, the Purchased Assets, the Assumed Liabilities
or NetBank Finance. Insofar as factual matters relating to Seller or its
respective Subsidiaries are concerned, there is no basis for the assertion of
any claim for Taxes which, if adversely determined, would or is reasonably
likely to result in the imposition of any Lien on the Purchased Assets, the
Assumed Liabilities or NetBank Finance or otherwise adversely affect Purchaser,
or Seller or their use of such assets.
5.9 Real Property.
(a) The Seller Property and the buildings, fixtures and improvements
thereon owned or leased by a Seller are in good operating condition and repair
(subject to normal wear and tear). Seller has delivered or otherwise made
available to Purchaser true, correct and complete copy of the Assumed Real
Property Lease, together with all amendments, modifications or supplements
thereto, including any assignments thereof, and each and every instrument
constituting the Assumed Real Property Lease, including all of said amendments,
modifications, supplements and assignments, is accurate and completely
identified in Schedule 5.9(a) to the Disclosure Letter.
(b) Seller has a valid and enforceable leasehold interest under the
Assumed Real Property Lease, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally and subject, as to enforceability, to general principles of
equity). The Assumed Real Property Lease is in full force and effect, and
Seller has not received or given any notice of any default or event that with
notice or lapse of time, or both, would constitute a default by Seller under the
Assumed Real Property Lease and, to the Knowledge of Seller, no other party is
in default thereof, and no party to the Assumed Real Property Lease has
exercised any termination rights with respect thereto.
(c) Seller has all material certificates of occupancy and Permits of
any Governmental Body necessary or useful for the current use and operation of
the Seller Property, and Seller has fully complied with all material conditions
of the Permits applicable to them. No default or violation, or event
29
that with the lapse of time or giving of notice or both would become a default
or violation, has occurred in the due observance of any Permit.
(d) There does not exist any actual or, to the Knowledge of Seller,
threatened or contemplated condemnation or eminent domain proceedings that
affect the Seller Property or any part thereof, and Seller has not received any
notice, oral or written, of the intention of any Governmental Body or other
Person to take or use all or any part thereof.
(e) Seller has not received any notice from any insurance company that
has issued a policy with respect to the Seller Property requiring performance of
any structural or other repairs or alterations to such Seller Property.
5.10 Tangible Personal Property.
(a) Seller has good and marketable title to all of the items of
tangible personal property that are or will be Purchased Assets (except as sold
or disposed of subsequent to the date thereof in the Ordinary Course of
Business), free and clear of any and all Liens, other than Permitted
Exceptions. All such items of tangible personal property are in good condition
and in a state of good maintenance and repair (ordinary wear and tear
excepted) and are suitable for the purposes used.
(b) Schedule 5.10 to the Disclosure Letter sets forth all leases of
personal property involving annual payments in excess of $10,000 relating to
personal property used by Seller exclusively in connection with NetBank Finance
or by which the properties or assets of NetBank Finance is bound (“Personal
Property Leases”). All of the items of personal property under the Personal
Property Leases are in good condition and repair and are suitable for the
purposes used, and such property is in all material respects in the condition
required of such property by the terms of the lease applicable thereto during
the term of the lease. Seller has delivered or otherwise made available to the
Purchaser true, correct and complete copies of the Personal Property Leases,
together with all amendments, modifications or supplements thereto.
(c) Seller has a valid and enforceable leasehold interest under each
of the Personal Property Leases under which it is a lessee, subject to
affecting creditors’ rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). Each of the
Personal Property Leases is in full force and effect. There is no default under
any Personal Property Lease by Seller or, to the Knowledge of Seller, by any
other party thereto, and no event has occurred that with the lapse of time or
the giving of notice or both would constitute a default thereunder. No party to
any of the Personal Property Leases has exercised any termination rights with
respect thereto.
5.11 Intellectual Property.
(a) Schedule 5.11(a) to the Disclosure Letter sets forth an accurate
and complete list of all Patents, registered Marks, pending applications for
registration of Marks, unregistered Marks, registered Copyrights, and pending
applications for registration of Copyrights owned by Seller, Parent or any
Subsidiary or used by such entity in the conduct of its business. Schedule
5.11(a) to the Disclosure Letter lists (i) the jurisdictions in which each such
item has been issued, registered, otherwise arises or in which any such
application for such issuance and registration has been filed and (ii) the
registration or application date, as applicable.
30
(b) Except as disclosed in Schedule 5.11(b) to the Disclosure Letter,
Seller is the sole and exclusive owner of all right, title and interest in and
to all of the Purchased Intellectual Property and the Purchased Intellectual
Property includes each of the Copyrights in any works of authorship prepared by
or for a Seller that resulted from or arose out of any work performed by or on
behalf of a Seller or by any employee, officer, consultant or contractor of any
of them. Except as disclosed in Schedule 5.11(b) to the Disclosure Letter, to
the Knowledge of Seller, Seller is the sole and exclusive owners of, or have
valid and continuing rights to use, sell and license, as the case may be, all
Purchased Intellectual Property as the same is used, sold and licensed in its
business as presently conducted and proposed to be conducted, free and clear of
all Liens or obligations to others (except for those specified licenses included
in Schedule 5.11(e) to the Disclosure Letter).
(c) The Purchased Intellectual Property, the manufacturing, licensing,
marketing, importation, offer for sale, sale or use of any products and services
in connection with the respective business operations of the Seller as presently
and as currently proposed to be conducted in connection with the Purchased
Assets, Assumed Liabilities or NetBank Finance, and the present and currently
proposed business practices, methods and operations of Seller relating to the
Purchased Assets, Assumed Liabilities or NetBank Finance do not infringe,
constitute an unauthorized use, misappropriation or violation of any Copyright,
Trade Secret or other similar right of any Person and, to the Knowledge of
Seller, do not infringe, constitute an unauthorized use of, misappropriate,
dilute or violate any other Intellectual Property or other right of any Person
(including pursuant to any non-disclosure agreements or obligations to which
Seller or any of its Affiliates or any of their present or former employees is a
party). The Purchased Intellectual Property and the Intellectual Property
Licenses include all of the Intellectual Property necessary and sufficient to
enable Seller to conduct its businesses in the manner in which it is currently
being conducted.
(d) Except with respect to licenses of commercial off-the-shelf
Software available on reasonable terms for a license fee of no more than
$10,000, and except pursuant to the Intellectual Property Licenses listed in
Schedule 5.11(e) to the Disclosure Letter, Seller is not required, obligated, or
under any Liability whatsoever, to make any payment by way of royalties, fees or
otherwise to any owner, licensor of, or other claimant to any Purchased
Intellectual Property, or other third Person, with respect to the use thereof or
in connection with the conduct of their respective business operations as
currently conducted or proposed to be conducted.
(e) Schedule 5.11(e) to the Disclosure Letter sets forth a complete
and accurate list of all Contracts, excluding Contracts for off-the-shelf
$10,000, related to the Purchased Assets, Assumed Liabilities and NetBank
Finance (i) to which Seller is a party (A) granting any Intellectual Property
License, (B) containing a covenant not to compete or otherwise limiting its
ability to (x) exploit fully any of the Purchased Intellectual Property or
(y) conduct their respective business operations in any market or geographical
area or with any Person or (ii) to which Seller is a party containing an
agreement to indemnify any other Person against any claim of infringement,
unauthorized use, misappropriation, dilution or violation of Intellectual
Property.
(f) Each of the licenses for Purchased Intellectual Property and
Intellectual Property Licenses is in full force and effect and is the legal,
valid and binding obligation of the Seller, enforceable against it in accordance
moratorium and similar laws affecting creditors’ rights and remedies generally
of whether enforcement is sought in a proceeding at law or in equity). Seller
is not in default under any Intellectual Property License, nor, to the Knowledge
of Seller, is any other party to an Intellectual Property License in default
thereunder, and no event has occurred that with the lapse of time or the giving
of notice or both would constitute a default thereunder. No party to any of the
Intellectual Property Licenses has exercised any termination rights
31
with respect thereto. Seller has, and will transfer to Purchaser at the
Closing, good and valid title to the Intellectual Property Licenses, free and
clear of all Liens other than Permitted Exceptions. Seller has delivered or
otherwise made available to Purchaser true, correct and complete copies of all
of the Intellectual Property Licenses, together with all amendments,
modifications or supplements thereto.
(g) No Trade Secret or any other non-public, proprietary information
included in the Purchased Assets material to respective businesses of the Seller
as presently conducted and proposed to be conducted has been authorized to be
disclosed or has been actually disclosed by Seller to any of their employees or
any third Person other than pursuant to a non-disclosure agreement restricting
the disclosure and use of the Purchased Intellectual Property. Seller has taken
adequate security measures to protect the secrecy, confidentiality and value of
all the Trade Secrets included in the Purchased Intellectual Property and any
other non-public, proprietary information included in the Purchased Technology,
which measures are reasonable in the industries in which Seller operates. Each
employee, consultant and independent contractor of Seller has entered into a
written non-disclosure and invention assignment agreement with them in a form
reasonably acceptable to them and provided to Purchaser prior to the date
hereof.
(h) As of the date hereof, neither Seller nor Parent is the subject of
any pending or, to the Knowledge of Seller or Parent, threatened Legal
Proceedings which involve a claim of infringement, unauthorized use,
misappropriation, dilution or violation by any Person against Seller or Parent
or challenging the ownership, use, validity or enforceability of any Purchased
Intellectual Property. Neither Seller nor Parent has received written
(including by electronic mail) notice of any such threatened claim and, to the
Knowledge of Seller or Parent, there are no facts or circumstances that would
form the basis for any such claim or challenge. The Purchased Intellectual
Property, and all of Seller’s or Parent’s rights in and to the Purchased
Intellectual Property, are valid and enforceable.
(i) Except as disclosed on Schedule 5.11(i) to the Disclosure Letter,
to the Knowledge of Seller, no Person is infringing, violating, misusing or
misappropriating any Purchased Intellectual Property, and no such claims have
been made against any Person by Seller.
(j) There are no Orders to which Seller is a party or by which it is
bound which restrict, in any material respect, any rights to any Purchased
Intellectual Property.
(k) The consummation of the transactions contemplated hereby will not
result in the loss or impairment of Purchaser’s right to own or use any of the
Purchased Intellectual Property.
(l) No present or former Employee has any right, title, or interest,
directly or indirectly, in whole or in part, in any material Purchased
Intellectual Property. To the Knowledge of Seller, no employee, consultant or
independent contractor of Seller is, as a result of or in the course of such
employee’s, consultant’s or independent contractor’s engagement, in default or
breach of any material term of any employment agreement, non-disclosure
agreement, assignment of invention agreement or similar agreement.
(m) The Purchased Technology represents (a) all of the Software owned
exclusively by Seller that is material to the operation of NetBank Finance and
(b) all other Software used in NetBank Finance that is not exclusively owned by
Seller, excluding commercial-off-the-shelf Software available on reasonable
terms for a license fee of no more than $10,000.
5.12 Material Contracts.
(a) Schedule 5.12 to the Disclosure Letter sets forth all of the
following Contracts to which Seller or any of the Subsidiaries is a party or by
which Seller or any Subsidiary is bound and that
32
relate to or are used by NetBank Finance, or that relate to the Purchased Assets
or Assumed Liabilities (collectively, the “Material Contracts”):
(i) Contracts with any Affiliate or current or former officer,
director, stockholder or Affiliate of Seller or any of the Subsidiaries or any
agent, broker or sales representative of Seller or any of the Subsidiaries;
(ii) Contracts with any labor union or association representing any
employees of Seller or any of the Subsidiaries;
(iii) Contracts for the sale of any of the assets of Seller or any of
the Subsidiaries or for the grant to any person of any preferential rights to
purchase any of their assets other than in the Ordinary Course of Business and
not material in amount in the aggregate;
(iv) Contracts for joint ventures, strategic alliances or partnerships
or other Contracts (however named) involving a sharing of profits, losses, costs
or Liabilities by Seller or any of the Subsidiaries with any other Person;
(v) Contracts prohibiting or limiting the ability of Seller or any of
the Subsidiaries to (A) engage in any line of business, (B) compete with, obtain
products or services from, or provide services or products to, any Person,
(C) carry on or expand the nature or geographical scope of their respective
business operations anywhere in the world or (D) disclose any confidential
information in their possession (and not otherwise generally available to the
public);
(vi) Contracts relating to the acquisition by Seller or any of the
Subsidiaries of any operating business or the capital stock of any other Person;
(vii) Contracts relating to incurrence, assumption or guarantee of any
indebtedness in excess of $100,000 or imposing a Lien on any of its assets;
(viii) Purchased Contracts involving (A) leases by Seller or any of the
Subsidiaries from or to any other Person of any tangible personal property or
real property other than the Leases or (B) purchases or sales by Seller or any
of the Subsidiaries of materials, supplies, equipment or services and which, in
the case of clauses (A) and (B), calls for future payments in excess of $100,000
in any year;
(ix) Contracts under which Seller or any of the Subsidiaries have made
advances or loans to any other Person other than in the Ordinary Course of
Business;
(x) Contracts for the employment (including “at will” employment) of,
or providing for a severance, retention, or change in control payment to, any
individual on a full-time, part-time or consulting or other basis, in each case,
providing annual compensation in excess of $100,000;
(xi) outstanding agreements of guaranty, surety or indemnification,
direct or indirect, by Seller or any of the Subsidiaries;
(xii) Contracts (or a group of related contracts) which involve the
expenditure of more than $50,000 annually or $100,000 in the aggregate or
require performance by any party more than one year from the date hereof; and
33
(xiii) Contracts that are otherwise material to the Purchased Assets or
NetBank Finance.
(b) Each of the Material Contracts and the Purchased Contracts is in
full force and effect and is the legal, valid and binding obligation of the
applicable Seller and/or a Subsidiary, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
of whether enforcement is sought in a proceeding at law or in equity). Neither
Seller nor any Subsidiary is in default under any Material Contract or Purchased
Contract, nor, to the Knowledge of Seller, is any other party to any Material
Contract or Purchased Contract in default thereunder, and no event has occurred
that with the lapse of time or the giving of notice or both would constitute a
default thereunder. No party to any Material Contract or Purchased Contract has
exercised any termination rights with respect thereto. Seller and its
Subsidiaries have, and will transfer to Purchaser at the Closing, good and valid
title to the Material Contracts, free and clear of all Liens other than
Permitted Exceptions. Seller has delivered or otherwise made available to
Purchaser true, correct and complete copies of all of the Material Contracts and
all Purchased Contracts, together with all amendments, modifications or
supplements thereto.
5.13 Employee Benefits.
(a) None of Seller, Parent nor any Subsidiary has any formal
commitment, or intention communicated to employees, to create any additional
Employee Benefit Plan or modify or change any existing Employee Benefit Plan of
Seller.
(b) With respect to each of the Employee Benefit Plans, Seller has
delivered to Purchaser true and complete copies of each of the following
documents, if applicable: (i) a signed copy of the most recent plan document
(including all amendments thereto); (ii) signed copies of trust documents and
insurance contracts; (iii) the annual reports (Form 5500 and schedules
thereto) filed for the last three years; and (v) the most recent summary plan
description, together with each summary of material modifications.
(c) Neither Seller nor any ERISA affiliate has ever maintained or
participated in any Employee Benefit Plan which has been subject to Title IV of
ERISA or Code Section 412 or ERISA Section 302, including, without limitation,
any “multiemployer plan” (within the meaning of Section 4001(a)(3) of ERISA).
An ERISA affiliate for purposes of this Section 5.13 is any person or entity
that would be considered, when combined with a Seller, a single employer
pursuant to Section 414 of the Code.
5.14 Labor.
(a) There is no labor or collective bargaining agreement with any
union or similar labor organization covering any Employee.
(b) No petition for certification or union election is existing or
pending with respect to any Employee and no union, labor organization or
collective bargaining unit has sought certification or recognition within the
preceding three (3) years with respect to any Employee.
(c) All Employees who are not a party to an employee agreement with
Seller or an Affiliate of Seller are at-will employees.
34
(d) There are no (i) strikes, work stoppages, slowdowns, lockouts or
arbitrations or (ii) material grievances or other labor disputes pending or, to
the Knowledge of Seller, threatened against or involving Seller or any of the
Subsidiaries involving any Employee. There are no unfair labor practice
charges, grievances or complaints pending or, to the Knowledge of Seller,
threatened by or on behalf of any Employee.
5.15 Litigation.
(a) Except as set forth on Schedule 5.15(a) to the Disclosure Letter,
there is no Legal Proceeding pending or, to the Knowledge of Seller, threatened
against Seller or any of its Affiliates (or to the Knowledge of Seller, pending
or threatened, against any of the officers, directors or key employees of
Seller, pending or threatened, against any of the officers, directors or key
employees of Seller or any of its Affiliates relating to NetBank Finance, the
Assumed Liabilities or the Purchased Assets, before any Governmental Body; nor
to the Knowledge of Seller is there any reasonable basis for any such Legal
Proceeding. Neither Seller nor any Subsidiary are subject to any Order (other
than in the Ordinary Course of Business relating to the Purchased Assets,
Assumed Liabilities or NetBank Finance). Neither Seller nor any Subsidiary are
engaged in any legal action related to the Purchased Assets, NetBank Finance or
the Assumed Liabilities to recover monies due it or for damages sustained by it
except in the Ordinary Course of Business.
(b) There are no Legal Proceedings or Orders issued, pending or, to
the Knowledge of Seller, threatened, against Seller or any Subsidiary or any of
their respective assets, at law, in equity or otherwise, in, before, by, or
otherwise involving, any Governmental Body, arbitrator or other Person that
question or challenge the validity or legality of, or have the effect of
prohibiting, preventing, restraining, restricting, delaying, making illegal or
otherwise interfering with, this Agreement, the Seller Documents, the
consummation of the transactions contemplated hereby or thereby or any action
taken or proposed to be taken by Seller pursuant hereto or in connection with
the transactions contemplated hereby or thereby. To the Knowledge of Seller, no
event has occurred or circumstance exists that could reasonably be expected to
give rise to or serve as a basis for the commencement of any such Legal
Proceeding or the issuance of any such Order.
(c) Except as set forth on Schedule 5.15(c) to the Disclosure Letter,
neither Seller nor any Subsidiary is a party to any written agreement, consent
agreement or memorandum of understanding with or a party to any commitment
letter or similar undertaking with, and the Board of Directors thereof has not
adopted any resolutions at the request of, any Governmental Body that restrict
the conduct of any of their respective business operations or activities or that
are in any manner related to its capital adequacy, its credit policies, its
management, nor have Seller or any Subsidiary been advised by any Governmental
Body that the entity is considering requesting such an agreement, consent
agreement, memorandum of understanding, commitment letter or similar
undertaking, or Board of Directors resolutions.
5.16 Compliance with Laws; Permits.
(a) Except as set forth on Schedule 5.16(a) to the Disclosure Letter,
and except as set forth in Parent’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2005, its Quarterly Report on Form 10-Q for the quarter
ended September 30, 2006, (without giving effect to any amendment filed after
the date of this Agreement), or any subsequent Current Report on Form 8-K, as it
relates to the Purchased Assets, Assumed Liabilities or NetBank Finance, Seller
(i) conducts its business in compliance with all applicable Laws or to the
employees conducting such businesses; (ii) is in compliance in all material
respects with all Laws of every Governmental Body applicable to its operations
or assets including all licensing, lending, consumer protection and escheat
laws; and (iii) has received, since
35
December 31, 2005, no written notification from any Governmental Body
(A) asserting that it is not in compliance with any of the Laws which such
Governmental Body enforces or (B) threatening to revoke any license, franchise,
Permit or governmental authorization. Neither Seller nor any Market Street has
received from any Governmental Body, since December 31, 2006, any written or
other notice of or been charged with the violation of any Law. To the Knowledge
of Seller, neither Seller nor Market Street is under investigation with respect
to the violation of any Law and there are no facts or circumstances which could
form the basis for any such violation.
(b) Seller and Market Street currently have all Permits which Seller
and Market Street are required to maintain in connection with their respective
business operations and activities as presently conducted. Seller and Market
Street have made all filings, applications, and registrations with Regulatory
Authorities that are required to be made by it or for it to own, lease, or
operate its material assets and to carry on its business as now conducted and
there has occurred no breach or violation of, or default under any Permit
applicable to its business or employees conducting its business. Seller and
Market Street have paid all fees and assessments due and payable in connection
therewith. Neither Seller nor Market Street is in default or violation, and no
event has occurred which, with notice or the lapse of time or both, would
constitute a default or violation, in any material respect of any term,
condition or provision of any Permit to which it is a party, to which the
business operations and activities of Seller and Market Street are subject or by
which its properties or assets are bound and, to the Knowledge of Seller, there
are no facts or circumstances which could form the basis for any such default or
violation. All applications required to have been filed for the renewal of any
Permit have been duly filed on a timely basis with the appropriate Governmental
Body, and all other filings required to have been made with respect to any
Permit have been duly made on a timely basis with the appropriate Governmental
Body.
(c) Neither Seller nor Market Street have taken or agreed to take any
action, and to Seller’s Knowledge it is not aware of any fact, circumstance or
reason that (i) is reasonably likely to impede or delay receipt of any Consents
of Regulatory Authorities referred to in Sections 5.3(b) of this Agreement, or
(ii) would result in the imposition of a condition that would reasonably be
(d) Except as set forth in Parent’s Annual Report on Form 10-K for the
quarter ended September 30, 2006 (without giving effect to any amendment filed
neither Seller nor Market Street are subject to, have been advised or have
reason to believe that it is reasonably likely to become subject to, any written
order, decree, agreement, memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission to, or extraordinary
supervisory letter from, or adopted any extraordinary board resolutions at the
request of, any Governmental Body charged with the supervision or regulation of
financial institutions or issuers of securities or engaged in the insurance of
deposits or the supervision or regulation of it.
5.17 Environmental Matters. Except as set forth on Schedule 5.17 to the
Disclosure Letter:
(a) no Hazardous Materials have been used, stored or otherwise handled
in any manner by Seller or any of the Subsidiaries on, in, from or affecting the
Seller Property except in compliance with applicable Environmental Laws;
(b) to the Knowledge of Seller, no Hazardous Materials have at any
time been released into or stored on or in the Seller Property or any other
properties presently or formerly owned, operated or used by Seller or Market
Street;
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(c) Seller has not received any notice of any violations (and, to the
Knowledge of Seller, there are no existing violations) of any applicable Law
governing the use, storage, treatment, transportation, manufacture, refinement,
handling, production or disposal of Hazardous Materials on, in, from or
affecting the Seller Property and there are no Legal Proceedings pending or, to
the Knowledge of Seller, threatened by any Person with respect to any such
violations; and
(d) the Seller Property is currently being, and have in the past been,
operated by Seller in all material respects in accordance and in compliance with
all applicable Environmental Laws and, to the Knowledge of Seller, all such
property has been operated in the past by third parties in all material respects
in accordance with, and in compliance with, all applicable Environmental Laws.
5.18 Insurance. Seller and Market Street have insurance policies in
full force and effect for such amounts as are sufficient for all requirements of
Law and all agreements to which Seller or Market Street are a party or by which
they are bound and are for amounts and coverages as are customary for similarly
situated businesses. No event relating to Seller or Market Street has occurred
which could reasonably be expected to result in a retroactive upward adjustment
in premiums under any such insurance policies or which could reasonably be
expected to result in a prospective upward adjustment in such premiums.
Excluding insurance policies that have expired and been replaced in the Ordinary
Course of Business, no insurance policy has been cancelled within the last two
(2) years and, to the Knowledge of Seller, no threat has been made to cancel any
insurance policy of Seller or Market Street during such period. All such
insurance will remain in full force and effect and all such insurance relating
to the Purchased Assets, Assumed Liabilities and NetBank Finance is assignable
or transferable to Purchaser. No event has occurred, including the failure by
Seller or Market Street to give any notice or information or Seller or Market
Street giving any inaccurate or erroneous notice or information, which limits or
impairs the rights of Seller or Market Street under any such insurance policies.
5.19 Receivables. All Receivables shown on the Balance Sheet that will
be Purchased Assets will represent valid and enforceable claims against the
representative account debtor and each obligor thereon (if any) and are not
subject to any defenses, counterclaims, or rights of setoff other than those
arising in the Ordinary Course of Business and for which adequate reserves have
been established, and are fully collectible to the extent not reserved for in
the balance sheet on which they are shown. Except as disclosed on Schedule 5.19
to the Disclosure Letter, such Receivables are owned by Seller and the
Subsidiaries free and clear of all Liens, except for Permitted Exceptions.
5.20 Loan Originations.
(a) Seller and its Subsidiaries have been, during the last three
years, and are in compliance with all Applicable Requirements, and all
applicable Laws, Agency, investor and Insurer requirements applicable to them,
their assets and their conduct of business, except as would not be materially
adverse to Seller and its Subsidiaries. Except as would not be materially
adverse to Seller and its Subsidiaries, Seller and its Subsidiaries have timely
filed, or will have timely filed by the Closing Date, all reports that any
Governmental Body or Insurer requires that it file with respect to its mortgage
origination business. Neither Seller nor its Subsidiaries have done or caused to
be done, or have failed to do or omitted to be done, any act, the effect of
which would operate to invalidate or materially impair (i) any PMI or commitment
of any private mortgage insurer to insure; (ii) any title insurance policy;
(iii) any hazard insurance policy; (iv) any flood insurance policy; (v) any
fidelity bond, direct surety bond, or errors and omissions insurance policy
required by private mortgage insurers; or (vi) any surety or guaranty agreement,
in each case applicable to the Mortgage Loans or reasonably necessary to the
operation of their respective businesses. Except as disclosed in Schedule
5.20(a) to the Disclosure Letter, no Agency has indicated to Seller or any of
its Subsidiaries in writing, or to the Knowledge of Seller, in any other manner,
that it has terminated or intends to terminate its relationship with Seller or
any such
37
Subsidiary for poor performance, poor loan quality or concern with respect to
Seller’s or any Subsidiary’s compliance with Laws or that Seller or any of its
Subsidiaries is in default under or not in compliance with respect to any
Applicable Requirements, except as would not, individually or in the aggregate,
be materially adverse to Seller and its Subsidiaries. The loan origination and
underwriting processes, procedures and guidelines of Seller and its Subsidiaries
are adequate and are consistent with generally accepted industry standards, and
Seller and its Subsidiaries have not taken any action or omitted to take any
action in violation of such loan origination and underwriting processes,
procedures and guidelines with respect to any of the Mortgage Loans or Beacon
Loans.
(b) Except as set forth on Schedule 5.20(b) to the Disclosure Letter,
the representations and warranties set forth on Exhibit 5.20(b) are true and
correct with respect to each Mortgage Loan other than a Georgia Affordable
Housing Loan or the Habitat Loan.
(c) Except as set forth on Schedule 5.20(c) to the Disclosure Letter,
the representations and warranties set forth on Exhibit 5.20(c) are true and
correct with respect to each Georgia Affordable Housing Loan and the Habitat
Loan.
(d) Except as set forth on Schedule 5.20(d) to the Disclosure Letter,
all HELOC Loans with a zero balance of unpaid principal on the Closing Date that
are or will be Purchased Assets have an active line of credit as of the Closing
Date and should not have been closed or terminated in accordance with the terms
thereof.
(e) As of the Closing Date, all advances made to Mortgagors by any
servicer, Seller or its designee with respect to HELOC Loans have been in strict
accordance with the terms of the related Mortgage and credit line agreement;
further, any servicer, Seller or its designee have not agreed, committed,
arranged or entered into any understanding in connection with such advances
which render the terms of the applicable Mortgage and credit line agreement
unenforceable or which negatively impact Purchaser’s ability to collect all
advances thereunder.
5.21 Beacon Loans and Leases. The representations and warranties set
forth at Exhibit 5.21 shall be true and correct with respect to each Beacon Loan
other than a Georgia Affordable Housing Loan or the Habitat Loan.
5.22 Related Party Transactions.
(a) Neither Seller nor the Subsidiaries, any Affiliate of Seller or
any of their respective executive officers, directors or employees (i) own any
direct or indirect interest of any kind in, or controls or is a director,
officer, employee or partner of, or consultant to, or lender to or borrower from
or has the right to participate in the profits of, any Person which is a
competitor, supplier, customer, landlord, tenant, creditor or debtor of Seller
or any of the Subsidiaries, or a participant in any transaction related to the
Purchased Assets and Assumed Liabilities to which Seller or any of the
Subsidiaries is a party or (ii) is a party to any Contract with Seller or any of
the Subsidiaries related to the Purchased Assets or Assumed Liabilities, except
with respect to clauses (i) and (ii) (A) for ownership interests of 10% or less
of any entity, (B) for business dealings or transactions in the ordinary course
of business at substantially prevailing market prices and on substantially
prevailing market terms, and (C) as set forth on Schedule 5.22 to the Disclosure
Letter.
(b) Other than as permitted by Regulation W as modified by 12 C.F.R.
563.41, each Contract, agreement, or arrangement between Seller or any of the
Subsidiaries on the one hand, and any Affiliate of Seller or any officer,
director or employee of Seller on the other hand, is on commercially
38
reasonable terms no more favorable to the Affiliate, director, officer or
employee of Seller than what any third party negotiating on an arms-length basis
would reasonably expect.
5.23 Financial Advisors. Except for Sandler O’Neill LLP, whose fees, if
any, shall be paid by Seller, no Person has acted, directly or indirectly, as a
broker, finder or financial advisor for Seller or any of the Subsidiaries in
connection with the transactions contemplated by this Agreement and no Person is
entitled to any fee or commission or like payment in respect thereof.
5.24 Deposits.
(a) All of the deposits are insured by the FDIC to the maximum extent
provided in the rules and regulations of the FDIC.
(b) All of the deposits were marketed, issued and have been
continuously serviced in compliance with all applicable Laws and the terms of
the deposits themselves, including, without limitation, Laws relating to the
acceptance of deposits, the truth-in-savings act, federal deposit insurance in
general and pass-through insurance in particular (as referenced in 12 C.F.R.
Section 330.14), escheatment and/or abandoned property and, where applicable,
issuance of brokered deposits.
(c) Seller has provided, or shall provide as soon as reasonably
practicable after the date hereof, to Purchaser all forms that have been used
for the deposits. All deposits were issued using one of such forms and no other
form, and such forms have not been substantively modified for any of the
deposits other than as set forth in change in terms notifications, copies of
which have been provided to Purchaser. None of the deposits restricts the
assignment and assumption contemplated by this Agreement and such deposits may
be assigned by Seller without restriction, other than the: (i) requirement of
regulatory approval which is obtained prior to Closing; and (ii) depositors’
rights of withdrawal.
(d) Neither Seller nor, to Seller’s Knowledge, any deposit broker has
made any promise, agreement or commitment to any depositor in connection with a
deposit, except in the Ordinary Course of Business in connection with servicing
the deposits and recorded in the Bank’s Books and Records.
(e) Each deposit is enforceable in accordance with its terms.
(f) None of the Bank’s certificates of deposit: (i) permit additional
deposits thereto; or (ii) permit early withdrawals except: (A) upon the death or
adjudication of incompetence of the underlying Depositor; or (B) as described in
Schedule 5.24(f) to the Disclosure Letter. All of the Bank’s certificates of
deposit constitute time deposits for purposes of Regulation D of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 204.
(g) All of the deposits that constitute brokered deposits were issued
in full compliance with Section 29 of the Federal Deposit Insurance Act and 12
C.F.R. Sec. 337.6 and with the terms and conditions of the brokered deposit
agreements under which they were issued and Seller is otherwise in compliance
with the terms and conditions of such agreements. Such agreements do not
prohibit or restrict the assignment and assumption or substitution contemplated
by this Agreement.
(h) Seller and/or a deposit broker, if applicable, have performed all
obligations required to be performed under the deposits up to the Closing Date
and under any additional promises, commitments and agreements made to depositors
and recorded in the Bank’s books and records. Seller is not in default under
any of the deposits. Without limiting the generality of the foregoing, Seller
has paid to the depositors all interest that is due and payable on and before
the Closing Date.
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(i) Schedule 5.24(i) to the Disclosure Letter accurately reflects the
term and maturity dates of all certificates of deposit, the interest rates on
all deposits, the frequency of paying interest thereon, the identities of
deposit brokers, if any, and the liabilities assumed by Purchaser in respect
thereof. Schedule 5.24(i) to the Disclosure Letter accurately reflects
notations on or reissuances of Master Certificates for CDs. Seller has
previously provided to Purchaser a list in electronic form that accurately
represents of all Deposit Liabilities as of April 30, 2007.
(j) Seller has timely paid all deposit insurance assessments required
under section of the Federal Deposit Insurance Act and 12 C.F.R., Part 327 and
all assessments, as determined by the FDIC, to pay interest on bonds issued by
the Financing Corporation.
(k) No error, omission, negligence, misrepresentation, fraud, identity
theft, or similar occurrence has taken place on the part of the Seller, nor, to
the Knowledge of Seller, a depositor or any deposit broker or any other Person
with respect to the origination or servicing of any Deposit Liability.
ARTICLE VI
Purchaser hereby represents and warrants to Seller that:
6.1 Organization and Good Standing. Purchaser is a federal savings
and loan association chartered by the Office of Thrift Supervision (“OTS”), and
United States.
6.2 Authorization of Agreement. Purchaser has full corporate power
and authority to execute and deliver this Agreement and each other agreement,
document, instrument or certificate contemplated by this Agreement or to be
executed by Purchaser in connection with the consummation of the transactions
contemplated hereby and thereby (the “Purchaser Documents”), and to consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance by Purchaser of this Agreement and each Purchaser Document have been
duly authorized by all necessary corporate action on behalf of Purchaser. This
Agreement has been, and each Purchaser Document will be at or prior to the
Closing, duly executed and delivered by Purchaser and (assuming the due
authorization, execution and delivery by the other parties hereto and
thereto) this Agreement constitutes, and each Purchaser Document when so
executed and delivered will constitute, legal, valid and binding obligations of
Purchaser, enforceable against Purchaser in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors’ rights and remedies generally, and
subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
6.3 Conflicts; Consents of Third Parties.
(a) Except as set forth on Schedule 6.3 of the disclosure letter
provided by Purchaser to the Seller as of the date of this Agreement (the
“Purchaser Disclosure Letter”), none of the execution and delivery by Purchaser
of this Agreement or by Purchaser of the Purchaser Documents, the consummation
of the transactions contemplated hereby or thereby, or compliance by Purchaser
with any of the provisions hereof or thereof will conflict with, or result in
any violation of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or give
rise to any obligation of Purchaser to make any payment under, or to the
increased, additional, accelerated or guaranteed rights or
40
entitlements of any Person under, or result in the creation of any Liens upon
any of the properties or assets of Purchaser under, any provision of (i) the
certificate of incorporation and by-laws or comparable organizational documents
of Purchaser; (ii) any Contract or Permit to which a Purchaser is a party or by
which any of the properties or assets of Purchaser is bound; (iii) any Order of
any Governmental Body applicable to Purchaser or by which any of the properties
or assets of a Purchaser are bound; or (iv) any applicable Law, except, in the
case of clauses (ii), (iii) and (iv), for such violations, breaches or defaults
as would not, individually or in the aggregate, have a material adverse effect
on the ability of Purchaser to consummate the transactions contemplated by this
Agreement.
the part of Purchaser in connection with (i) the execution and delivery of this
Agreement or the Purchaser Documents, the compliance by Purchaser with any of
the provisions hereof or thereof, the consummation of the transactions
contemplated hereby or thereby or the taking by Purchaser of any other action
contemplated hereby or thereby or (ii) the continuing validity and effectiveness
immediately following the Closing of any Contract or Permit of Purchaser, except
(A) (1) filings of applications and notices with, receipt of approvals or
OTS and the FDIC and (2) compliance with the applicable requirements of the HSR
Act,(2) and (B) as set forth on Schedule 6.3 to the Purchaser Disclosure Letter.
6.4 Litigation. There are no Legal Proceedings pending or, to the
restrain the ability of Purchaser to enter into this Agreement or consummate the
transactions contemplated hereby.
6.5 Financial Advisors. No Person has acted, directly or indirectly,
as a broker, finder or financial advisor for Purchaser in connection with the
transactions contemplated by this Agreement and no Person is entitled to any fee
or commission or like payment in respect thereof.
6.6 Financing. Purchaser has available, and on the Closing Date will
have available, sufficient funds, available lines of credit or other sources of
immediately available funds to enable it to purchase the Purchased Assets and
assume the Assumed Liabilities on the terms and conditions of this Agreement.
Purchaser’s obligations hereunder are not subject to any conditions regarding
Purchaser’s ability to obtain financing for the consummation of the transactions
contemplated hereby.
ARTICLE VII
COVENANTS
7.1 Access to Information. Seller shall, and shall cause the
Subsidiaries to, afford Purchaser, its officers, employees, advisors, attorneys,
accountants and representatives reasonable access to make such investigation of
the properties, businesses and operations of Seller and the Subsidiaries and
such examination of the books, records and financial condition of Seller and the
Subsidiaries as it reasonably requests and to make extracts and copies of such
books and records; and access to the members of management and personnel of
Seller and the Subsidiaries. Any such investigation, examination, discussion
and review shall be conducted during regular business hours and under reasonable
circumstances, and Seller shall cooperate fully therein. No investigation by
Purchaser prior to or after the date of this Agreement shall diminish or obviate
any of the representations, warranties, covenants or agreements of Seller
contained in this Agreement or the Seller Documents. In order that Purchaser
may
(2) HSR Act filing requirement to be discussed with Seller’s counsel.
41
have full opportunity to make such physical, business, accounting and legal
review, examination or investigation as it may reasonably request of the affairs
of Seller and the Subsidiaries, Seller shall cause the officers, employees,
consultants, agents, accountants, attorneys and other representatives of Seller
and the Subsidiaries to cooperate fully with such representatives in connection
with such review and examination.
7.2 Conduct of Operations Pending the Closing.
(a) Except as otherwise contemplated by this Agreement, by applicable
Law, or with the prior written consent of Purchaser, and solely as it relates
directly or indirectly to NetBank Finance, the Purchased Assets or the Assumed
Liabilities, Seller prior to the Closing Date shall:
(i) conduct its business and operations only in the Ordinary Course
of Business, including maintaining competitive deposit rates;
(ii) use its commercially reasonable efforts to (A) preserve its
present business operations, organization (including, without limitation,
management and the sales force) and goodwill of Seller and (B) preserve the
present relationships with Persons having business dealings with Seller
(including, without limitation, customers, suppliers, officers, employees,
underwriters, agents, brokers, sales representatives, correspondents, landlords
and investors);
(iii) maintain (A) all of the assets and properties of Seller and the
Subsidiaries in their current condition, ordinary wear and tear excepted and
(B) insurance upon all of the assets and properties of Seller and the
Subsidiaries in such amounts and of such kinds comparable to that in effect on
the date of this Agreement;
(iv) (A) maintain the books, accounts and records of Seller and the
Subsidiaries in the Ordinary Course of Business, (B) continue to collect
accounts receivable and pay accounts payable utilizing normal procedures and
without discounting or accelerating payment of such accounts, and (C) comply
with all contractual and other obligations applicable to the operation of Seller
and the Subsidiaries;
(v) comply in all material respects with all applicable Laws;
(vi) pay all maintenance and similar fees and take all other
appropriate actions as necessary to prevent the abandonment, loss or impairment
of all Purchased Intellectual Property;
(vii) continue the existing credit collection control of delinquencies
and other policies and practices relating to the conduct of Seller and the
Subsidiaries; and
(viii) not take any action which would adversely affect the ability of
the parties to consummate the transactions contemplated by this Agreement.
(b) Except as otherwise contemplated by this Agreement or with the
prior written consent of Purchaser, Seller shall not, and shall not permit the
Subsidiaries to:
(i) (A) increase the annual level of compensation of any Employee,
(B) grant any unusual or extraordinary bonus, benefit or other direct or
indirect compensation to any Employee, director or consultant, or (C) increase
the coverage or benefits with respect to any
42
Employee available under any Employee Benefit Plan or create or enter into any
new Employee Benefit Plan;
(ii) make any loan or advance to any Person other than in the Ordinary
Course of Business;
(iii) incur or assume any indebtedness other than in the Ordinary
Course of Business;
(iv) subject to any Lien or otherwise encumber or, except for Permitted
Exceptions, permit, allow or suffer to be encumbered, any of the properties or
assets (whether tangible or intangible) of Seller or any of the Subsidiaries;
(v) except as in accordance with Section 7.6, sell, assign, license,
transfer, convey, lease or otherwise dispose of any assets or properties
(whether real or personal, tangible or intangible) of Seller and the
Subsidiaries;
(vi) except as in accordance with Section 7.6, enter into or agree to
enter into any merger or consolidation with, any corporation or other entity, or
engage in any new business or invest in, make a loan (other than in the Ordinary
Course of Business), advance or capital contribution to, or otherwise acquire
the securities of any other Person;
(vii) prior to the Closing Date, cancel or compromise any debt or claim
or waive or release any right of Seller or any of the Subsidiaries;
(viii) prior to the Closing Date, deviate from or change in any respect
the credit or underwriting policies or collateral eligibility standards of
Seller or any Subsidiary;
(ix) enter into any transaction or to enter into, modify, amend,
terminate or renew any Contract relating to a Purchased Asset, NetBank Finance
or Assumed Liability which by reason of its size, terms or otherwise is not in
the Ordinary Course of Business;
(x) enter into any Contract, understanding or commitment that
restrains, restricts, limits or impedes the ability of NetBank Finance, or the
ability of Purchaser, to compete with or conduct any business or line of
business in any geographic area;
(xi) terminate, amend, restate, supplement or waive any rights under
any (A) Material Contract relating to a Purchased Asset, NetBank Finance or
Assumed Liability or (B) Permit;
(xii) amend the certificates of organization or incorporation or
by-laws (or other similar governing documents) of Seller or any Subsidiary; or
(xiii) agree to do anything (A) prohibited by this Section 7.2,
(B) which would make any of the representations and warranties of Seller in this
Agreement untrue or incorrect or (C) that would reasonably be expected to have a
Material Adverse Effect.
7.3 Consents. Seller shall use (and shall cause each of the
Subsidiaries to use) its reasonable best efforts, and Purchaser shall cooperate
with Seller, to obtain at the earliest practicable date all consents and
approvals required to consummate the transactions contemplated by this
Agreement,
43
including, without limitation, the consents and approvals referred to in Section
5.3(b). Seller and Purchaser shall equally share the cost of obtaining such
consents and approvals.
7.4 Regulatory Approvals.
(a) Each of Purchaser and Seller shall use commercially reasonable
efforts to (i) make or cause to be made all filings required of each of them or
any of their respective Subsidiaries or Affiliates under the HSR Act or other
Antitrust Laws with respect to the transactions contemplated hereby as promptly
as practicable and, in any event, within ten days after the date of this
Agreement, (ii) comply at the earliest practicable date with any request under
the HSR Act or other Antitrust Laws for additional information, documents, or
other materials received by each of them or any of their respective Subsidiaries
from the FTC, the Antitrust Division or any other Governmental Body in respect
of such filings or such transactions and (iii) cooperate with each other in
connection with any such filing (including, to the extent permitted by
applicable Law, providing copies of all such documents to the non-filing parties
prior to filing and considering all reasonable additions, deletions or changes
suggested in connection therewith) and in connection with resolving any
investigation or other inquiry of any of the FTC, the Antitrust Division or
other Governmental Body under any Antitrust Laws with respect to any such filing
or any such transaction. Each of Purchaser on the one hand and Seller on the
other hand shall be responsible for and shall pay one-half of all filing fees
for required filings under the HSR Act. Each such party shall use commercially
reasonable efforts to furnish to each other all information required for any
application or other filing to be made pursuant to any applicable Law in
connection with the transactions contemplated by this Agreement. Each such
party shall promptly inform the other parties hereto of any oral communication
with, and provide copies of written communications with, any Governmental Body
regarding any such filings or any such transaction. Subject to applicable Law,
no party hereto shall independently participate in any formal meeting with any
Governmental Body in respect of any such filings, investigation, or other
inquiry without giving the other parties hereto prior notice of the meeting and,
to the extent permitted by such Governmental Body, the opportunity to attend
and/or participate. Subject to applicable Law, the parties hereto will consult
and cooperate with one another in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any party hereto relating to proceedings under the
HSR Act or other Antitrust Laws.
(b) Each of Purchaser and Seller shall use commercially reasonable
efforts to resolve such objections, if any, as may be asserted by any
Governmental Body with respect to the transactions contemplated by this
Agreement under the HSR Act, the Sherman Act, as amended, the Clayton Act, as
amended, the Federal Trade Commission Act, as amended, and any other United
States federal or state or foreign statutes, rules, regulations, orders,
decrees, administrative or judicial doctrines or other laws that are designed to
monopolization or restraint of trade (collectively, the “Antitrust Laws”). In
connection therewith, if any Legal Proceeding is instituted (or threatened to be
instituted) challenging any transaction contemplated by this Agreement as in
violation of any Antitrust Law, Seller shall use commercially reasonable
efforts, and Purchaser shall cooperate with Seller and its Affiliates, to
contest and resist any such Legal Proceeding, and to have vacated, lifted,
reversed, or overturned any decree, judgment, injunction or other order whether
temporary, preliminary or permanent, that is in effect and that prohibits,
prevents, or restricts consummation of the transactions contemplated by this
Agreement, including by pursuing all available avenues of administrative and
judicial appeal and all available legislative action, unless, by mutual
agreement, Purchaser and Seller decide that litigation is not in their
respective best interests. Each of Purchaser and Seller shall use commercially
reasonable efforts to take such action as may be required to cause the
expiration of the notice periods under the HSR Act or other Antitrust Laws with
respect to such transactions as promptly as possible after the execution of this
Agreement. Notwithstanding anything to the contrary provided herein, neither
Purchaser nor any of its Affiliates shall be required (i) to hold
44
separate (including by trust or otherwise) or divest any of its businesses,
product lines or assets, or any of the Purchased Assets, (ii) to agree to any
limitation on the operation or conduct of NetBank Finance, or any of Purchaser’s
business or operations, or (iii) to waive any of the conditions to this
Agreement set forth in Section 9.1.
(c) Without limiting the foregoing, Seller and Purchaser shall
cooperate with the other and use their commercially reasonable efforts to
promptly: (i) file applications and notices, as applicable, with the OTS under
the Bank Merger Act, the Home Owners’ Loan Act, as amended, and the regulations
promulgated thereunder, and obtain approval of, or non-objection to, such
applications and notices, (ii) file any required applications or notices with
any foreign or state banking, insurance or other Regulatory Authorities and
obtaining approval of such applications and notices, (iii) make any notices to
or filings with the Small Business Administration, (iv) make any notices or
filings under the HSR Act, and (v) make any filings with and obtain any consents
and approvals in connection with compliance with the applicable provisions of
the rules and regulations of any applicable industry self-regulatory
organization, or that are required under consumer finance, mortgage banking and
other similar Laws (collectively, the “Regulatory Consents”).
7.5 Further Assurances.
(a) Subject to Section 7.4, each of Seller and Purchaser shall use
commercially reasonable efforts to (i) take all actions necessary or appropriate
to consummate the transactions contemplated by this Agreement and (ii) cause the
fulfillment at the earliest practicable date of all of the conditions to their
respective obligations to consummate the transactions contemplated by this
Agreement.
(b) Seller and the Subsidiaries shall execute such additional
documents and take such other actions as may be reasonably necessary or
desirable to secure, record or perfect the assignment of the Purchased
Intellectual Property and Purchased Technology to Purchaser and to allow
Purchaser to register, maintain, defend, enforce and otherwise obtain the full
benefits of the Purchased Intellectual Property and Purchase Technology.
(c) Seller shall cooperate with Purchaser’s efforts to cause each of
the individuals listed on Schedule 7.5(c) to the Disclosure Letter to enter into
mutually acceptable employment agreements prior to the Closing.
(d) Seller agrees to forward promptly to the Purchaser: (i) any
payments (properly endorsed without recourse as necessary) which are received by
Seller on or after the Closing Date that relate to the Mortgage Loans, Beacon
Loans and Leases and to provide sufficient information so that any such payments
may be properly applied to the extent such information is available to Seller;
and (ii) any notices or other correspondence received on or after the Closing
Date that relate to the Mortgage Loans, Beacon Loans, Leases or other Purchased
Assets.
(e) (i) For all Mortgage Loans that are not MERS Loans and except to
the extent otherwise directed by Purchaser, prior to the Closing Date, Seller
shall prepare and, on the Closing Date, Seller shall cause an Assignment of
Mortgage to be properly recorded in each public recording office where mortgage
loans are recorded. An “Assignment of Mortgage” means an assignment, notice of
transfer or equivalent instrument in recordable form, of the Mortgage, securing
a Mortgage Loan which creates a lien on an estate in fee simple in real
property, that is sufficient under the laws of the jurisdiction wherein the
applicable real property is located to reflect the transfer of such Mortgage to
Purchaser, which assignment, notice of transfer or equivalent instrument may be
in the form of one or more blanket assignments covering the Mortgage Loans
secured by real property located in the same jurisdiction, if
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permitted by law. Additionally, Seller shall prior to the Closing prepare and
execute any note endorsements relating to any of the Mortgage Loans.
(ii) For all Mortgage Loans that are MERS Loans, Seller shall take, at Seller’s
cost and expense, such steps as are necessary to reflect Purchaser as owner of
the underlying Mortgage.
(f) Seller shall (i) prior to the Closing Date (to be effective as of
the Closing Date), endorse the promissory notes, notes, instruments or other
evidence of indebtedness with respect to the Beacon Loans and Leases in favor of
Purchaser, (ii) prepare, prior to the Closing Date and in such manner as is
necessary to perfect the sale of the Beacon Loans and Leases to the Purchaser
and the proceeds thereof, and on the Closing Date file all UCC-3 forms or other
similar forms or notices that evidence that all UCC-1 financing statements, that
evidence Beacon Loans and Leases in favor of the Bank or its Subsidiaries have
been assigned to Purchaser, (iii) deliver a file-stamped copy to the Purchaser
of each such financing statement (or continuation statement) or other evidence
of such filings (which may, for purposes of this Section, consist of telephone
confirmation of such filings with the file stamped copy of each such filings to
be provided to the Purchaser in due course), as soon as is practicable after
receipt by the Seller thereof, and (iv) prepare and execute all assignments
relating to the Loan Agreements, Lease Agreements and related Ancillary
Documents necessary to assign the Loan Agreements, Lease Agreements and related
Ancillary Documents to Purchaser as of the Closing Date.
(g) Seller shall deliver to Purchaser audited financial statements for
the year ending December 31, 2006 as soon as practicable.
7.6 No Shop.
(a) Neither Seller nor any of Seller’s Affiliates will, and will not
permit any of their respective directors, officers, employees, representatives
or agents (collectively, the “Representatives”) to, directly or indirectly,
(i) discuss, negotiate, undertake, authorize, recommend, propose or enter into,
either as the proposed surviving, merged, acquiring or acquired corporation, any
transaction involving a merger, consolidation, business combination (excluding a
merger or business combination with Parent or a wholly owned direct or indirect
subsidiary of Parent that is conditioned on the Closing under this Agreement),
purchase, assumption or disposition of any amount of the Purchased Assets,
NetBank Finance, the Deposit Liabilities or the capital stock of Seller
(excluding a merger or business combination with Parent or a wholly owned direct
or indirect subsidiary of Parent that is conditioned on the Closing under this
Agreement) other than the transactions contemplated by this Agreement (an
“Acquisition Transaction”), (ii) facilitate, encourage, solicit or initiate
discussions, negotiations or submissions of proposals or offers in respect of an
Acquisition Transaction, (iii) furnish or cause to be furnished, to any Person,
any information concerning operations, properties, assets or liabilities of
Seller in connection with an Acquisition Transaction, or (iv) otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other Person to do or seek any of the foregoing.
(b) Seller shall notify Purchaser orally and in writing promptly (but
in no event later than 24 hours) after receipt of any proposal or offer from any
Person other than Purchaser to effect an Acquisition Transaction or any request
for non-public information relating to Seller or any of the Subsidiaries or for
access to the properties, books or records of Seller or any Subsidiary by any
Person other than Purchaser. Such notice shall indicate the identity of the
Person making the proposal or offer, or intending to make a proposal or offer or
requesting non-public information or access to the books and records of Seller,
the material terms of any such proposal or offer, or modification or amendment
to such proposal or offer and copies of any written proposals or offers or
amendments or supplements thereto. Seller shall keep Purchaser informed, on a
current basis, of any material changes in the status and any material changes or
modifications in the material terms of any such proposal, offer, indication or
request.
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(c) Seller shall (and shall cause its Representatives to) immediately
cease and cause to be terminated any existing discussions or negotiations with
any Persons (other than Purchaser) conducted heretofore with respect to any of
the foregoing; provided that Seller may continue discussions that relate to a
Seller agrees not to release any third party from the confidentiality and
standstill provisions of any agreement to which Seller or any of the
Subsidiaries is a party.
7.7 Non-Competition; Non-Solicitation; Confidentiality.
(a) For a period from the date hereof until the third anniversary of
the Closing Date, Seller shall not and shall cause Parent and its Subsidiaries
not to (other than Market Street, the Market Street Joint Ventures, River City
Mortgage Services, LLC and any other joint venture in which Market Street has an
ownership interest or for which Market Street provides origination, marketing,
warehouse or administrative services in the Ordinary Course of Business) not to,
directly or indirectly, own, manage, operate, control or participate in the
ownership, management, operation or control of any business, whether in
corporate, proprietorship or partnership form or otherwise, engaged in the
business conducted or engaged in by NetBank Finance, accepting any deposits,
originating, purchasing, selling, retaining or servicing any loans or leases
which are of a type originated, purchased, sold, retained or serviced by
Purchaser or Seller, providing any banking or related services or otherwise
competing with Purchaser other than any business or operations relating to the
Excluded Assets (a “Restricted Business”) in North America; provided, however,
that the restrictions contained in this Section 7.7(a) shall not restrict Seller
from acquiring, directly or indirectly, less than 2% of the outstanding capital
stock of any publicly traded company engaged in a Restricted Business.
(b) For a period from the date hereof to the third anniversary of the
Closing Date, Seller shall not and each shall cause each Parent and its
Subsidiaries not to, cause, solicit, induce or encourage any Employees who are
or become employees of Purchaser or its Affiliates to leave such employment or
hire, employ or otherwise engage any such individual.
(c) For a period from the date hereof to the third anniversary of the
Closing Date, Seller shall not, and each shall cause Parent and its Subsidiaries
not to, directly or indirectly, cause, induce or encourage any Person who is an
actual or prospective client, customer, broker, correspondent, supplier, or
licensor of Seller or the Subsidiaries as of the date hereof or of the Closing
Date to terminate or modify any such actual or prospective relationship.
Further, for a period of three years after the Closing Date, Seller shall not
(i) maintain any list of the Seller’s Former Depositors for the purpose of
marketing loans or attracting deposits, (ii) specifically target and solicit
customers of Seller or Purchaser using any customer or mailing list which
consists primarily of customers of Seller; provided, however, that these
restrictions shall not restrict general mass mailings, telemarketing calls,
statement stuffers and other similar communications directed to all customers of
Seller or Seller’s Affiliates, or to the public or newspaper, radio, television
or Internet advertisements of a general nature or otherwise prevent Seller from
taking such actions as may be required to comply with any applicable Law.
(d) Confidentiality For a period from the date hereof to the third
anniversary of the Closing Date, Seller shall not and shall cause Parent and its
Subsidiaries and Parent and its and such Subsidiaries’ respective officers, and
directors not to, directly or indirectly, disclose, reveal, divulge or
communicate to any Person other than authorized officers, directors and
employees of Purchaser or use or otherwise exploit for its own benefit or for
the benefit of anyone other than the Purchaser, any Confidential Information (as
defined below). Neither Seller nor its respective officers, directors and
Parent or its Subsidiaries shall have any obligation to keep confidential any
Confidential Information if and to the extent disclosure thereof is specifically
required by Law; provided, that in the event disclosure
47
is required by applicable Law, Seller shall, to the extent reasonably possible,
provide Purchaser with prompt notice of such requirement prior to making any
disclosure so that Purchaser may seek an appropriate protective order. For
purposes of this Section 7.7(d), “Confidential Information” shall mean any
confidential information with respect to the Purchased Assets, Assumed
Liabilities and NetBank Finance including, methods of operation, customers,
customer lists, broker and correspondent lists, products, prices, fees, costs,
Technology, inventions, know-how, Software, marketing methods, plans, personnel,
suppliers, competitors, markets or other specialized information or proprietary
matters. “Confidential Information” does not include, and there shall be no
obligation hereunder with respect to, information that (i) is generally
available to the public on the date of this Agreement or (ii) becomes generally
available to the public other than as a result of a disclosure not otherwise
permissible hereunder.
From and after the date hereof, Seller shall not, and each shall cause its
Subsidiaries and its and such Subsidiaries’ respective officers, and directors
not to, directly or indirectly, disclose, reveal, divulge or communicate to any
Person other than authorized officers, directors and employees of Purchaser or
use or otherwise exploit for its own benefit or for the benefit of anyone other
than the Purchaser, any Trade Secrets (as defined below).
(e) The covenants and undertakings contained in this Section 7.7
relate to matters which are of a special, unique and extraordinary character and
a violation of any of the terms of this Section 7.7 will cause irreparable
injury to the parties, the amount of which will be impossible to estimate or
determine and which cannot be adequately compensated. Therefore, Purchaser will
be entitled to an injunction, restraining order or other equitable relief from
any court of competent jurisdiction in the event of any breach of this Section
7.7. The rights and remedies provided by this Section 7.7 are cumulative and in
addition to any other rights and remedies which Purchaser may have hereunder or
at law or in equity. In the event that Purchaser were to seek damages for any
breach of this Section 7.7, the portion of the Purchase Price which is allocated
by the parties to the foregoing covenants shall not be considered a measure of
or limit on such damages.
(f) The parties agree that the covenants contained in this Section
7.7 are reasonable and valid in time and scope and in all other respects. The
covenants set forth herein shall be considered and construed as separate and
independent covenants. Should any part or provision of any covenant be held
invalid, void or unenforceable in any court of competent jurisdiction, such
invalidity, voidness or unenforceability shall not render invalid, void or
unenforceable any other part or provision of this Agreement. The parties hereto
further agree that, if any court of competent jurisdiction determines that a
specified time period, a specified geographical area, a specified business
limitation or any other relevant feature of this Section 7.7 is unreasonable,
arbitrary or against public policy, then a lesser time period, geographical
area, business limitation or other relevant feature which is determined to be
reasonable, not arbitrary and not against public policy may be enforced against
the applicable party.
7.8 Preservation of Records. Subject to this Section 7.8, Seller and
Purchaser each agrees that it shall preserve and keep the records held by it or
its Affiliates relating to the Purchased Assets and Assumed Liabilities for a
period of seven years from the Closing Date and shall make such records and
personnel available to the other as may be reasonably required by such party in
connection with, among other things, any insurance claims by, legal proceedings
against or governmental investigations of Seller or any of their Affiliates or
Purchaser or any of its Affiliates or in order to enable Seller or Purchaser to
comply with its obligations under this Agreement and each other agreement,
document or instrument contemplated hereby or thereby. Notwithstanding the
foregoing, in the event Seller or Purchaser wish to destroy (or permit to be
destroyed) such records after three years and before seven years, such party may
destroy (or permit to be destroyed) such records without liability or obligation
to the other party provided that such party wishing to destroy the records shall
first give 90 days prior written notice to the other, receipt of which notice
must be acknowledged, and such other party shall have the right at its option
and
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expense, upon prior written notice given to such party within that 90 day
period, to take possession of the records within 180 days after the date of such
notice.
7.9 Publicity.
(a) Except for the issuance of a press release upon the signing of
this Agreement, none of Parent, Seller, their Affiliates nor Purchaser shall
issue any press release or public announcement concerning the terms of this
Agreement or the transactions contemplated hereby without obtaining the prior
written approval of the other party hereto, which approval will not be
unreasonably withheld or delayed, unless, in the reasonable judgment of the
respective counsel of such party, disclosure is otherwise required by applicable
Law or by the applicable rules of any stock exchange on which such party’s
securities are traded; provided, that, to the extent required by applicable Law,
such party shall use its reasonable best efforts consistent with such applicable
Law to consult with the other party with respect to the timing and content
thereof.
(b) Each of Purchaser, Parent and Seller agrees that the terms of this
Agreement shall not be disclosed or otherwise made available to the public and
that copies of this Agreement shall not be publicly filed or otherwise made
available to the public, except where such disclosure, availability or filing is
required by applicable Law and only to the extent required by such Law. In the
event that such disclosure, availability or filing is required by applicable
Law, each of Purchaser and Seller (as applicable) agrees to use its reasonable
best efforts to obtain “confidential treatment” of this Agreement with the U.S.
Securities and Exchange Commission (or the equivalent treatment by any other
Governmental Body) and to redact such terms of this Agreement the other party
shall request.
7.10 Notice to Borrowers and Lessees. Purchaser and Seller shall notify
each Mortgagor under the Mortgage Loans of the sale of the Mortgage Loans and
each borrower and guarantor under the Beacon Loans and Leases in accordance with
applicable Laws. As promptly as reasonably practicable after the Closing Date
or at such other times as may be required by applicable Law, Purchaser and
Seller shall jointly notify the appropriate casualty and title insurance
companies and agents, escrow companies, credit reporting agencies, appraisers
and other service providers that the Mortgage Loans, Beacon Loans and Leases
have been transferred, and instruct such entities to deliver all payments,
notices, insurance statements and reports to Purchaser after the Closing Date.
7.11 Use of Name. Except as set forth on Schedule 7.11 to the
Disclosure Letter, Seller hereby agrees that upon the consummation of the
transactions contemplated hereby, Purchaser will have the sole right to the use
of the trade name “NetBank” and any other trade names used by Seller and the
Subsidiaries and all similar names or any service marks, trademarks, trade
names, identifying symbols, logos, emblems or signs containing or comprising the
phrase “NetBank,” including any name or mark confusingly similar thereto
(collectively, the “Business Marks”) and Seller shall not, and shall not permit
any Affiliate to, use such name or any variation or simulation thereof;
provided, that Seller may continue to use the name “NetBank” until the first
anniversary of the Closing Date pursuant to the terms of the Licensing Agreement
attached hereto as Exhibit E and the Seller and the Subsidiaries may continue to
use the trade names, trademarks, service marks and logos set forth on Schedule
7.11 to the Disclosure Letter. In furtherance thereof, as promptly as
practicable but in no event later than one hundred eighty (180) days following
the Closing Date, Seller and the Subsidiaries shall remove, strike over or
otherwise obliterate all Business Marks from all materials owned by Parent and
Seller and used or displayed publicly including, without limitation, any sales
and marketing materials, displays, signs, promotional materials and other
materials.
7.12 Net Worth. For a period of three years after the Closing Date,
Seller shall maintain a Net Worth equal to at least the Minimum Net Worth and
shall maintain liquidity in an amount that is
49
reasonably sufficient to enable Seller to satisfy its indemnification
obligations under Article X of this Agreement. During such three year period,
Seller shall not make any distributions to its shareholder or transfer any of
its assets if such actions would cause Seller’s net worth to fall below the
Minimum Net Worth or would cause Seller’s liquidity to fall below an amount that
is reasonably sufficient to enable Seller to satisfy its indemnification
obligations under Article X of this Agreement. For purposes of this Agreement,
(i) “Minimum Net Worth” means an amount equal to $7,000,000 less the amount of
any indemnification payments actually paid to the Purchaser under Article X of
this Agreement and (ii) “Net Worth” means the difference between the book value
of Seller’s assets and Seller’s liabilities, in each case determined in
accordance with GAAP as of the applicable date for which such determination is
to be made.
ARTICLE VIII
EMPLOYEES AND EMPLOYEE BENEFITS
8.1 Employment.
(a) Transferred Employees. At least 15 Business Days prior to
Closing, Purchaser shall deliver Schedule 8.1(a) to the Disclosure Letter to
Seller identifying those Employees that will be offered employment with
Purchaser following the Closing. At least five days prior to the Closing,
Purchaser shall deliver, in writing, an offer of employment (on an “at will”
basis) to each of those Employees identified by Purchaser on Schedule 8.1(a) to
the Disclosure Letter to commence such employment immediately upon the Closing
Date, which shall include the following: (i) substantially all of the employees
of NetBank Finance, (ii) certain employees of Seller’s corporate support,
banking and servicing divisions such as finance, accounting and marketing), and
(iii) certain other employees of Seller. Such individuals who accept such offer
by the Closing Date are hereinafter referred to as the “Transferred Employees.”
Subject to applicable Laws, on and after the Closing Date, Purchaser shall have
the right to dismiss any or all Transferred Employees at any time, with or
without cause, and to change the terms and conditions of their employment
(including compensation and employee benefits provided to them).
(b) Excluded Employees. Any Employee who is not offered employment by
Purchaser prior to Closing or who does not accept an offer of employment by
Purchaser and commence work with Purchaser immediately after the Closing, in
each case pursuant to Section 8.1(a), is hereinafter referred to as an “Excluded
Employee.”
(c) Purchaser shall provide compensation and employee benefits
(including, without limitation, salary or wages (as appropriate), bonus, health,
life and disability insurance, but specifically excluding stock options,
restricted stock or other plans involving the potential issuance of securities
or equity rights) to Transferred Employees that are no less favorable in the
aggregate to such Transferred Employees and any dependents and beneficiaries of
such Transferred Employees, as appropriate, than those provided to a similarly
situated employee of Purchaser or its Affiliates who is not a Transferred
Employee taking into account the employee’s performance and geographic location;
provided, that if Purchaser terminates any Transferred Employee’s employment
without cause within six (6) months after hiring the individual, the employee
shall be entitled to any severance payment that such individual would have
received had he or she been terminated by the Seller as a result of the
Closing. Except as specifically set forth in the immediately preceding sentence
with respect to compensation and benefits for Transferred Employees, nothing in
this Agreement shall be construed as restricting Purchaser, Seller or any
Affiliate of the Purchaser, in the exercise of its independent business
judgment, in modifying any of the terms and conditions of the employment of any
employee following the Closing or terminating the employment of any employee,
including any Transferred Employee, following the Closing.
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(d) With respect to the benefit plans of Purchaser in which any
Transferred Employee participates after the Closing (each, a “Purchaser Benefit
Plan”), Purchaser shall cause each such Purchaser Benefit Plan to recognize the
service of each such Transferred Employee prior to the Closing with Seller and
its Affiliates as employment with Purchaser and its Affiliates for purposes of
eligibility and benefit entitlement, but not for purposes of benefit accrual,
under each such Purchaser Benefit Plan. With respect to medical, dental and
other health and welfare Purchaser Benefit Plans covering Transferred Employees
as required herein, Purchaser shall waive any waiting periods or limitations or
exclusions relating to pre-existing conditions to the extent that such periods,
limitations or exclusions were not applicable to or had been satisfied by such
Transferred Employees immediately prior to the Closing Date under applicable
Employee Benefit Plans of Seller or their Affiliate.
(e) Purchaser shall not be responsible (and Seller shall be
responsible) for any health and accident claims and expenses with respect to
services provided to the Transferred Employees prior to the Closing. Seller
shall not be responsible (and Purchaser shall be responsible) for any health and
accident claims and expenses with respect to services provided to Transferred
Employees from and after the Closing Date. Purchaser agrees to provide
continuation coverage required by COBRA to all Transferred Employees and their
covered beneficiaries who become entitled to COBRA coverage in connection with a
“qualifying event” (as such term is defined in ERISA) that occurs after the
Closing Date. Seller shall provide continuation coverage required by COBRA to
all Transferred Employees and their covered beneficiaries who became entitled to
COBRA coverage in connection with a “qualifying event” that occurred on or
(f) Nothing in this Article VIII shall require Purchaser or Seller to
provide or continue any specific plans, programs, policies or arrangements.
Furthermore, Purchaser shall not assume any Employee Benefit Plan which is
maintained, contributed to or required to be contributed to by Seller, and
Seller shall retain all Liabilities and obligations for all benefits incurred,
accrued, or legally committed to, if any, under such Employee Benefit Plans
including, without limitation, responsibility for all welfare plan claims
incurred by Employees and all long or short-term disability claims arising from
disabilities. For this purpose, a claim is incurred when the medical or other
service giving rise to the claim is performed, except that in the case of death,
a claim is incurred upon death. Seller shall retain all Liabilities and
obligations to provide post-retirement health and life insurance benefits to
former and current Employees (and their covered spouses and dependents) incurred
under the terms of the Employee Benefit Plans which are maintained, contributed
to or required to be contributed to Seller. Any obligation to provide employee
benefits to Excluded Employees shall remain the obligation of the Seller.
(g) The Transferred Employees will be eligible within a period that is
consistent with other employees participating in the Purchaser 401(k) Plan after
the Closing Date to participate in a plan established, maintained or adopted by
Purchaser which is described in Section 401(k) of the Code (individually a
“Purchaser 401(k) Plan”). To the extent permitted under Section 401(k) of the
Code and the regulations promulgated thereunder, the Purchaser 401(k) Plan will
provide that the Transferred Employees will have the right to make direct
rollovers from Seller’s 401(k) plans to the applicable plan of their vested
accounts in the Purchasers’ 401(k) Plan to the extent those rollovers constitute
“eligible rollover distributions” within the meaning of Section 402(c)(4) of the
Code. Such rollover distributions received by the Purchaser 401(k) Plan shall
not include any participant loans. None of the assets involved in such rollover
shall include shares of Parent stock. The Transferred Employees will receive
credit under the Purchaser 401(k) Plan for all service with Seller or the
Subsidiaries for purposes of satisfying any service requirement to participate
in the applicable plan and any service requirement to earn a vested benefit
under the applicable plan; however, such service shall not be credited for any
other purpose under the Purchaser 401(k) Plan.
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(h) Seller shall remain liable and pay, perform and discharge any and
all employment, compensation and employee benefit liabilities, responsibilities
and obligations of Seller and its Affiliates including, without limitation, any
and all claims of employment discrimination under any local, state, or federal
law or ordinance, including, without limitation, Title VII of the Civil Rights
Act of 1964, as amended; the Civil Rights Act of 1991; the Americans with
Disabilities Act of 1990; the Age Discrimination in Employment Act of 1967, as
amended by the Older Workers Benefit Protection Act of 1990; and Section 510 of
ERISA, which Liabilities, responsibilities and obligations are incurred as the
result of incidents occurring prior to the Closing, regardless of whether claims
are made or reported prior to the Closing. In the event that Purchaser or its
Affiliate or any benefit plan maintained by Purchaser or any of its Affiliates
directly or indirectly incurs any costs, liabilities, obligations or legal
expenses related to any such incidents occurring prior to the Closing, Seller
shall reimburse and indemnify Purchaser and its Affiliates for any and all such
costs, liabilities, obligations and expenses immediately upon the demand of
Purchaser.
(i) Notwithstanding anything in this Agreement to the contrary, the
terms of this Agreement shall not amend or have the effect of amending the terms
of any Employee Benefit Plan or Purchaser Benefit Plan.
8.2 Standard Procedure. Pursuant to the “Standard Procedure” provided
in Section 4 of Revenue Procedure 96-60, 1996-2 C.B. 399, as amended and
expanded by Rev. Proc. 2004-53, IRS 2004-34 (August 18, 2004), (i) Purchaser and
Seller shall report on a predecessor/successor basis as set forth therein,
(ii) Seller will not be relieved from filing a Form W-2 with respect to any
Transferred Employees, and (iii) Purchaser will undertake to file (or cause to
be filed) a Form W-2 for each such Transferred Employee only with respect to the
portion of the year during which such Employees are employed by the Purchaser
that includes the Closing Date, excluding the portion of such year that such
Employee was employed by Seller or the Subsidiaries.
8.3 Terminated Employees. At the Closing, Seller shall deliver to
Purchaser a true and complete list of all Employees who suffered an “employment
loss” as defined in WARN within 90 days prior to the Closing Date.
ARTICLE IX
CONDITIONS TO CLOSING
9.1 Conditions Precedent to Obligations of Purchaser. The obligation
of Purchaser to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, on or prior to the Closing Date, of each of the
following conditions (any or all of which may be waived by Purchaser in whole or
in part to the extent permitted by applicable Law):
(a) the representations and warranties of Seller set forth in this
Agreement qualified as to materiality shall be true and correct, and those not
so qualified shall be true and correct in all material respects, as of the date
of this Agreement and as of the Closing as though made at and as of the Closing,
except to the extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties qualified as to
materiality shall be true and correct, and those not so qualified shall be true
and correct in all material respects, on and as of such earlier date);
(b) Seller, and Parent in the case of Section 7.6 only, shall have
performed and complied in all material respects with all obligations and
agreements required in this Agreement to be performed or complied with by it
prior to the Closing Date;
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(c) there shall not have been or occurred any event, change,
occurrence or circumstance that has had or has a reasonable likelihood of having
a Material Adverse Effect since the Balance Sheet Date;
(d) Purchaser shall have received a certificate or certificates signed
by the chief executive officer and chief financial officer of Seller each in
form and substance reasonably satisfactory to Purchaser, dated the Closing Date,
to the effect that each of the conditions specified above in Sections 9.1(a)-(c)
have been satisfied in all respects;
(e) no Legal Proceedings shall have been instituted or threatened or
claim or demand made against Seller or Purchaser seeking to restrain or prohibit
or to obtain substantial damages with respect to the consummation of the
transactions contemplated hereby, and there shall not be in effect any Order by
a Governmental Body of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated hereby
or imposing a Burdensome Condition;
(f) (i) the waiting periods under the HSR Act, as applicable, and the
Bank Merger Act shall have expired or early termination shall have been granted
and Seller shall have obtained any other Regulatory Consent, Order or
authorization of, or non-objection to, or registration, declaration or filing
with, any Governmental Body including the OTS and FDIC, required to be obtained
or made in connection with the execution and delivery of this Agreement or the
performance and consummation of the transactions contemplated hereby and such
Regulatory Consents, Orders, authorizations, non-objections, registrations,
declarations and filings shall be in full force and effect and shall not contain
any conditions or restrictions that may be reasonably expected to materially
impair the ability of Purchaser to consummate the transactions contemplated
hereby or operate NetBank Finance or any business operated by Purchaser or its
Affiliates following the Closing in substantially the same manner it has been
operated prior to the date of this Agreement or to otherwise enjoy the benefits
of the Purchased Assets following the Closing (each a “Burdensome Condition”)
and (ii) Seller shall have obtained all consents, non-objections, waivers and
approvals under all Antitrust Laws and those consents, waivers and approvals
referred to in Section 5.3(b) in a form and substance satisfactory to Purchaser;
(g) Seller shall have provided Purchaser with affidavits of
non-foreign status of Seller and the Subsidiaries that complies with Section
1445 of the Code (a “FIRPTA Affidavit”);
(h) Seller shall have delivered, or caused to be delivered, to
Purchaser a duly executed bill of sale in the form of Exhibit C;
(i) Seller shall have delivered, or caused to be delivered, to
Purchaser a duly executed assignment and assumption agreement in the form of
Exhibit D and duly executed assignments of the registrations and applications
included in the Purchased Intellectual Property, in a form reasonably acceptable
to Purchaser and suitable for recording in the U.S. Patent and Trademark Office,
U.S. Copyright Office or equivalent foreign agency, as applicable, and general
assignments of all other Purchased Intellectual Property;
(j) Seller shall have delivered, or caused to be delivered, to
Purchaser a duly executed Transition Services Agreement;
(k) Seller shall have delivered, or caused to be delivered, to
Purchaser original execution copies of all documents evidencing and/or securing
the Mortgage Loans, and all Leases and Beacon Loans, Contracts relating to
Mortgage Loans (excluding Investor Contracts and any other contracts relating to
Excluded Assets), Loan Agreements, Lease Agreements and Ancillary Documents,
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along with the credit and transaction files (including all information stored on
discs, tapes, or other media) relating to such Mortgage Loans, Leases or Beacon
Loans;
(l) Seller shall have delivered, or caused to be delivered, to
Purchaser original execution copies of all other documents, instruments and
affidavits needed to transfer the Purchased Assets and the Assumed Liabilities;
(m) Seller shall have delivered, or caused to be delivered, to
Purchaser evidence of the release or assignment to Purchaser of the UCC-1
financing statement(s) filed by Seller or its Affiliates;
(n) Seller shall have delivered, or caused to be delivered, to
Purchaser evidence that (i) Mortgage Loans, Mortgage Notes, Loan Agreements,
Lease Agreements and Ancillary Documents to be assigned and delivered to
Purchaser at the Closing have been so assigned and delivered, (ii) all UCC-1
financing statements in favor of Seller or the Subsidiaries relating to any
Purchased Assets have been assigned to Purchaser, (iii) except as otherwise
directed by Purchaser in writing, all Assignments of Mortgages have been
executed and properly filed and recorded in the applicable public recording
offices, and (iv) all lockbox agreements and blocked account agreements have
been assigned to Purchaser;
(o) Seller shall have delivered, or caused to be delivered, to
Purchaser a duly executed Holdback Agreement;
(p) Each of the individuals listed on Schedule 7.5(c) to the
Disclosure Letter shall have entered into an employment agreement acceptable to
Purchaser and such agreement shall be in full force and effect;
(q) Seller shall have delivered, or caused to be delivered, to
Purchaser (i) certified copies of the resolutions of the Board of Directors of
the Bank and Parent, in each case authorizing and approving this Agreement and
the consummation of the transactions contemplated hereby; (ii) a copy of the
certificate of incorporation or any other similar organizational or governing
document of Seller certified as of a recent date by the Secretary of State of
the jurisdiction of incorporation or organization of each such Person; (iii) a
copy of the bylaws, partnership or limited liability company agreement, or any
other similar organizational or governing document of Seller and the
Subsidiaries certified by the Secretary of Seller; and (iv) certificates of good
standing for Seller and the Subsidiaries from the Secretary of State of the
state of their respective incorporation or organization, in each case dated not
more than ten days prior to the Closing Date;
(r) Seller shall have delivered, or caused to be delivered, to
Purchaser such other documents as Purchaser may reasonably request;
(s) Seller or any of the Subsidiaries (i) have not entered into a
Contract relating to, or consummated, an Acquisition Transaction and (ii)
complied in all material respects with their covenants, obligations, agreements
and undertakings set forth in Section 7.6;
(t) Seller shall have delivered, or caused to be delivered, to
Purchaser evidence of the wire transfer referred to in Section 3.3, if
applicable; and
(u) Seller shall have caused the Purchased Intellectual Property set
forth on Schedule 1.1(d) and the Purchased Technology set forth on Schedule
1.1(e) to be assigned to Purchaser.
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9.2 Conditions Precedent to Obligations of Seller. The obligations of
Seller to consummate the transactions contemplated by this Agreement are subject
to the fulfillment, prior to or on the Closing Date, of each of the following
conditions (any or all of which may be waived by Seller in whole or in part to
the extent permitted by applicable Law):
(a) the representations and warranties of Purchaser set forth in this
materially shall be true and correct, and those not so qualified shall be true
(b) Purchaser shall have performed and complied in all respects with
all obligations and agreements required by this Agreement to be performed or
complied with by Purchaser on or prior to the Closing Date;
(c) there shall not be in effect any Order by a Governmental Body of
competent jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby;
(d) the waiting periods under the HSR Act and the Bank Merger Act
shall have expired or early termination shall have been granted and Purchaser
shall have obtained any other consent, approval, order or authorization of,
non-objection to, or registration, declaration or filing with, any Governmental
Body, including the OTS and FDIC, required to be obtained or made in connection
with the execution and delivery of this Agreement or the performance of the
transactions contemplated herein;
(e) Purchaser shall have delivered, or caused to be delivered, to
Seller evidence of the wire transfer referred to in Section 3.3, if applicable;
and
(f) Purchaser shall have delivered, or caused to be delivered, to
Seller a duly executed assignment and assumption agreement in the form attached
hereto as Exhibit E.
ARTICLE X
INDEMNIFICATION
10.1 Survival of Representations and Warranties. The representations
and warranties of the parties contained in Articles V and VI of this Agreement
or in any Seller Document or Purchaser Document shall survive the Closing
through and including the third anniversary of the Closing Date; provided, that
the representations and warranties (a) of Seller set forth in Sections 5.1
(organization), 5.2 (authorization), 5.6 (title), and 5.23 (financial advisors)
shall survive the Closing indefinitely, (b) of Seller set forth in Sections 5.8
(taxes), 5.13 (employee benefits), and 5.17 (environmental matters) shall
survive the Closing until sixty (60) days following the expiration of the
applicable statute of limitations with respect to the particular matter that is
the subject matter thereof and (c) of Purchaser set forth in Sections 6.1
(organization), 6.2 (authorization) and 6.5 (financial advisors) shall survive
the Closing indefinitely (in each case, the “Survival Period”); provided,
further that any obligation to indemnify and hold harmless shall not terminate
with respect to any Losses as to which the Person to be indemnified shall have
given notice (stating in reasonable detail the basis of the claim for
indemnification) to the indemnifying party in accordance with Section 10.3(a)
before the termination of the applicable Survival Period. Unless a specified
period is set forth in this Agreement (in which event such specified period will
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control), the covenants and other agreements in this Agreement will survive the
Closing and remain in effect indefinitely.
10.2 Indemnification.
(a) Subject to Sections 10.1, Section 10.4 and Section 10.5, Seller
and Parent hereby agree, jointly and severally, to indemnify and hold Purchaser
and its directors, officers, employees, Affiliates, stockholders, agents,
attorneys, representatives, successors and assigns (collectively, the “Purchaser
Indemnified Parties”) harmless from and against:
(i) any and all losses, Taxes, Liabilities, claims, demands,
judgments, obligations, damages, costs and expenses (including costs of
investigation and defense and reasonable attorneys’ and other professionals’
fees) or diminution in value whether or not involving a third party claim
(individually, a “Loss” and, collectively, “Losses”) directly related to the
failure of Seller’s representations and warranties set forth in Section 5.20, or
otherwise based upon, attributable to or resulting from the failure of any of
the other representations or warranties of Seller set forth in this Agreement or
in any Seller Document, to be true and correct in all respects at the date
hereof and at the Closing Date (without giving effect to any materiality,
Material Adverse Effect or Knowledge qualifier contained therein) or in any
document purporting to assign, convey or transfer Purchased Assets or Assumed
Liabilities in connection with the transactions contemplated hereby (each a
“Transfer Document” and collectively the “Transfer Documents”);
(ii) any and all Losses based upon, attributable to or resulting from
the breach of any covenant or other agreement on the part of Seller under this
Agreement or any Seller Document;
(iii) any and all Losses attributable to any Transferred Employee
resulting from or based upon (A) any employment-related liability (statutory or
otherwise) with respect to employment or termination of employment on or prior
to the Closing Date, (B) except as set forth in the Transition Services
Agreement, any liability relating to, arising under or in connection with any
Employee Benefit Plan, including any liability under COBRA, whether arising
prior to, on or after the Closing Date and (C) any liability under WARN;
(iv) any and all Losses arising out of, based upon or relating to any
Excluded Asset, Excluded Liability or Excluded Employee;
(v) any Losses caused by or arising out of the absence of or any
defect or deficiency in the contents of filings or recordings in any public
office of financing statements, continuations statements or mortgages or other
documents or instruments or notices necessary under the provisions of the
Uniform Commercial Code, any real property law or any comparable statute in all
places where required on, before or after the Closing, to perfect, preserve and
protect the interests in all Mortgage Loans, Beacon Loans and Leases transferred
to Purchaser pursuant to this Agreement; and
(vi) Any Losses caused by or arising out of the obligations of Seller
under Article XI.
(b) Subject to Sections 10.1 and 10.4, Purchaser hereby agrees to
indemnify and hold Seller and its Affiliates, stockholders, agents, attorneys,
representatives, successors and permitted assigns (collectively, the “Seller
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(i) any and all Losses based upon, attributable to or resulting from
the failure of any of the representations or warranties of Purchaser set forth
in this Agreement or any Purchaser Document, to be true and correct at the date
Material Adverse Effect or Knowledge qualifier contained therein);
the breach of any covenant or other agreement on the part of Purchaser under
this Agreement or any Purchaser Document; and
(iii) any and all Losses arising out of, based upon or relating to any
Assumed Liability.
(c) The right to indemnification or any other remedy based on
representations, warranties, covenants and agreements in this Agreement shall
not be affected by any investigation conducted with respect to, or any knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant or agreement. The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or agreements, will not affect the right to
indemnification or any other remedy based on such representations, warranties,
covenants and agreements.
(d) From and after the Closing, indemnification pursuant to this
Article X shall be the exclusive remedy of the parties hereto for any Losses
arising out of or relating to this Agreement, except in the case of fraud, bad
faith, willful misconduct or willful breach of this Agreement.
(e) The amount of any Losses for which indemnification is provided
under this Article 10 shall be net of any insurance proceeds (net of applicable
policy deductibles and associated premium increases) that are actually received
as an offset against such Losses.
(f) No Person shall be entitled to collect punitive damages, special
damages or consequential damages by operation of this Article X or any other
provision of this Agreement, except insofar as such punitive, special or
consequential damages are owed to a third party and otherwise constitute Losses
hereunder
10.3 Indemnification Procedures.
(a) A claim for indemnification for any matter not involving a third
party claim may be asserted by notice to the party from whom indemnification is
sought.
(b) In the event that any Legal Proceedings shall be instituted or
that any claim or demand shall be asserted by any third party in respect of
which payment may be sought under Section 10.2 hereof (regardless of the
limitations set forth in Section 10.4) (“Indemnification Claim”), the
indemnified party shall reasonably and promptly cause written notice of the
assertion of any Indemnification Claim of which it has knowledge which is
covered by this indemnity to be forwarded to the indemnifying party. The
indemnifying party shall have the right, at its sole expense, to be represented
by counsel of its choice, which must be reasonably satisfactory to the
indemnified party, and to defend against, negotiate, settle or otherwise deal
with any Indemnification Claim which relates to any Losses indemnified against
hereunder; provided, that the indemnifying party shall have acknowledged in
writing to the indemnified party its unqualified obligation to indemnify the
indemnified party as provided
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hereunder. If the indemnifying party elects to defend against, negotiate,
settle or otherwise deal with any Indemnification Claim which relates to any
Losses indemnified against hereunder, it shall within five days (or sooner, if
the nature of the Indemnification Claim so requires) notify the indemnified
party of its intent to do so. If the indemnifying party elects not to defend
against, negotiate, settle or otherwise deal with any Indemnification Claim
which relates to any Losses indemnified against hereunder, fails to notify the
indemnified party of its election as herein provided or contests its obligation
to indemnify the indemnified party for such Losses under this Agreement, the
indemnified party may defend against, negotiate, settle or otherwise deal with
such Indemnification Claim, and in such event, the indemnifying party shall
reimburse the indemnified party for the reasonable expenses of defending such
Indemnification Claim upon submission of periodic bills. If the indemnifying
party shall assume the defense of any Indemnification Claim, the indemnified
party may participate, at his or its own expense, in the defense of such
Indemnification Claim; provided, that such indemnified party shall be entitled
to participate in any such defense with separate counsel at the expense of the
indemnifying party if (i) so requested by the indemnifying party to participate
or (ii) in the reasonable opinion of counsel to the indemnified party a conflict
or potential conflict exists between the indemnified party and the indemnifying
party that would make such separate representation advisable; and provided,
further, that the indemnifying party shall not be required to pay for more than
one such counsel (and any appropriate local counsel) for all indemnified parties
in connection with any Indemnification Claim. The parties hereto agree to
cooperate fully with each other in connection with the defense, negotiation or
settlement of any such Indemnification Claim. Notwithstanding anything in this
Section 10.3 to the contrary, neither the indemnifying party nor the indemnified
party shall, without the written consent of the other party, settle or
compromise any Indemnification Claim or permit a default or consent to entry of
any judgment unless the claimant and such party provide to such other party an
unqualified release from all liability in respect of the Indemnification Claim.
Notwithstanding the foregoing, if a settlement offer solely for money damages is
made by the applicable third party claimant, and the indemnifying party notifies
the indemnified party in writing of the indemnifying party’s willingness to
accept the settlement offer and, subject to the applicable limitations of
Section 10.4, pay the amount called for by such offer, and the indemnified party
declines to accept such offer, the indemnified party may continue to contest
such Indemnification Claim, free of any participation by the indemnifying party,
and the amount of any ultimate liability with respect to such Indemnification
Claim that the indemnifying party has an obligation to pay hereunder shall be
limited to the lesser of (A) the amount of the settlement offer that the
indemnified party declined to accept plus the Losses of the indemnified party
relating to such Indemnification Claim through the date of its rejection of the
settlement offer or (B) the aggregate Losses of the indemnified party with
respect to such Indemnification Claim. If the indemnifying party makes any
payment on any Indemnification Claim, the indemnifying party shall be
subrogated, to the extent of such payment, to all rights and remedies of the
indemnified party to any insurance benefits or other claims of the indemnified
party with respect to such Indemnification Claim.
(c) Notwithstanding the foregoing, if an indemnified party determines
in good faith that there is a reasonable probability that an Indemnification
Claim related to a third party claim (i) may adversely affect it, the Assumed
Liabilities, NetBank Finance, the Purchased Assets or any of its Affiliates
other than solely as a result of monetary damages for which it could be entitled
to indemnification under this Agreement, (ii) may have a material and adverse
effect upon the conduct or reputation of the indemnified party after the Closing
Date (which shall include any purported class action claim against Purchaser
and/or its Affiliates and any claim based on an investigation, inquiry or other
proceeding by a Governmental Body), or (iii) relates to Taxes and involves
matters that are not indemnified hereunder or is reasonably anticipated to
increase the Tax Liability for any post-closing tax period, the indemnified
party may, by notice to the indemnifying party, assume the exclusive right to
defend, compromise or settle such Indemnification Claim at the indemnifying
party’s expense; provided, that no such compromise, discharge or settlement of,
or admission of Liability in connection with, such
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claims may be effected by the indemnified party without the indemnifying party’s
written consent (which shall not be unreasonably withheld, conditioned or
delayed).
(d) After any final judgment or award shall have been rendered by a
Governmental Body of competent jurisdiction and the expiration of the time in
which to appeal therefrom, or a settlement shall have been consummated, or the
indemnified party and the indemnifying party shall have arrived at a mutually
binding agreement with respect to an Indemnification Claim hereunder, the
indemnified party shall forward to the indemnifying party notice of any sums due
and owing by the indemnifying party pursuant to this Agreement with respect to
such matter and the indemnifying party shall be required to pay all of the sums
so due and owing to the indemnified party by wire transfer of immediately
available funds within five Business Days after the date of such notice. If
Seller is the indemnifying party and fails to make payment of amounts due in
accordance with this Article X, Purchaser may, at its option, (i) reduce the
Indemnification Holdback Amount by any sums due and owning to Purchaser pursuant
to this Article X in partial or total satisfaction of one or more
indemnification payments due from Seller to Purchaser under this Article X or
(ii) take any and all necessary actions to enforce its right to payment of any
amounts due and owing Purchaser by Seller under this Article X including
bringing any Legal Proceeding against Seller or Parent or both.
(e) The failure of the indemnified party to give reasonably prompt
notice of any Indemnification Claim or the indemnifying party to give reasonably
prompt notice of its election as to whether to assume the defense of any
Indemnification Claim shall not release, waive or otherwise affect the parties’
rights and obligations with respect thereto except to the extent that the
indemnifying party can demonstrate actual loss and prejudice as a result of such
failure.
10.4 Limitations on Indemnification for Breaches of Representations and
Warranties.
(a) An indemnifying party shall not have any liability under Section
10.2(a)(i) or Section 10.2(b)(i) hereof unless the aggregate amount of Losses to
the indemnified parties finally determined to arise thereunder based upon,
attributable to or resulting from the failure of any of the representations or
warranties (other than the representations and warranties set forth in Sections
5.1 (organization), 5.2 (authorization), 5.6 (title), 5.8 (taxes), 5.20 (loan
originations), 5.21 (Beacon loans), 5.23 (financial advisors), 5.24 (deposits),
6.1 (organization), 6.2 (authorization), 6.5 (financial advisors) and the
obligations under Section 11.1 hereof) to be true and correct exceeds $250,000
(the “Basket”) and, in such event, the indemnifying party shall be required to
pay the entire amount of such Losses.
(b) Seller and Parent shall not have any liability under Section
10.2(a)(i) with respect to the failure of the representations and warranties set
forth in Section 5.24 (deposits) unless the aggregate amount of Losses to
Purchaser finally determined to arise thereunder based upon, attributable to or
resulting from the failure of such representations or warranties to be true and
correct exceeds $250,000 (the “Deposit Deductible”) and, in such event, the
indemnifying party shall be required to pay the amount of such Losses in excess
of the Deposit Deductible.
(c) Neither Seller nor Purchaser shall be required to indemnify any
Person under Section 10.2(a)(i) or 10.2(b)(i) for an aggregate amount of Losses
exceeding $10,000,000 (the “Cap”) in connection with Losses related to the
breach of any of the representations and warranties of Seller or Purchaser in
Articles V and VI, respectively; provided, that the Cap limitation shall not
apply to Losses related to the failure of any representation or warranty
contained in Sections 5.1 (organization), 5.2 (authorization), 5.6 (title), 5.8
(taxes) 5.20 (loan origination), 5.21 (Beacon loans), 5.23 (financial advisors),
5.24 (deposits), 6.1 (organization), 6.2 (authorization), 6.5 (financial
advisors) and the obligations under Section 11.1 to be true and correct.
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(d) The indemnification obligations of any party hereunder shall be
reduced to the extent that the Indemnified Party, through willful or grossly
negligent action, inaction or omission contributes to the Loss.
10.5 Tax Treatment of Indemnity Payments. Seller and Purchaser agree to
treat any indemnity payment made pursuant to this Article X as an adjustment to
the Purchase Price for all Tax purposes. If, notwithstanding the treatment
required by the preceding sentence, any indemnification payment is determined to
be taxable to the Purchaser Indemnified Parties by any Taxing Authority, Seller
shall also indemnify the Purchaser Indemnified Parties for any Taxes incurred by
reason of the receipt of such payment and any expenses incurred by the party
receiving such payment in connection with such Taxes (or any asserted
deficiency, claim, demand, action, suit, proceeding, judgment or assessment,
including the defense or settlement thereof, relating to such Taxes).
ARTICLE XI
TAXES
11.1 Transfer Taxes. Seller shall (i) be responsible for any and all
sales, use, stamp, documentary, filing, recording, transfer, real estate
transfer, stock transfer, gross receipts, registration, duty, securities
transactions or similar fees or Taxes or governmental charges (together with any
interest or penalty, addition to tax or additional amount imposed) as levied by
any Taxing Authority in connection with the transactions contemplated by this
Agreement (collectively, “Transfer Taxes”), regardless of the Person liable for
such Transfer Taxes under applicable Law and (ii) timely file or caused to be
filed all necessary documents (including all Tax Returns) with respect to
Transfer Taxes.
11.2 Prorations. Seller shall bear all property and ad valorem Tax
Liability with respect to the Purchased Assets if the Lien or assessment date
arises prior to the Closing Date irrespective of the reporting and payment dates
of such taxes. All other real property Taxes, personal property Taxes, or ad
valorem obligations and similar recurring Taxes and fees on the Purchased Assets
for taxable periods beginning before, and ending after, the Closing Date, shall
be prorated between Purchaser and Seller as of the Closing Date. The portion to
be paid by the Seller will be based on a fraction, the numerator of which is the
number of days in the Taxable period ending on the Closing Date and the
denominator of which is the total number of days in such Taxable Period. With
respect to Taxes described in this Section 11.2, Seller shall timely file all
Tax Returns due before the Closing Date with respect to such Taxes and Purchaser
shall prepare and timely file all Tax Returns due after the Closing Date with
respect to such Taxes. If one party remits to the appropriate Taxing Authority
payment for Taxes, which are subject to proration under this Section 11.2 and
such payment includes the other party’s share of such Taxes, such other party
shall promptly reimburse the remitting party for its share of such Taxes.
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11.3 Cooperation on Tax Matters. Purchaser and Seller shall furnish or
cause to be furnished to each other, as promptly as practicable, such
information and assistance relating to the Purchased Assets and the Assumed
Liabilities as is reasonably necessary for the preparation and filing of any Tax
Return, claim for refund or other filings relating to Tax matters, for the
preparation for any Tax audit, for the preparation for any Tax protest, for the
prosecution or defense of any suit or other proceeding relating to Tax matters.
ARTICLE XII
MISCELLANEOUS
12.1 Expenses. Except as otherwise provided in this Agreement, each of
Seller and Purchaser shall bear its own expenses incurred in connection with the
negotiation and execution of this Agreement and each other agreement, document
and instrument contemplated by this Agreement and the consummation of the
12.2 Submission to Jurisdiction; Consent to Service of Process; Waiver
of Jury Trial.
(a) The parties hereto hereby irrevocably submit to the non-exclusive
jurisdiction of any federal or state court located within the State of Florida
over any dispute arising out of or relating to this Agreement or any of the
transactions contemplated hereby and each party hereby irrevocably agrees that
all claims in respect of such dispute or any suit, action proceeding related
thereto may be heard and determined in such courts. The parties hereby
irrevocably waive, to the fullest extent permitted by applicable Law, any
objection which they may now or hereafter have to the laying of venue of any
such dispute brought in such court or any defense of inconvenient forum for the
maintenance of such dispute. Each of the parties hereto agrees that a judgment
in any such dispute may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by Law.
(b) EACH PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY DOCUMENT REFERRED TO IN THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED
CERTIFICATIONS IN THIS SECTION 12.2.
(c) Each of the parties hereto hereby consents to process being served
by any party to this Agreement in any suit, action or proceeding by the delivery
of a copy thereof in accordance with the provisions of Section 12.5.
12.3 Entire Agreement; Amendments and Waivers. This Agreement
(including the schedules and exhibits hereto) represents the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof. This Agreement can be amended, supplemented or changed,
and any
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provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the party against whom enforcement of any
such amendment, supplement, modification or waiver is sought. No action taken
pursuant to this Agreement, including any investigation by or on behalf of any
party, shall be deemed to constitute a waiver by the party taking such action of
compliance with any representation, warranty, covenant or agreement contained
herein. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a further or continuing waiver of
such breach or as a waiver of any other or subsequent breach. No failure on the
part of any party to exercise, and no delay in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or remedy by such party preclude any other
remedy. All remedies hereunder are cumulative and are not exclusive of any
other remedies provided by Law.
12.4 Governing Law. This Agreement shall be governed by and construed
in accordance with the law of the State of New York applicable to contracts made
and performed in such State.
12.5 Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given (i) when delivered personally by
hand (with written confirmation of receipt), (ii) when sent by facsimile (with
written confirmation of transmission) or (iii) one Business Day following the
day sent by overnight courier (with written confirmation of receipt), in each
case at the following addresses and facsimile numbers (or to such other address
or facsimile number as a party may have specified by notice given to the other
party pursuant to this provision):
If to Seller, to:
NetBank
9710 Two Notch Road
Columbia, South Carolina
Facsimile:
Attention: Steven F. Herbert, Chief Executive Officer
Powell Goldstein LLP
1201 West Peachtree Street, 14th Floor
Atlanta, Georgia 30303
Facsimile: (404) 572-6999
Attention: Walter G. Moeling, IV
If to Purchaser, to:
EverBank
8100 Nations Way
Jacksonville, Florida 32256
Facsimile: (904) 281-6443
Attention: General Counsel
62
Alston & Bird LLP
The Atlantic Building
950 F Street, N.W.
Facsimile: (202) 756-3333
Attention: Michael P. Reed
12.6 Severability. If any term or other provision of this Agreement is
invalid, illegal, or incapable of being enforced by any law or public policy,
all other terms or provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal, or incapable of being enforced, the parties hereto shall
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
12.7 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to
create any third party beneficiary rights in any Person not a party to this
Agreement except as provided below. No assignment of this Agreement or of any
rights or obligations hereunder may be made by either Seller or Purchaser (by
operation of law or otherwise) without the prior written consent of the other
parties hereto and any attempted assignment without the required consents shall
be void; provided, that Purchaser may assign this Agreement and any or all
rights or obligations hereunder (including, without limitation, Purchaser’s
rights to purchase the Purchased Assets and assume the Assumed Liabilities and
Purchaser’s rights to seek indemnification hereunder) to any Affiliate of
Purchaser, or any Person to which Purchaser or any of its Affiliates proposes to
sell all or substantially all of Purchased Assets. Upon any such permitted
assignment, the references in this Agreement to Purchaser shall also apply to
any such assignee unless the context otherwise requires.
12.8 Knowledge. When references are made in this Agreement to
information being to the “Knowledge of Parent” or “Knowledge of Seller” or
similar language, such knowledge shall refer to the knowledge of any current or
previous officer or director of Parent or the Bank, as applicable. Such
individuals shall be deemed to have “knowledge” of a particular fact or other
matter if: (a) such individual is actually aware of such fact or other matter;
or (b) a prudent individual in such person’s capacity with Seller could be
expected to discover or otherwise become aware of such fact or other matter in
the course of conducting a reasonably comprehensive investigation concerning the
existence of such fact or other matter.
12.9 Disclosure Letter.
(a) The disclosures in the Disclosure Letter must relate, and
notwithstanding anything to the contrary therein, shall be deemed to relate,
only to the specific section (or subsection thereof, if applicable) of the
Agreement to which they expressly relate and not to any other section or
subsection of the Agreement.
(b) In the event of an inconsistency between the statements in the
body of this Agreement and those in such Disclosure Letter (other than an
exception expressly set forth in the Disclosure Letter with respect to a
specifically identified section or subsection), the statements in the body of
this Agreement will control.
63
12.10 Parent Agreement and Obligations
(a) Parent hereby agrees to be jointly and severally liable for the
prompt and complete performance of Seller’s obligations under this Agreement,
including its no shop covenants under Section 7.6 and indemnification
obligations under Article X, subject to the same terms, conditions, procedural
requirements and limitations that apply to Seller’s indemnification obligations
hereunder, as if Parent had delivered or made the same representations,
warranties, covenants and agreements that Seller has delivered or made
hereunder, on a joint and several basis. Parent’s obligations hereunder are
unconditional (other than with respect to the conditions applicable to Seller
hereunder) irrespective of any circumstances which might otherwise constitute,
by operation of law, a discharge of a guarantor and it shall not be necessary
for Purchaser to institute or exhaust any remedies or causes of action against
Seller or any other Person as a condition to the obligations of Parent
hereunder. In addition, Parent agrees to be, and agrees to cause its Affiliates
to be, subject to the restrictions, limitations, prohibitions and other
covenants set forth in Section 7.6
(b) Parent hereby irrevocably waives any right to receive a separate
formal notification or to request that any other formalities or protest be
accomplished as a condition to its obligations hereunder, and expressly
undertakes not to exercise, and waives to the fullest extent lawful, any rights
that it may have under applicable law
12.11 Non-Recourse. No past, present or future director, officer,
employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney
or representative of Purchaser or its Affiliates shall have any liability for
any obligations or liabilities of Purchaser under this Agreement or the
Purchaser Documents of or for any claim based on, in respect of, or by reason
of, the transactions contemplated hereby and thereby.
12.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[Signatures on following page]
64
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the date first
written above.
EVERBANK
By:
/s/ Robert M. Clements
Name: Robert M. Clements
NETBANK
By:
/s/ Steven F. Herbert
Name: Steven F. Herbert
Title: President
NETBANK, INC. (with respect to Section 12.10 only)
By:
|
b'PRICING ADDENDUM FOR DILLARD\xe2\x80\x99S AMERICAN EXPRESS\xc2\xae CREDIT CARD AGREEMENT\nAs of February 13, 2021\nInterest Rates and Interest Charges\nAnnual Percentage Rate (APR)\nfor Purchases\n\nU.S. Prime Rate + 21.74%\n\nAPR for Cash Advances\nPaying Interest\n\nThis APR will vary with the market based on the U.S. Prime Rate (\xe2\x80\x9cIndex Rate\xe2\x80\x9d).\nU.S. Prime Rate + 23.74%\nThis APR will vary with the market based on the U.S. Prime Rate (\xe2\x80\x9cIndex Rate\xe2\x80\x9d).\n\nMinimum Interest Charge\n\nYour due date is at least 23 days after the close of each billing cycle. We will not charge you any interest\non purchases if you pay your entire balance by the due date each month. We will begin charging interest\non cash advances on the transaction date.\nIf you are charged interest, the charge will be no less than $1.00.\n\nFees\nAnnual Fee\n\nNone\n\nTransaction Fees\n\xe2\x80\xa2 Cash Advance\nEither $10.00 or 4% of the amount of each cash advance, whichever is greater.\n\xe2\x80\xa2 Foreign Currency Conversion 3% of each transaction converted to U.S. dollars\nPenalty Fees\n\xe2\x80\xa2 Late Payment\nUp to $40.00\nHow We Will Calculate Your Balance: We use a method called \xe2\x80\x9caverage daily balance (including new purchases).\xe2\x80\x9d See your Agreement for\nmore details.\nBilling Rights: Information on your rights to dispute transactions and how to exercise those rights is provided in your Agreement.\nHow We Will Calculate Your Late Payment Fee: The fee will be the lesser of the Total Minimum Payment Due or $29.00. For any subsequent\nevent within a rolling six billing cycle period, the fee will be the lesser of the Total Minimum Payment Due or $40.00.\nHow We Will Calculate Your Variable APRs: The APR used to figure interest for purchases on your Account is figured by adding a margin\nof 21.74 percentage points to the U.S. Prime Rate for that Billing Cycle. The APR used to figure interest for cash advances is figured by\nadding a margin of 23.74 percentage points to the U.S. Prime Rate. These rates vary with the market based on the U.S. Prime Rate. See your\nAgreement for more details.\nThe information about the cost of credit described in this Agreement is accurate as of February 2021. This information may have changed\nafter that date. To find out what may have changed, call us at 1-866-834-6294.\nVariable Interest Rate Calculation\nIndex Rate effective as of 01/01/2021\n\n3.25%\n\nMargin added to the Index Rate to determine your APR for Purchases\n\n21.74%\n\nMargin added to the Index Rate to determine your APR for Cash Advances\n\n23.74%\n\nAPR for Purchases\n\n24.99%\n\nAPR for Cash Advances\n\n26.99%\n\n1 of 5\n\n6102OA DILLARDS AMEX 0221\n\n\x0cDILLARD\xe2\x80\x99S AMERICAN EXPRESS\xc2\xae CREDIT CARD AGREEMENT\nNotice to California Cardmembers\nTo our California customers who have discussed credit card terms and conditions with us\nin Spanish, Chinese, Korean, Vietnamese, or Tagalog:\nRead the section titled INTERPRETER CERTIFICATION before you use your Account.\nLean la secci\xc3\xb3n titulada CERTIFICACI\xc3\x93N DE INT\xc3\x89RPRETE antes de usar su Cuenta.\n\xe8\xab\x8b\xe6\x82\xa8\xe5\x9c\xa8\xe4\xbd\xbf\xe7\x94\xa8\xe6\x82\xa8\xe7\x9a\x84\xe5\xb8\xb3\xe6\x88\xb6\xe4\xb9\x8b\xe5\x89\x8d\xe9\x96\xb1\xe8\xae\x80\xe6\xa8\x99\xe9\xa1\x8c\xe7\x82\xba\xe3\x80\x8c\xe7\xbf\xbb\xe8\xad\xaf\xe5\x93\xa1\xe8\xaa\x8d\xe8\xad\x89\xe3\x80\x8d\xe7\x9a\x84\xe7\xab\xa0\xe7\xaf\x80\xe3\x80\x82\n\xea\xb3\x84\xec\xa2\x8c\xeb\xa5\xbc \xec\x82\xac\xec\x9a\xa9\xed\x95\x98\xec\x8b\x9c\xea\xb8\xb0 \xec\xa0\x84\xec\x97\x90 \xe2\x80\x9c\xed\x86\xb5\xec\x97\xad\xec\x82\xac \xec\xa6\x9d\xeb\xaa\x85\xe2\x80\x9d \xed\x95\xad\xeb\xaa\xa9\xec\x9d\x84 \xec\x9d\xbd\xec\x9c\xbc\xec\x8b\x9c\xea\xb8\xb0 \xeb\xb0\x94\xeb\x9e\x8d\xeb\x8b\x88\xeb\x8b\xa4.\nH\xc3\xa3y \xc4\x91\xe1\xbb\x8dc ph\xe1\xba\xa7n c\xc3\xb3 t\xe1\xbb\xb1a \xc4\x91\xe1\xbb\x81 X\xc3\x81C NH\xe1\xba\xacN V\xe1\xbb\x80 TH\xc3\x94NG D\xe1\xbb\x8aCH VI\xc3\x8aN tr\xc6\xb0\xe1\xbb\x9bc khi qu\xc3\xbd v\xe1\xbb\x8b s\xe1\xbb\xad d\xe1\xbb\xa5ng\nTr\xc6\xb0\xc6\xa1ng m\xe1\xbb\xa5c c\xe1\xbb\xa7a m\xc3\xacnh.\nBasahin ang seksiyong may pamagat na SERTIPIKASYON NG TAGAPAGSALING-WIKA bago\nmo gamitin ang iyong Account.\nThese terms apply to your entire Account.\nAbout Your Account\nAGREEMENT. This Credit Card Agreement (\xe2\x80\x9cAgreement\xe2\x80\x9d) covers the use of your Credit Card\nAccount (\xe2\x80\x9cAccount\xe2\x80\x9d) with us. It includes the Important Terms of Your Credit Card Account.\nYou accept the terms of this Agreement by opening or using your Account. Your signature on\nyour application or solicitation for this Account, including without limitation any electronic\nor digital signature, as well as your signature on Sales Slips or any Account-related document,\nrepresents your signature on this Agreement. Please read this Agreement carefully and save\nit for future reference.\nPARTIES TO THIS AGREEMENT. This Agreement is made between Wells Fargo Bank, N.A.,\nP.O. Box 10347, Des Moines, IA 50306 (\xe2\x80\x9cwe,\xe2\x80\x9d \xe2\x80\x9cus,\xe2\x80\x9d and \xe2\x80\x9cour\xe2\x80\x9d) and the account holder (\xe2\x80\x9cyou\xe2\x80\x9d\nand \xe2\x80\x9cyour\xe2\x80\x9d).\nCONTACTING US. Unless stated otherwise in this Agreement, you may contact us at the\nphone number or address shown on your statement.\nDEFINITIONS.\nBilling Cycle\n\nThe interval between statements. Each statement shows a\nclosing date. The statement closing date is the last day of the\nBilling Cycle for that statement.\n\nCard\n\nThe credit card we may issue to use your Account.\n\nImportant Terms\nof Your Credit Card\nAccount\n\nA summary of your Account\xe2\x80\x99s Annual Percentage Rates\n(\xe2\x80\x9cAPRs\xe2\x80\x9d), fees and other important information.\n\nNew Balance\n\nThe Outstanding Balance as of a statement closing date.\n\nOutstanding\nBalance\n\nThe sum of all unpaid amounts, including purchases, cash\nadvances, interest, fees and any other amounts that you may\nowe us.\n\nPayment Address\n\nThe address where you mail your payment. It is located on\nyour Payment Stub.\n\nPayment Due Date\n\nThe date the Total Minimum Payment Due is due to us. It is\nshown on your statement.\n\nPayment Stub\n\nThe portion of your statement that is to be returned with your\npayment.\n\nSales Slip\n\nAny document that describes the terms of a purchase on the\nAccount.\n\nOVERVIEW OF ACCOUNT. Your Account may be divided into two or more balances.\nDifferent terms may apply to different balances.\nUSING YOUR ACCOUNT. You may use your Account for purchases and cash advances:\n\xe2\x80\xa2 Purchases. You may use your Account for purchases from Dillard\xe2\x80\x99s locations, including\nDillard\xe2\x80\x99s website, and from any merchant that accepts American Express Cards. Purchases\nwill be part of the regular balance unless a Dillard\xe2\x80\x99s Sales Slip shows that Club Plan terms\napply. If Club Plan terms apply, the purchase will be part of a Club Plan balance. Club\nPlans are described later in this Agreement (see Club Plans section).\n\xe2\x80\xa2 Cash Advances. If we allow you to take cash advances, they will be part of your cash\nadvance balance. You may take a cash advance by presenting your Card at a participating\nbank or Automated Teller Machine (\xe2\x80\x9cATM\xe2\x80\x9d). There may be limits on the amount and\nfrequency of advances.\nYou promise that you will use your Account only for lawful personal, family or household\npurposes. In addition, we reserve the right to deny transactions or authorizations from\nmerchants apparently engaging in the Internet gambling business or identifying themselves\nthrough the Card transaction record or otherwise as engaged in such business. American\nExpress Cards are not presently accepted for the purchase of bets, lottery tickets or casino\ngaming chips. We are not responsible if anyone does not allow you to use your Account.\nPROMISE TO PAY. When you use your Account, or let someone else use it, you promise to\npay the total amount of the purchase or cash advance, as well as any interest, fees or other\namounts that you may owe us. We may limit or close your Account, but the terms of this\nAgreement will apply until you pay the Account in full.\nCREDIT LIMIT. We will assign a Credit Limit to your Account. A Credit Limit is the amount of\ncredit we will extend to your Account. Your Credit Limit is provided with your Card and on\neach of your statements. You promise to use your Account only to the Credit Limit. If you\nexceed your Credit Limit, we may authorize the transaction without increasing your Credit\nLimit. If you exceed your Credit Limit, you will remain liable for all amounts payable under\nthis Agreement. We can adjust your Credit Limit at any time.\n\nFees and Interest\nFEES. You agree to pay the following fees. You will find the fee amounts in the Important\nTerms of Your Credit Card Account.\n\xe2\x80\xa2 Late Payment Fee. This fee may be charged each time we do not receive the Total\nMinimum Payment Due by the Payment Due Date. This fee will be charged to your regular\nbalance.\n\xe2\x80\xa2 Cash Advance Fee. This fee may be charged when you take a cash advance. This fee will\nbe charged to your cash advance balance.\n\xe2\x80\xa2 Foreign Transaction Fee. We will charge this fee for purchases you make in currencies\nother than U.S. dollars and/or in a country other than the U.S., whether or not the\ntransaction was in a foreign currency. This fee will be charged to your regular balance.\nCurrency Conversion. If you make a transaction with your Account in a currency other than\nU.S. dollars, American Express will convert the transaction amount into U.S. dollars. Unless\na specific rate is required by applicable law, American Express will choose a conversion rate\nthat is acceptable to them for that date. The rate American Express uses to make conversions\nfrom transactions in foreign currencies to U.S. dollars is no greater than the highest official\nrate published by a government agency or the highest interbank rate from customary\nbanking sources on the conversion date or business day prior to the day on which the\ntransactions are processed by American Express or American Express\xe2\x80\x99 agents, which rates\nmay differ from the rates in effect on the transaction date. Charges converted by third\nparties will be converted at their rates. American Express charges a commission of 1% on\ntransactions you make with your Account in currencies other than U.S. dollars, and in U.S.\ndollars outside the U.S. (including charges made from websites outside the U.S.), but never\non the same transaction. We charge a fee for each transaction that you make in a country\nother than the United States, whether or not the transaction was in a foreign currency. This\nfee will be equal to 2% of the dollar amount of the foreign transaction.\nINTEREST RATES. The daily periodic rates are calculated by dividing each applicable APR\nby 365. The APRs used to figure interest on balances are shown in the Important Terms of\nYour Credit Card Account.\nPRIME RATE. The Prime Rate we use is the U.S. Prime Rate published in the Money Rates\nsection of The Wall Street Journal. We select the Prime Rate published on the first business\nday of the month preceding the month of the quarterly rate change date. If more than one\nPrime Rate is published, we will use the average of the Prime Rates. If the Prime Rate is no\nlonger published or is not available, we may select a similar rate. The APR will increase or\ndecrease if the Prime Rate increases or decreases and this will also cause the daily periodic\nrate to increase or decrease. An increase or decrease in the APR will increase or decrease\nthe total amount of interest you pay. It may also increase or decrease the Total Minimum\nPayment Due. The rate change date for each quarter is the first day of the first Billing Cycle\nbeginning on or after January 1, April 1, July 1, and October 1.\nWHEN WE CHARGE INTEREST. Unless stated otherwise below, we begin charging interest\non a purchase, cash advance or interest charge on the date the purchase, cash advance or\ninterest charge posts to your Account. We begin charging interest on a fee on the first day of\nthe Billing Cycle following the Billing Cycle in which the fee posts to your Account. However,\nif a late payment fee is posted to your Account in the current Billing Cycle, but is related to\na late payment in the prior Billing Cycle, we will begin charging interest on the fee on the\nfirst day of the current Billing Cycle.\nHOW TO AVOID PAYING INTEREST ON PURCHASES. Except as described in the Club Plans\nsection below, to avoid paying interest on new Purchases you have to pay your entire New\nBalance by the Due Date on your statement each Billing Period. You cannot avoid interest\non cash advances.\nHOW WE CALCULATE INTEREST\xe2\x80\x94AVERAGE DAILY BALANCE METHOD (INCLUDING\nNEW PURCHASES). The total interest charge is the sum of interest charges for each type\nof balance on your Account (e.g. regular, cash advance balance). We figure the interest\ncharge for each type of balance on your Account by applying the daily periodic rate to\nthe average daily balance (\xe2\x80\x9cADB\xe2\x80\x9d). Then, we multiply this amount by the number of days\nin the Billing Cycle.\nInterest charge = daily periodic rate x ADB x number of days in the Billing Cycle.\nADBs for each type of balance are calculated separately, starting with the beginning balance\non the first day of each Billing Cycle. The beginning balance on the first day of the Billing\nCycle includes the following:\n\xe2\x80\xa2 The prior Billing Cycle\xe2\x80\x99s ending balance, which includes any unpaid fees posted to your\nAccount in the prior Billing Cycle.\n\xe2\x80\xa2 Any late payment fees posted in the current Billing Cycle that are related to a late payment\nin the prior Billing Cycle.\nTo get the ADB for each type of balance, we take the beginning balance each day and add\nany new purchases and cash advances. Except for the first day of each Billing Cycle, we\nadd interest equal to the previous day\xe2\x80\x99s balance multiplied by the daily periodic rate. (This\nmeans interest is compounded daily.) Then, we subtract any payments or credits. This gives\nus the daily balance. Any daily balance that is a credit balance will be treated as zero. Then,\nwe add up all the daily balances for the Billing Cycle. We divide this amount by the number\nof days in the Billing Cycle. This gives us the ADB.\nADB = sum of daily balances \xc3\xb7 number of days in the Billing Cycle.\nMINIMUM INTEREST CHARGE. If you are charged interest in a Billing Cycle, the charge\nwill be no less than $1.00.\nPayments\nTOTAL MINIMUM PAYMENT DUE. You promise to pay the Total Minimum Payment Due by\nthe Payment Due Date. The Total Minimum Payment Due is the greater of (A) or (B), plus (C):\n(A) $29.00 (or $40.00 if we do not receive the Total Minimum Payment Due by the Payment\nDue Date in any one of the prior six Billing Cycles)\n\n2 of 5\n\n6102OA DILLARDS AMEX 0221\n\n\x0c(B) The sum of:\n\xe2\x80\xa2 Any past due amounts; plus\n\xe2\x80\xa2 Any fees assessed during the current Billing Cycle; plus\n\xe2\x80\xa2 1% of the new balance (excluding any Club Plan balance); plus\n\xe2\x80\xa2 The sum of any interest charges in the current Billing Cycle\n(C) The payment(s) for any Club Plan 12 or Club Plan 24 balances (see Club Plans section).\nThe Total Minimum Payment Due will never be more than the New Balance. If you pay more\nthan the Total Minimum Payment Due but less than the Outstanding Balance, you are still\nrequired to pay the Total Minimum Payment Due in the next Billing Cycle.\nPAYMENT INSTRUCTIONS. Follow these instructions when making a payment:\n\xe2\x80\xa2 Make your payment in U.S. dollars, but do not send cash.\n\xe2\x80\xa2 If you make a payment by mail, please include the Payment Stub with your payment.\nUse the envelope enclosed with your statement to mail both documents to the Payment\nAddress. Payments received by 5:00 p.m. local time at the Payment Address will be\ncredited as of the date of receipt. Payments received after the 5:00 p.m. cut-off time will be\ncredited as of the next day. When you provide a check as payment, you authorize us either\nto use information from your check to make a one-time electronic fund transfer from\nyour account or to process the payment as a check transaction. When we use information\nfrom your check to make an electronic fund transfer, funds may be withdrawn from your\naccount as soon as the same day we receive your payment, and you will not receive\nyour check back from your financial institution. Your billing statement also explains how\ninformation on your check is used.\n\xe2\x80\xa2 If you make a payment online, it must be made via Dillard\xe2\x80\x99s website, which is shown on\nyour statement. The cut-off time for online payments will be disclosed at the time of the\ntransaction.\n\xe2\x80\xa2 You also can make a payment at a Dillard\xe2\x80\x99s store. Payments received at the Dillard\xe2\x80\x99s store\nlocation where payment is made will be credited as of the date of receipt.\nIf you do not follow these instructions, your payments may not receive credit for up to five\ndays after we receive it. You may at any time pay, in whole or in part, the Outstanding Balance\nwithout any additional charge for prepayment.\nSome of your available line of credit may be held at our discretion, until your payment is\nhonored.\nIRREGULAR PAYMENTS. We may accept late payments, partial payments or payments\nthat reflect \xe2\x80\x9cpaid in full\xe2\x80\x9d (or other restrictive language), without losing our rights to receive\nfull payment. If you intend to claim to pay your Account in full with an amount less than\nthe Outstanding Balance, payments must be sent to us at Wells Fargo Bank, N.A., P.O. Box\n10311, Des Moines, IA 50306-0311.\nAPPLICATION OF PAYMENTS. We apply payment amounts equal to or less than the Total\nMinimum Payment Due at our discretion. We apply any payment amounts in excess of the\nTotal Minimum Payment Due to balances with higher APRs before lower APRs.\nAny payment in excess of the Total Minimum Payment Due is applied based on the balances\nreflected on your last statement. We post payments in the Billing Cycle they are received.\nOther Information\nCANCELLATION. We may close your Account at any time and for any reason. You may also\nclose the Account at any time by contacting us. If that happens, you must still repay the\nbalance owed according to the terms of this Agreement. If we close the account, notice may\nbe provided to only one Account Holder.\nAUTHORIZED USERS. You may request additional Cards for authorized users. You are\nresponsible for all charges (including related interest and fees) made by the authorized\nuser. If you want to end an authorized user\xe2\x80\x99s privilege to use your Account, before we can\nprocess the request, you must:\n\xe2\x80\xa2 Recover and destroy that person\xe2\x80\x99s Card. If you do not recover and destroy the Card, you\nwill continue to be liable for any charges made after you advised us of your wish to cancel\nthe privileges, unless you tell us to cancel all Cards and establish a new Account for you.\n\xe2\x80\xa2 You must notify us of your request by contacting us at the phone number or address\nshown on your statement.\nIn general, an authorized user is not obligated on this Account and is not liable for any\nOutstanding Balance or any other charges made by you or by any other authorized user.\nEach authorized user\xe2\x80\x99s privilege ends automatically upon the death of all account holders.\nIf any person uses the Card, such use indicates his or her agreement to pay us, and we may,\nat our discretion, pursue the person for payment of any Outstanding Balance or any other\ncharges they authorize. You agree to notify each authorized user that they are subject to\nall applicable sections of this Agreement.\nCONTACTING YOU. By providing us with any phone number, you are expressly consenting\npermission to contact you at that number about all of your Wells Fargo accounts. You give\nconsent to allow us to contact your past, present and future phone service providers to\nverify the information you have provided against their records. You agree that your phone\nservice providers may verify any phone numbers you have supplied to the name, address,\nand status on their records. In order for us to service your Account or to collect any amounts\nyou may owe, you agree that we may contact you using any contact information related to\nyour Account, including any number (i) you have provided to us, (ii) from which you called\nus, or (iii) which we obtained and reasonably believe we can reach you. We may use any\nmeans to contact you. This may include contact from companies working on our behalf to\nservice your Accounts. This may include automated dialing devices, prerecorded/artificial\nvoice messages, mail, e-mail, text messages and calls to your mobile, wireless or similar\ndevice or Voice over Internet Protocol (VolP) service, or any other data or voice transmission\ntechnology. You are responsible for any service provider charges as a result of us contacting\nyou. You agree to promptly notify us if you change any contact information you provide\nto us. This includes your name, mailing address, e-mail address(es), or phone number(s).\nPHONE MONITORING. We may monitor and record your phone calls with us.\n\nLOST OR STOLEN CARDS AND LIABILITY FOR UNAUTHORIZED USE. You agree to contact\nus immediately if your Card is lost or stolen or if you believe your Account is being used\nwithout your permission. You may contact us at: 1-866-834-6294 or P.O. Box 10347, Des\nMoines, IA 50306. You agree to assist us in our investigation of the matter. If you do this, you\nwill not be held liable for the unauthorized use of your Account, but you will be responsible\nfor all use by anyone you give your Card to or allow to use your Account.\nDEFAULT. Your Account will be in default if any of the following occur:\n\xe2\x80\xa2 You fail to pay the Total Minimum Payment Due by the Payment Due Date.\n\xe2\x80\xa2 Any payment is dishonored.\n\xe2\x80\xa2 You violate the terms of this Agreement.\n\xe2\x80\xa2 You made an untrue statement on your application.\n\xe2\x80\xa2 You file for bankruptcy.\nIf your Account is in default, our rights include, but are not limited to, refusing to authorize\nfurther transactions, closing your Account, and requiring the immediate payment of the\nOutstanding Balance. If your Account is in default, you also agree to pay our collection costs,\nattorney\xe2\x80\x99s fees, and court costs.\nGOVERNING LAW. Federal law and the laws of South Dakota govern this Agreement and\nyour Account.\nCHANGE IN TERMS. We may change this Agreement at any time. These changes may\napply to existing and future balances. We will give you advance written notice of the\nchange(s) and a right to reject the change(s) if required by law. We may require you\nto close your Account or take other actions if you reject the changes.\nENFORCING THIS AGREEMENT. We may waive or delay enforcing any of our rights without\nlosing them. We may waive or delay enforcing a right against one of you without waiving\nit as to the other.\nSEPARATION OF UNLAWFUL PROVISIONS. If any provision of this Agreement is\ndetermined to be unlawful, the rest of the Agreement will stand and the unlawful provision\nwill be deemed amended to conform to law.\nINFORMATION SHARING. When you applied for an Account, you gave us and Dillard\xe2\x80\x99s,\nInc. information about yourself that we could share with each other. Dillard\xe2\x80\x99s, Inc. will use\nthe information in connection with the credit program and for things like creating and\nupdating its records and offering you special benefits. Federal or state laws may limit our\nability to share your personal and/or Account information with Dillard\xe2\x80\x99s, Inc. even though\nyou have given us this authorization. We comply with these federal and state laws. Please\nrefer to the Wells Fargo Bank, N.A. Dillard\xe2\x80\x99s Privacy Notice for more information about how\nwe collect, share, and protect your information, as well as how you may limit some, but not\nall, information sharing.\nCREDIT INFORMATION. You promise that any information you give to us in connection\nwith your Account is true and complete. You understand that we rely on this information\nto open your Account and extend credit to you. You authorize us to investigate your credit,\nemployment, assets, and income records and to verify your credit references. You also\nauthorize us to obtain credit reports on you from time to time.\nINFORMATION REPORTING. You agree that we may report your performance, status, and\nhistory under this Agreement to consumer reporting agencies. If you request additional\nCards on your Account for others, you understand that we may report Account information\nin your name as well as in the names of those additional cardmembers. If you fail to comply\nwith the terms of the Account as defined in this Agreement, it will be furnished to the credit\nreporting agencies and it could cause a negative reference on your credit report and the\ncredit reports of any additional cardmembers. You have the right to dispute the accuracy\nof information that we have reported by writing to us at Wells Fargo Bank, N.A., P.O. Box\n14517, Des Moines, IA 50306 and describing the specific information that is inaccurate or\nin dispute and the basis for any dispute with supporting documentation. In the case of\ninformation that you believe relates to an identity theft, you will need to provide us with\nan identity theft report.\nASSIGNMENT. We have the right to assign your Account to another creditor. The other\ncreditor is then entitled to any rights we assign to them. You do not have the right to assign\nyour Account.\nClub Plans\nThese terms apply to Club Plans.\nCLUB PLANS. From time to time, certain Dillard\xe2\x80\x99s purchases may qualify as a Club Plan\npurchase. If a Sales Slip shows that Club Plan terms apply, then the purchase will be governed\nby the Club Plan terms (described below) and the terms of this Agreement. You accept the\nClub Plan terms by making the purchase.\n\xe2\x80\xa2 Club Plan 12. If a Sales Slip shows that Club Plan 12 terms apply, this means the payment\nis the amount required to pay the initial purchase balance in full in 12 equal monthly\npayments. Because of rounding, the final payment could be less than other payments.\n\xe2\x80\xa2 Club Plan 24. If a Sales Slip shows that Club Plan 24 terms apply, this means the payment\nis the amount required to pay the initial purchase balance in full in 24 equal monthly\npayments. Because of rounding, the final payment could be less than other payments.\n\xe2\x80\xa2 We will not charge you interest on a Club Plan 12 or Club Plan 24 balance. The payment\namount for any Club Plan 12 or Club Plan 24 balance(s) is included in the Total Minimum\nPayment Due (see Total Minimum Payment Due section).\nInterpreter Certification\nINTERPRETER CERTIFICATION. THIS CERTIFICATION APPLIES IF YOU CHOSE TO DISCUSS\nOPENING AN ACCOUNT WITH US IN SPANISH, CHINESE, KOREAN, VIETNAMESE, OR\nTAGALOG. By signing the credit card application, using or otherwise accepting the Card\nor related Account issued to you, you certify to Wells Fargo Bank, N.A. (us) that: (1) You\nhave received and discussed this Agreement with your interpreter and that you and your\ninterpreter have been given an opportunity to discuss with us the terms and conditions\ncontained in these enclosed documents; (2) Your interpreter is at least 18 years old and is\nfluent both in English and in the language in which you chose to discuss with us the terms\n\n3 of 5\n\n6102OA DILLARDS AMEX 0221\n\n\x0cand conditions of your Account, and is not employed by or made available through the\nMerchant; (3) You understand and agree to the terms and conditions contained in these\nenclosed documents as written.\nCERTIFICACI\xc3\x93N DE INT\xc3\x89RPRETE. ESTA CERTIFICACI\xc3\x93N SE APLICA SI USTED ELIGI\xc3\x93\nCONVERSAR CON NOSOTROS SOBRE LA APERTURA DE UNA CUENTA EN ESPA\xc3\x91OL, CHINO,\nCOREANO, VIETNAMITA O TAGALO. Al firmar la solicitud de tarjeta de cr\xc3\xa9dito, utilizar o\naceptar de otro modo la Tarjeta o la Cuenta relacionada que se le haya otorgado, usted\ncertifica a Wells Fargo Bank, N.A., (nosotros) que: (1) Usted ha recibido y analizado este\nContrato con su int\xc3\xa9rprete, y que usted y su int\xc3\xa9rprete han tenido la oportunidad de analizar\ncon nosotros los t\xc3\xa9rminos y condiciones contenidos en estos documentos adjuntos; (2) Su\nint\xc3\xa9rprete tiene por lo menos 18 a\xc3\xb1os de edad y habla con fluidez en ingl\xc3\xa9s y en el idioma\nen el que usted haya elegido analizar con nosotros los t\xc3\xa9rminos y condiciones de su Cuenta,\ny no es un empleado ni ofrece sus servicios a trav\xc3\xa9s del Comerciante; (3) Usted entiende y\nacepta los t\xc3\xa9rminos y condiciones contenidos en estos documentos adjuntos tal como se\nencuentran redactados.\n\xe7\xbf\xbb\xe8\xad\xaf\xe5\x93\xa1\xe8\xaa\x8d\xe8\xad\x89\xe3\x80\x82\xe6\x9c\xac\xe8\xaa\x8d\xe8\xad\x89\xe6\x96\xbc\xe7\x95\xb6\xe6\x82\xa8\xe9\x81\xb8\xe6\x93\x87\xe4\xbb\xa5\xe8\xa5\xbf\xe7\x8f\xad\xe7\x89\x99\xe8\xaa\x9e\xe3\x80\x81\xe4\xb8\xad\xe6\x96\x87\xe3\x80\x81\xe9\x9f\x93\xe8\xaa\x9e\xe3\x80\x81\xe8\xb6\x8a\xe5\x8d\x97\xe8\xaa\x9e\xe6\x88\x96\xe5\xa1\x94\xe5\x8a\xa0\xe6\x8b\x89\xe6\x97\x8f\xe8\xaa\x9e\xe8\x88\x87\n\xe6\x88\x91\xe5\x80\x91\xe8\xa8\x8e\xe8\xab\x96\xe9\x96\x8b\xe6\x88\xb6\xe4\xba\x8b\xe5\xae\x9c\xe4\xb9\x8b\xe6\x99\x82\xe9\x81\xa9\xe7\x94\xa8\xe3\x80\x82\xe4\xb8\x80\xe6\x97\xa6\xe6\x82\xa8\xe7\xb0\xbd\xe7\xbd\xb2\xe4\xbf\xa1\xe7\x94\xa8\xe5\x8d\xa1\xe7\x94\xb3\xe8\xab\x8b\xe8\xa1\xa8\xef\xbc\x8c\xe4\xbd\xbf\xe7\x94\xa8\xe6\x88\x96\xe4\xbb\xa5\xe5\x85\xb6\xe4\xbb\x96\xe6\x96\xb9\xe5\xbc\x8f\xe6\x8e\xa5\xe5\x8f\x97\xe6\xa0\xb8\xe7\x99\xbc\n\xe7\xb5\xa6\xe6\x82\xa8\xe7\x9a\x84\xe4\xbf\xa1\xe7\x94\xa8\xe5\x8d\xa1\xe6\x88\x96\xe7\x9b\xb8\xe9\x97\x9c\xe5\xb8\xb3\xe6\x88\xb6\xef\xbc\x8c\xe5\x8d\xb3\xe8\xa1\xa8\xe7\xa4\xba\xe6\x82\xa8\xe5\x90\x91\xe5\xaf\x8c\xe5\x9c\x8b\xe9\x8a\x80\xe8\xa1\x8c 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\xeb\x85\xbc\xec\x9d\x98\xed\x95\xa0\n\xea\xb8\xb0\xed\x9a\x8c\xeb\xa5\xbc \xeb\xb6\x80\xec\x97\xac\xeb\xb0\x9b\xec\x95\x98\xea\xb3\xa0, (2) \xeb\x8b\xb4\xeb\x8b\xb9 \xed\x86\xb5\xec\x97\xad\xec\x82\xac\xeb\x8a\x94 18\xec\x84\xb8 \xec\x9d\xb4\xec\x83\x81\xec\x9d\xb4\xeb\xa9\xb0 \xed\x9a\x8c\xec\x9b\x90\xeb\x8b\x98 \xea\xb3\x84\xec\xa2\x8c\xec\x9d\x98 \xec\x95\xbd\xea\xb4\x80\xec\x97\x90 \xea\xb4\x80\xed\x95\xb4\n\xeb\x8b\xb9\xec\x82\xac\xec\x99\x80 \xeb\x85\xbc\xec\x9d\x98\xed\x95\xa0 \xeb\x95\x8c \xed\x9a\x8c\xec\x9b\x90\xeb\x8b\x98\xea\xbb\x98\xec\x84\x9c \xec\x82\xac\xec\x9a\xa9\xed\x95\x98\xea\xb8\xb0\xeb\xa1\x9c \xec\x84\xa0\xed\x83\x9d\xed\x95\x98\xec\x8b\xa0 \xec\x96\xb8\xec\x96\xb4\xec\x99\x80 \xec\x98\x81\xec\x96\xb4 \xeb\xaa\xa8\xeb\x91\x90\xec\x97\x90 \xeb\x8a\xa5\xed\x86\xb5\xed\x95\x9c\n\xec\x82\xac\xeb\x9e\x8c\xec\x9d\xb4\xea\xb3\xa0 Wells Fargo Bank, N.A.(\xeb\xaf\xb8\xea\xb5\xad)\xec\x97\x90\xec\x84\x9c \xec\xb1\x84\xec\x9a\xa9\xed\x95\x98\xea\xb1\xb0\xeb\x82\x98 \xec\x95\x8c\xec\x84\xa0\xed\x95\x9c \xec\x9d\xb8\xeb\xa0\xa5\xec\x9d\xb4 \xec\x95\x84\xeb\x8b\x88\xeb\xa9\xb0, (3)\n\xec\x9d\xb4 \xeb\x8f\x99\xeb\xb4\x89\xeb\x90\x9c \xeb\xac\xb8\xec\x84\x9c\xec\x97\x90 \xea\xb8\xb0\xeb\xa1\x9d\xeb\x90\x9c \xec\x95\xbd\xea\xb4\x80\xec\x9d\x98 \xeb\x82\xb4\xec\x9a\xa9\xec\x9d\x84 \xed\x9a\x8c\xec\x9b\x90\xeb\x8b\x98\xea\xbb\x98\xec\x84\x9c \xec\x9d\xb4\xed\x95\xb4\xed\x95\x98\xea\xb3\xa0 \xea\xb7\xb8\xec\x97\x90 \xeb\x8f\x99\xec\x9d\x98\xed\x96\x88\xec\x9d\x8c\xec\x9d\x84 Wells\nFargo Bank, N.A.(\xeb\xaf\xb8\xea\xb5\xad) \xec\xb8\xa1\xec\x97\x90 \xec\xa6\x9d\xeb\xaa\x85\xed\x95\x98\xec\x8b\xa0\xeb\x8b\xa4\xeb\x8a\x94 \xec\x9d\x98\xeb\xaf\xb8\xec\x9e\x85\xeb\x8b\x88\xeb\x8b\xa4.\nX\xc3\x81C NH\xe1\xba\xacN V\xe1\xbb\x80 TH\xc3\x94NG D\xe1\xbb\x8aCH VI\xc3\x8aN. PH\xe1\xba\xa6N X\xc3\x81C NH\xe1\xba\xacN N\xc3\x80Y \xc4\x90\xc6\xaf\xe1\xbb\xa2C \xc3\x81P D\xe1\xbb\xa4NG N\xe1\xba\xbeU\nQU\xc3\x9d V\xe1\xbb\x8a \xc4\x90\xc3\x83 CH\xe1\xbb\x8cN TH\xe1\xba\xa2O LU\xe1\xba\xacN V\xe1\xbb\x80 VI\xe1\xbb\x86C M\xe1\xbb\x9e TR\xc6\xaf\xc6\xa0NG M\xe1\xbb\xa4C T\xe1\xba\xa0I NG\xc3\x82N H\xc3\x80NG\nCH\xc3\x9aNG T\xc3\x94I B\xe1\xba\xb0NG TI\xe1\xba\xbeNG T\xc3\x82Y BAN NHA, TRUNG QU\xe1\xbb\x90C, H\xc3\x80N QU\xe1\xbb\x90C, VI\xe1\xbb\x86T NAM\nHO\xe1\xba\xb6C TAGALOG. V\xe1\xbb\x9bi vi\xe1\xbb\x87c k\xc3\xbd \xc4\x91\xc6\xa1n xin c\xe1\xba\xa5p th\xe1\xba\xbb t\xc3\xadn d\xe1\xbb\xa5ng, s\xe1\xbb\xad d\xe1\xbb\xa5ng hay n\xe1\xba\xbfu kh\xc3\xb4ng th\xc3\xac ch\xe1\xba\xa5p nh\xe1\xba\xadn\nTh\xe1\xba\xbb n\xc3\xa0y hay Tr\xc6\xb0\xc6\xa1ng m\xe1\xbb\xa5c li\xc3\xaan quan \xc4\x91\xc6\xb0\xe1\xbb\xa3c c\xe1\xba\xa5p cho qu\xc3\xbd v\xe1\xbb\x8b, qu\xc3\xbd v\xe1\xbb\x8b x\xc3\xa1c nh\xe1\xba\xadn v\xe1\xbb\x9bi Wells Fargo Bank,\nN.A. (ch\xc3\xbang t\xc3\xb4i) r\xe1\xba\xb1ng: (1) Qu\xc3\xbd v\xe1\xbb\x8b \xc4\x91\xc3\xa3 nh\xe1\xba\xadn \xc4\x91\xc6\xb0\xe1\xbb\xa3c v\xc3\xa0 th\xe1\xba\xa3o lu\xe1\xba\xadn v\xe1\xbb\x9bi th\xc3\xb4ng d\xe1\xbb\x8bch vi\xc3\xaan c\xe1\xbb\xa7a m\xc3\xacnh v\xe1\xbb\x81\nTh\xe1\xbb\x8fa thu\xe1\xba\xadn n\xc3\xa0y, v\xc3\xa0 qu\xc3\xbd v\xe1\xbb\x8b c\xc5\xa9ng nh\xc6\xb0 th\xc3\xb4ng d\xe1\xbb\x8bch vi\xc3\xaan \xc4\x91\xe1\xbb\x81u \xc4\x91\xc3\xa3 c\xc3\xb3 c\xc6\xa1 h\xe1\xbb\x99i trao \xc4\x91\xe1\xbb\x95i v\xe1\xbb\x9bi ch\xc3\xbang t\xc3\xb4i v\xe1\xbb\x81\nc\xc3\xa1c \xc4\x91i\xe1\xbb\x81u kho\xe1\xba\xa3n v\xc3\xa0 \xc4\x91i\xe1\xbb\x81u ki\xe1\xbb\x87n ghi trong nh\xe1\xbb\xafng t\xc3\xa0i li\xe1\xbb\x87u \xc4\x91\xc3\xadnh k\xc3\xa8m n\xc3\xa0y; (2) Th\xc3\xb4ng d\xe1\xbb\x8bch vi\xc3\xaan c\xe1\xbb\xa7a\nqu\xc3\xbd v\xe1\xbb\x8b ph\xe1\xba\xa3i t\xe1\xbb\xab 18 tu\xe1\xbb\x95i tr\xe1\xbb\x9f l\xc3\xaan, th\xc3\xb4ng th\xe1\xba\xa1o c\xe1\xba\xa3 ti\xe1\xba\xbfng Anh c\xc5\xa9ng nh\xc6\xb0 ng\xc3\xb4n ng\xe1\xbb\xaf m\xc3\xa0 qu\xc3\xbd v\xe1\xbb\x8b \xc4\x91\xc3\xa3 ch\xe1\xbb\x8dn s\xe1\xbb\xad\nd\xe1\xbb\xa5ng \xc4\x91\xe1\xbb\x83 trao \xc4\x91\xe1\xbb\x95i v\xe1\xbb\x9bi ch\xc3\xbang t\xc3\xb4i v\xe1\xbb\x81 c\xc3\xa1c \xc4\x91i\xe1\xbb\x81u kho\xe1\xba\xa3n v\xc3\xa0 \xc4\x91i\xe1\xbb\x81u ki\xe1\xbb\x87n c\xe1\xbb\xa7a Tr\xc6\xb0\xc6\xa1ng m\xe1\xbb\xa5c, v\xc3\xa0 kh\xc3\xb4ng ph\xe1\xba\xa3i\nl\xc3\xa0 nh\xc3\xa2n vi\xc3\xaan c\xe1\xbb\xa7a B\xc3\xaan b\xc3\xa1n ho\xe1\xba\xb7c \xc4\x91\xc6\xb0\xe1\xbb\xa3c B\xc3\xaan b\xc3\xa1n gi\xe1\xbb\x9bi thi\xe1\xbb\x87u ; (3) Qu\xc3\xbd v\xe1\xbb\x8b hi\xe1\xbb\x83u v\xc3\xa0 \xc4\x91\xe1\xbb\x93ng \xc3\xbd v\xe1\xbb\x9bi nguy\xc3\xaan\nv\xc4\x83n n\xe1\xbb\x99i dung c\xe1\xbb\xa7a c\xc3\xa1c \xc4\x91i\xe1\xbb\x81u kho\xe1\xba\xa3n v\xc3\xa0 \xc4\x91i\xe1\xbb\x81u ki\xe1\xbb\x87n \xc4\x91\xc6\xb0\xe1\xbb\xa3c ghi trong nh\xe1\xbb\xafng t\xc3\xa0i li\xe1\xbb\x87u \xc4\x91\xc3\xadnh k\xc3\xa8m n\xc3\xa0y.\nSERTIPIKASYON NG TAGAPAGSALING-WIKA. ILALAPAT ANG SERTIPIKASYONG ITO\nKUNG NAPILI MONG TALAKAYIN ANG PAGBUBUKAS NG ACCOUNT SA AMIN SA SPANISH,\nCHINESE, KOREAN, VIETNAMESE, O TAGALOG. Sa paglagda ng aplikasyon sa credit card,\npaggamit o kundi man ay pagtanggap ng Card o kaugnay na Account na ibinigay sa iyo,\npinatototohanan mo sa Wells Fargo Bank, N.A. (sa amin) na: (1) Natanggap mo at tinalakay\nang Kasunduang ito sa iyong tagapagsaling-wika at ikaw at ang iyong tagapagsalingwika ay nabigyan ng pagkakataong talakayin sa amin ang mga tuntunin at kundisyon na\nmatatagpuan sa mga nakalakip na dokumentong ito; (2) Ang iyong tagapagsaling-wika ay\nhindi mas bata sa 18 taong gulang at lubos na marunong sa Ingles at sa wika na napili mo\npara talakayin sa amin ang mga tuntunin at kundisyon ng iyong Account, at hindi nakaempleyo sa o nakuha sa pamamagitan ng Mangangalakal (o \xe2\x80\x9cMerchant\xe2\x80\x9d); (3) Nauunawaan\nat sinasang-ayunan mo ang mga tuntunin at kundisyong nakasaad sa mga nakalakip na\ndokumentong ito ayon sa nakasulat.\nNotices\nIN NEW JERSEY: Certain provisions of this Agreement are subject to applicable law. As a\nresult, they may be void, unenforceable or inapplicable in some jurisdictions. None of these\nprovisions, however, is void, unenforceable or inapplicable in New Jersey.\nIN OHIO: The Ohio laws against discrimination require that all creditors make credit\nequally available to all creditworthy customers, and that credit reporting agencies maintain\nseparate credit histories on each individual upon request. The Ohio Civil Rights Commission\nadministers compliance with this law.\nIN WISCONSIN: If you are married, please contact us immediately at: 1-855-412-2787 and\nprovide us with the name and address of your spouse. We are required by law to inform your\nspouse that you have opened an account with us. Also, please note that no provision of a\nmarital property agreement (including a Statutory Individual Property Agreement pursuant\nto Sec. 766.587, Wis. Stat.), unilateral statement classifying income from separate property\nunder Sec. 766.59, or court decree under Sec. 766.70 adversely affects the creditor unless\nthe creditor is furnished with a copy of the document prior to the credit transaction or has\nactual knowledge of its adverse provisions at the time the obligation is incurred.\nTHE MILITARY LENDING ACT NOTICE: Federal law provides important protections\nto members of the Armed Forces and their dependents relating to extensions of\nconsumer credit. In general, the costs of consumer credit to a member of the Armed\nForces and his or her spouse or dependent may not exceed an annual percentage rate\nof 36 percent. This rate must include, as applicable to the credit transaction or account:\nThe costs associated with credit insurance premiums; fees for ancillary products sold in\nconnection with the credit transaction; any application fee charged (other than certain\napplication fees for specified credit transactions or accounts); and any participation fee\ncharged (other than certain participation fees for a credit card account). Please Note:\nThere are NO credit insurance premiums, fees for ancillary products, or application\nfees with this Account.\n\nYou may contact us at 1-844-363-9971 for information about the Military Annual\nPercentage Rate and a description of your payment obligation.\nThe Arbitration Agreement does not apply to you if you are covered by the Military\nLending Act nor do any provisions that waive any right to legal recourse under any\nstate or federal law to the extent required by the Military Lending Act.\nYour Billing Rights: Keep This Document For Future Use\nThis notice tells you about your rights and our responsibilities under the Fair Credit Billing\nAct.\nWhat To Do If You Find A Mistake On Your Statement\nIf you think there is an error on your statement, write to us at:\nDillard\xe2\x80\x99s Card Services / Wells Fargo Bank, N.A.\nP.O. Box 522\nDes Moines, IA 50306-0522\nIn your letter, give us the following information:\n\xe2\x80\xa2 Account information: Your name and Account number.\n\xe2\x80\xa2 Dollar amount: The dollar amount of the suspected error.\n\xe2\x80\xa2 Description of problem: If you think there is an error on your bill, describe what you\nbelieve is wrong and why you believe it is a mistake.\nYou must contact us:\n\xe2\x80\xa2 Within 60 days after the error appeared on your statement.\n\xe2\x80\xa2 At least 3 business days before an automated payment is scheduled, if you want to stop\npayment on the amount you think is wrong.\nYou must notify us of any potential errors in writing. You may call us, but if you do we are\nnot required to investigate any potential errors and you may have to pay the amount in\nquestion.\nWhat Will Happen After We Receive Your Letter\nWhen we receive your letter, we must do two things:\n1. Within 30 days of receiving your letter, we must tell you that we received your letter. We\nwill also tell you if we have already corrected the error.\n2. Within 90 days of receiving your letter, we must either correct the error or explain to\nyou why we believe the bill is correct.\nWhile we investigate whether or not there has been an error:\n\xe2\x80\xa2 We cannot try to collect the amount in question, or report you as delinquent on that\namount.\n\xe2\x80\xa2 The charge in question may remain on your statement, and we may continue to charge\nyou interest on that amount.\n\xe2\x80\xa2 While you do not have to pay the amount in question, you are responsible for the\nremainder of your balance.\n\xe2\x80\xa2 We can apply any unpaid amount against your credit limit.\nAfter We Finish Our Investigation, One Of Two Things Will Happen\n\xe2\x80\xa2 If we made a mistake: You will not have to pay the amount in question or any interest or\nother fees related to that amount.\n\xe2\x80\xa2 If we do not believe there was a mistake: You will have to pay the amount in question,\nalong with applicable interest and fees. We will send you a statement of the amount\nyou owe and the date payment is due. We may then report you as delinquent if you do\nnot pay the amount we think you owe.\nIf you receive our explanation but still believe your bill is wrong, you must write to us\nwithin 10 days telling us that you still refuse to pay. If you do so, we cannot report you as\ndelinquent without also reporting that you are questioning your bill. We must tell you\nthe name of anyone to whom we reported you as delinquent, and we must let those\norganizations know when the matter has been settled between us.\nIf we do not follow all of the rules above, you do not have to pay the first $50 of the amount\nyou question even if your bill is correct.\nYour Rights If You Are Dissatisfied With Your Credit Card Purchases\nIf you are dissatisfied with the goods or services that you have purchased with your credit\ncard, and you have tried in good faith to correct the problem with the merchant, you may\nhave the right not to pay the remaining amount due on the purchase.\nTo use this right, all of the following must be true:\n1. The purchase must have been made in your home state or within 100 miles of your\ncurrent mailing address, and the purchase price must have been more than $50. (Note:\nNeither of these are necessary if your purchase was based on an advertisement we\nmailed to you, or if we own the company that sold you the goods or services.)\n2. You must have used your credit card for the purchase. Purchases made with cash\nadvances from an ATM or with a check that accesses your Credit Card Account do not\nqualify.\n3. You must not yet have fully paid for the purchase.\nIf all of the criteria above are met and you are still dissatisfied with the purchase, contact\nus in writing at:\nDillard\xe2\x80\x99s Card Services / Wells Fargo Bank, N.A.\nP.O. Box 522\nDes Moines, IA 50306-0522\nWhile we investigate, the same rules apply to the disputed amount as discussed above.\nAfter we finish our investigation, we will tell you our decision. At that point, if we think you\nowe an amount and you do not pay, we may report you as delinquent.\nThe credit card program is issued and administered by Wells Fargo Bank, N.A. pursuant to\na license from American Express. American Express is a federally registered service mark\nof American Express.\n\n4 of 5\n\n6102OA DILLARDS AMEX 0221\n\n\x0cDILLARD\xe2\x80\x99S AMERICAN EXPRESS\xc2\xae CREDIT CARD AGREEMENT\nImportant Terms of Your Credit Card Account\nInterest Rates and Interest Charges\nAnnual Percentage Rate (APR)\nThis APR will vary with the market based on the U.S. Prime Rate.\nfor Purchases\nAPR for Cash Advances\n26.99%\nThis APR will vary with the market based on the U.S. Prime Rate.\nPaying Interest\nYour due date is at least 23 days after the close of each billing cycle. We will not charge you any interest\non purchases if you pay your entire balance by the due date each month. We will begin charging interest\non cash advances on the transaction date.\nMinimum Interest Charge\nIf you are charged interest, the charge will be no less than $1.00.\n\n24.99%\n\nFor Credit Card Tips from the To learn more about factors to consider when applying for or using a credit card, visit the website\nConsumer Financial Protection of the Consumer Financial Protection Bureau at https://www.consumerfinance.gov/learnmore.\nBureau\nFees\nAnnual Fee\nNone\nTransaction Fees\n\xe2\x80\xa2 Cash Advance\nEither $10.00 or 4% of the amount of each cash advance, whichever is greater.\n\xe2\x80\xa2 Foreign Currency Conversion 3% of each transaction converted to U.S. dollars\nPenalty Fees\n\xe2\x80\xa2\nUp to $40.00\nHow We Will Calculate Your Balance: We use a method called \xe2\x80\x9caverage daily balance (including new purchases).\xe2\x80\x9d See your Agreement for\nmore details.\nBilling Rights: Information on your rights to dispute transactions and how to exercise those rights is provided in your Agreement.\nHow We Will Calculate Your Late Payment Fee: The fee will be the lesser of the Total Minimum Payment Due or $29.00. For any subsequent\nevent within a rolling six billing cycle period, the fee will be the lesser of the Total Minimum Payment Due or $40.00.\nHow We Will Calculate Your Variable APRs: The APR used to figure interest for purchases on your Account is figured by adding a margin\nof 21.74 percentage points to the U.S. Prime Rate for that Billing Cycle. The APR used to figure interest for cash advances is figured by\nadding a margin of 23.74 percentage points to the U.S. Prime Rate. These rates vary with the market based on the U.S. Prime Rate. See your\nAgreement for more details.\nThe information about the cost of credit described in this Agreement is accurate as of February 2021. This information may have changed\nafter that date. To find out what may have changed, call us at 1-866-834-6294.\nARBITRATION AGREEMENT\nBinding Arbitration. You and Wells Fargo Bank, N.A. (the \xe2\x80\x9cBank\xe2\x80\x9d), including the Bank\xe2\x80\x99s assignees, agents, employees, officers, directors, shareholders, parent companies,\nsubsidiaries, affiliates, predecessors and successors, agree that if a Dispute (as defined below) arises between you and the Bank, upon demand by either you or the Bank, the\nDispute shall be resolved by the following arbitration process. However, the Bank shall not initiate an arbitration to collect a consumer debt, but reserves the right to arbitrate\nall other disputes with its consumer customers. A \xe2\x80\x9cDispute\xe2\x80\x9d is any unresolved disagreement between you and the Bank. It includes any disagreement relating in any way to\nyour Credit Card Account (\xe2\x80\x9cAccount\xe2\x80\x9d) or related services. It includes claims based on broken promises or contracts, torts, or other wrongful actions. It also includes statutory,\ncommon law and equitable claims. A Dispute also includes any disagreements about the meaning or application of this Arbitration Agreement. This Arbitration Agreement\nshall survive the payment or closure of your Account. You understand and agree that you and the Bank are waiving the right to a jury trial or trial before a judge in\na public court. As the sole exception to this Arbitration Agreement, you and the Bank retain the right to pursue in small claims court any Dispute that is within that court\xe2\x80\x99s\njurisdiction. If either you or the Bank fails to submit to binding arbitration following lawful demand, the party so failing bears all costs and expenses incurred by the other in\ncompelling arbitration.\nArbitration Procedure; Severability. Either you or the Bank may submit a Dispute to binding arbitration at any time notwithstanding that a lawsuit or other proceeding\nhas been previously commenced. Neither you nor the Bank shall be entitled to join or consolidate disputes by or against others in any arbitration, or to include in\nany arbitration any dispute as a representative or member of a class, or to act in a private attorney general capacity. Each arbitration, including the selection of the\narbitrator(s) shall be administered by the American Arbitration Association (AAA), or such other administrator as you and the Bank may mutually agree to (the AAA or such\nother mutually agreeable administrator to be referred to hereinafter as the \xe2\x80\x9cArbitration Administrator\xe2\x80\x9d), according to the Commercial Arbitration Rules and the Supplemental\nProcedures for Consumer Related Disputes (\xe2\x80\x9cAAA Rules\xe2\x80\x9d). To the extent that there is any variance between the AAA Rules and this Arbitration Agreement, this Arbitration\nAgreement shall control. Arbitrator(s) must be members of the state bar where the arbitration is held, with expertise in the substantive laws applicable to the subject matter\nof the Dispute. No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a party\nrequired in the ordinary course of its business or by applicable law or regulation. You and the Bank (the \xe2\x80\x9cParties\xe2\x80\x9d) agree that in this relationship: (1) The Parties are participating\nin transactions involving interstate commerce; and (2) This Arbitration Agreement and any resulting arbitration are governed by the provisions of the Federal Arbitration Act\n(Title 9 of the United States Code), and, to the extent any provision of that Act is inapplicable, unenforceable or invalid, the laws of the state of South Dakota. If any of the\nprovisions of this Arbitration Agreement dealing with class action, class arbitration, private attorney general action, other representative action, joinder, or consolidation is\nfound to be illegal or unenforceable, that invalid provision shall not be severable and this entire Arbitration Agreement shall be unenforceable.\nRights Preserved. This Arbitration Agreement does not prohibit the Parties from exercising any lawful rights or using other available remedies to preserve, foreclose or obtain\npossession of real or personal property; exercise self-help remedies, including setoff and repossession rights; or obtain provisional or ancillary remedies such as injunctive\nrelief, attachment, garnishment or the appointment of a receiver by a court of competent jurisdiction. Any statute of limitations applicable to any Dispute applies to any\narbitration between the Parties. The provisions of this Arbitration Agreement shall survive termination, amendment or expiration of the Account or any other relationship\nbetween you and the Bank.\nFees and Expenses of Arbitration. Arbitration fees shall be determined by the rules or procedures of the Arbitration Administrator, unless limited by applicable law. Please\ncheck with the Arbitration Administrator to determine the fees applicable to any arbitration you may file. If the applicable law of the state in which you opened your Account\nlimits the amount of fees and expenses to be paid by you, then no allocation of fees and expenses to you shall exceed this limitation. Unless inconsistent with applicable law,\neach of us shall bear the expense of our own attorney, expert and witness fees, regardless of which of us prevails in the arbitration.\nMilitary Lending Act. The Arbitration Agreement does not apply to you if you are covered by the Military Lending Act nor do any provisions that waive any right to legal\nrecourse under any state or federal law to the extent required by the Military Lending Act. Please see The Military Lending Act Notice in the Agreement for more information.\n5 of 5\n\n6102OA DILLARDS AMEX 0221\n\n\x0c' |
Exhibit 10.32
STOCK PURCHASE AGREEMENT
by and among
FIRST COMMUNITY BANCORP
and
THE PURCHASERS LISTED ON SCHEDULE 1 HERETO
August 26, 2005
FIRST COMMUNITY BANCORP
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this “Agreement”) is made as of August 26, 2005,
by and between First Community Bancorp, a California corporation (the
“Company”), and the Purchasers listed on Schedule 1 hereto (“Purchasers”).
RECITALS
WHEREAS, the Company has authorized, and has filed a registration statement (the
“Registration Statement”) on Form S-3 under the Securities Act of 1933, as
amended (the “Act”), with respect to, the sale and issuance of an aggregate of
up to 3,400,000 shares of its Common Stock, no par value (the “Common Stock”);
WHEREAS, Purchasers collectively desire to purchase shares of
Common Stock on the terms and conditions set forth herein, and the Company
desires to issue and sell such shares to Purchasers on the terms and conditions
set forth herein;
promises hereinafter set forth, the parties hereto agree as follows:
SECTION 1
AGREEMENT TO SELL AND PURCHASE
Subject to the terms and conditions hereof, Purchasers jointly agree to purchase
from the Company, on the Closing Date (as defined below),
shares (the “Shares”) of Common Stock, with each individual purchaser purchasing
the number of Shares set forth opposite its name on Schedule 1, and the Company
agrees to issue and sell such Shares to Purchasers, for an aggregate purchase
price (the “Purchase Price”) equal to $ .
SECTION 2
CLOSING, DELIVERY AND PAYMENT
2.1 CLOSING. THE CLOSING (THE “CLOSING”) OF THE
PURCHASE AND SALE OF THE SHARES SHALL TAKE PLACE AT THE OFFICES OF IRELL &
MANELLA LLP, AT 10:00 A.M., LOCAL TIME ON FRIDAY, AUGUST 26, 2005, OR AT SUCH
TIME AFTER THE LAST TO BE WAIVED OR FULFILLED OF THE CONDITIONS SET FORTH IN
SECTION 6 HAS BEEN FULFILLED OR WAIVED, BUT IN NO EVENT LATER THAN 5:00 P.M. ON
FRIDAY, AUGUST 26, 2005 (IT BEING UNDERSTOOD THAT NEITHER PARTY HERETO SHALL
HAVE THE OBLIGATION TO CLOSE THE PURCHASE AND SALE OF SHARES HEREUNDER IF THE
CLOSING SHALL NOT HAVE OCCURRED BY SUCH DATE EXCEPT TO THE EXTENT THE CLOSING
SHALL HAVE FAILED TO OCCUR DUE TO A PARTY’S FAILURE TO PERFORM ITS OBLIGATIONS
HEREUNDER, IN WHICH CASE SUCH PARTY SHALL REMAIN BOUND BY ITS OBLIGATIONS
HEREUNDER). THE DATE ON WHICH THE CLOSING OCCURS IS REFERRED TO HEREIN AS THE
“CLOSING DATE.”
2.2 DELIVERY. PRIOR TO CLOSING, IF PURCHASERS
INTEND TO RECEIVE THEIR SHARES IN BOOK-ENTRY FORM, PURCHASERS SHALL HAVE
SUBMITTED, OR CAUSED THE SUBMISSION OF, A REQUEST TO THE DEPOSITORY TRUST
COMPANY FOR THE TRANSFER OF THE SHARES TO IT IN SUCH DENOMINATIONS AND IN SUCH
NAMES AS PURCHASERS SHALL DETERMINE, SUBJECT TO RECEIPT BY THE COMPANY OF THE
PURCHASE PRICE. AT THE CLOSING, SUBJECT TO THE TERMS AND CONDITIONS HEREOF, THE
COMPANY WILL DELIVER TO PURCHASERS THE SHARES IN BOOK ENTRY FORM THROUGH THE
FACILITIES OF THE DEPOSITORY TRUST COMPANY, OR IN CERTIFICATE FORM, IN EITHER
CASE PURSUANT TO INSTRUCTIONS OF THE PURCHASERS AS SET FORTH ON
SCHEDULE 2.2(A) HERETO, FREE AND CLEAR OF ANY LIENS OR OTHER ENCUMBRANCES (OTHER
THAN THOSE PLACED THEREON BY OR ON BEHALF OF ANY PURCHASER), AND PURCHASERS,
THROUGH THE PURCHASER OR ENTITY IDENTIFIED ON SCHEDULE 1 AS THE PURCHASERS’
REPRESENTATIVE (THE “PURCHASERS’ REPRESENTATIVE”), WILL MAKE PAYMENT TO THE
COMPANY OF THE PURCHASE PRICE, BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS
TO AN ACCOUNT DESIGNED BY THE COMPANY AND SET FORTH IN SCHEDULE 2.2(B) HERETO.
THE DELIVERY OF THE SHARES WILL BE PRECEDED BY THE DELIVERY OF, OR ACCOMPANIED
BY, THE PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT, AS SUPPLEMENTED TO
REFLECT THE TERMS OF THE ISSUANCE AND SALE OF THE SHARES (AS SO SUPPLEMENTED,
AND INCLUDING ALL MATERIAL INCORPORATED BY REFERENCE THEREIN, THE
“PROSPECTUS”). PURCHASERS, ACTING THROUGH THE PURCHASERS’ REPRESENTATIVE, AND
THE COMPANY SHALL EXECUTE A CROSS RECEIPT ACKNOWLEDGING RECEIPT OF THE SHARES
AND THE PURCHASE PRICE, RESPECTIVELY.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Purchasers as follows:
3.1 ORGANIZATION AND STANDING; CERTIFICATE AND
BYLAWS. THE COMPANY IS A CORPORATION DULY ORGANIZED AND EXISTING UNDER, AND BY
VIRTUE OF, THE LAWS OF THE STATE OF CALIFORNIA AND IS IN GOOD STANDING UNDER
SUCH LAWS. THE COMPANY HAS REQUISITE CORPORATE POWER AND AUTHORITY TO OWN AND
OPERATE ITS PROPERTIES AND ASSETS AND TO CARRY ON ITS BUSINESS AS CURRENTLY
CONDUCTED AND AS PROPOSED TO BE CONDUCTED. THE COMPANY IS CURRENTLY QUALIFIED
TO DO BUSINESS IN EACH STATE IN WHICH THE FAILURE TO BE SO QUALIFIED WOULD HAVE
A MATERIAL ADVERSE EFFECT ON THE COMPANY’S BUSINESS AS NOW CONDUCTED AND AS
PROPOSED TO BE CONDUCTED.
3.2 CORPORATE POWER. THE COMPANY HAS ALL
REQUISITE CORPORATE POWER AND AUTHORITY TO EXECUTE AND DELIVER THIS AGREEMENT;
TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY; AND TO CARRY OUT AND PERFORM
ITS OBLIGATIONS UNDER THE TERMS HEREOF.
3.3 AUTHORIZATION. THIS AGREEMENT HAS BEEN DULY
AUTHORIZED, EXECUTED AND DELIVERED BY THE COMPANY AND CONSTITUTES A VALID AND
LEGALLY BINDING AGREEMENT, ENFORCEABLE AGAINST THE COMPANY IN ACCORDANCE WITH
ITS TERMS. THE SHARES HAVE BEEN DULY AND VALIDLY AUTHORIZED AND, WHEN ISSUED
PURSUANT TO THE TERMS HEREOF, WILL BE VALIDLY ISSUED, FULLY PAID AND
NONASSESSABLE AND WILL CONFORM TO THE DESCRIPTION THEREOF CONTAINED IN THE
REGISTRATION STATEMENT; AND THE SHARES WILL BE FREE OF ANY LIENS OR
ENCUMBRANCES, OTHER THAN ANY LIENS OR ENCUMBRANCES CREATED BY OR IMPOSED UPON
PURCHASERS. THE SHARES ARE NOT SUBJECT TO ANY PREEMPTIVE RIGHTS OR RIGHTS OF
FIRST REFUSAL SET FORTH IN THE CHARTER DOCUMENTS OF THE COMPANY OR IN ANY
AGREEMENT BY WHICH THE COMPANY IS BOUND.
2
3.4 COMPLIANCE. THE EXECUTION, DELIVERY, AND
PERFORMANCE OF AND COMPLIANCE WITH THIS AGREEMENT AND THE ISSUANCE OF THE SHARES
BY THE COMPANY HAVE NOT RESULTED AND WILL NOT RESULT IN (I) ANY VIOLATION OF,
CONFLICT WITH OR THE TERMINATION OF ANY RIGHT, THE LOSS OF ANY BENEFIT OR A
DEFAULT (WITH OR WITHOUT NOTICE AND THE PASSAGE OF TIME) UNDER (X) THE COMPANY’S
CHARTER OR BY-LAWS OR (Y) ANY AGREEMENTS TO WHICH THE COMPANY IS A PARTY, OR ANY
APPLICABLE STATUTE, RULE, REGULATION, ORDER OR RESTRICTION OF ANY FEDERAL OR
STATE GOVERNMENTAL ENTITY OR AGENCY THEREOF, OR (II) THE CREATION OF ANY
MORTGAGE, PLEDGE, LIEN, ENCUMBRANCE, OR CHARGE UPON ANY OF THE PROPERTIES OR
ASSETS OF THE COMPANY THAT, IN THE CASE OF ANY SUCH MATTER REFERRED TO IN EITHER
CLAUSE (I) OR (II), WOULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT UPON THE COMPANY.
3.5 GOVERNMENTAL CONSENT, ETC. NO CONSENT,
APPROVAL OR AUTHORIZATION OF OR DESIGNATION, DECLARATION OR FILING WITH ANY
GOVERNMENTAL AUTHORITY ON THE PART OF THE COMPANY IS REQUIRED IN CONNECTION WITH
THE VALID EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE OFFER, SALE OR
ISSUANCE OF THE SHARES, OR THE CONSUMMATION OF ANY OTHER TRANSACTION
CONTEMPLATED HEREBY.
3.6 REGISTRATION. THE REGISTRATION STATEMENT
(FILE NO. 333-124948) COVERING SHARES OF COMMON STOCK, INCLUDING THE SHARES, HAS
BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”) AND
HAS BECOME EFFECTIVE. ON THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT AND
ON THE DATE HEREOF, THE REGISTRATION STATEMENT CONFORMED IN ALL RESPECTS TO THE
REQUIREMENTS OF THE ACT AND THE RULES AND REGULATIONS OF THE COMMISSION (“SEC
REGULATIONS”) AND DID NOT INCLUDE ANY UNTRUE STATEMENT OF A MATERIAL FACT OR
OMIT TO STATE ANY MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY TO
MAKE THE STATEMENTS THEREIN NOT MISLEADING, AND ON THE DATE HEREOF AND AT THE
TIME OF FILING THE PROSPECTUS PURSUANT TO RULE 424(B) OF THE SEC REGULATIONS,
THE PROSPECTUS CONFORMED AND WILL CONFORM IN ALL RESPECTS TO THE REQUIREMENTS OF
THE ACT AND THE SEC REGULATIONS, AND AS OF SUCH DATES THE PROSPECTUS DID NOT
INCLUDE NOR WILL IT INCLUDE ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO
STATE ANY MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS THEREIN, IN LIGHT OF
THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING, EXCEPT THAT THE
FOREGOING DOES NOT APPLY TO STATEMENTS IN OR OMISSIONS FROM ANY OF SUCH
DOCUMENTS BASED UPON WRITTEN INFORMATION FURNISHED TO THE COMPANY BY PURCHASER
SPECIFICALLY FOR USE THEREIN.
SECTION 4
Each Purchaser hereby represents and warrants to the Company with respect to the
purchase of the Shares as follows:
4.1 INSTITUTIONAL ACCREDITED INVESTOR;
EXPERIENCE. SUCH PURCHASER IS AN INSTITUTIONAL “ACCREDITED INVESTOR” (AS
DEFINED IN RULE 501 UNDER THE ACT), WITH SUBSTANTIAL EXPERIENCE IN EVALUATING
AND INVESTING IN SECURITIES OF COMPANIES SIMILAR TO THE COMPANY SO THAT IT IS
HAS THE CAPACITY TO PROTECT ITS OWN INTERESTS.
3
4.2 INVESTMENT. IT IS ACQUIRING THE SHARES FOR
INVESTMENT FOR ITS OWN ACCOUNT OR FOR THE ACCOUNTS OF PERSONS FOR WHOM IT ACTS
AS AN INVESTMENT ADVISOR, IN EITHER CASE FOR INVESTMENT PURPOSES, AND NOT WITH
THE VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF. SUCH
PURCHASER UNDERSTANDS THAT IT MAY BE DEEMED AN “UNDERWRITER” UNDER THE ACT IN
CONNECTION WITH ANY SUCH DISTRIBUTION AND, UNDER SUCH CIRCUMSTANCES, SUCH
PURCHASER MAY BE SUBJECT TO VARIOUS STATUTORY REQUIREMENTS AND SEC REGULATIONS.
NEITHER IT NOR ANY OF ITS AFFILIATES NOR ANY ENTITY MANAGED BY IT HAS, WITH THE
COMPANY OR ANY THIRD PARTY, ANY PLANS OR AGREEMENTS TO RESELL OR OTHERWISE
DISTRIBUTE THE SHARES.
4.3 NO RELIANCE; CONFIDENTIALITY OF
INFORMATION. IT HAS RELIED SOLELY UPON ITS OWN INVESTIGATIONS AND DILIGENCE,
INCLUDING A REVIEW OF THE COMPANY’S PUBLICLY FILED REPORTS WITH THE COMMISSION,
THE REGISTRATION STATEMENT (INCLUDING EXHIBITS), THE PROSPECTUS AND THE
AGREEMENT, AND NOT UPON ANY OTHER INFORMATION PROVIDED BY OR ON BEHALF OF THE
COMPANY IN MAKING THE DECISION TO PURCHASE THE SHARES. IT UNDERSTANDS AND
ACKNOWLEDGES THAT NEITHER THE COMPANY NOR ANY OF THE COMPANY’S REPRESENTATIVES,
AGENTS OR ATTORNEYS IS MAKING OR HAS MADE AT ANY TIME ANY WARRANTIES OR
REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO
ANY MATTER OR THE COMMON STOCK, EXCEPT AS EXPRESSLY SET FORTH HEREIN.
4.4 ORGANIZATION AND STANDING; CERTIFICATE AND
BYLAWS. SUCH PURCHASER IS A CORPORATION, LIMITED LIABILITY COMPANY OR OTHER
ENTITY DULY ORGANIZED AND EXISTING UNDER, AND BY VIRTUE OF, THE LAWS OF THE
STATE OF ITS INCORPORATION, FORMATION OR ORGANIZATION, AND IS IN GOOD STANDING
UNDER SUCH LAWS.
4.5 CORPORATE POWER; AUTHORIZATION. SUCH
PURCHASER HAS ALL REQUISITE POWER AND AUTHORITY TO EXECUTE AND DELIVER THIS
AGREEMENT; TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY; AND TO CARRY OUT
AND PERFORM ITS OBLIGATIONS UNDER THE TERMS HEREOF. THIS AGREEMENT HAS BEEN
DULY AUTHORIZED, EXECUTED AND DELIVERED BY SUCH PURCHASER, AND CONSTITUTES A
VALID AND LEGALLY BINDING AGREEMENT, ENFORCEABLE AGAINST SUCH PURCHASER IN
ACCORDANCE WITH ITS TERMS.
4.6 COMPLIANCE. THE EXECUTION, DELIVERY, AND
PERFORMANCE OF AND COMPLIANCE WITH THIS AGREEMENT AND THE PURCHASE OF THE SHARES
BY SUCH PURCHASER HAVE NOT RESULTED AND WILL NOT RESULT IN (I) ANY VIOLATION OF,
DEFAULT (WITH OR WITHOUT NOTICE AND THE PASSAGE OF TIME) UNDER (X) SUCH
PURCHASER’S CORPORATE CHARTER OR BY-LAWS OR OTHER ORGANIZATIONAL DOCUMENTS, AS
APPLICABLE, OR (Y) ANY AGREEMENTS TO WHICH SUCH PURCHASER IS A PARTY, OR ANY
APPLICABLE STATUTE, RULE, REGULATION, ORDER OR RESTRICTION OF PURCHASER’S PLACE
OF ORGANIZATION, THE UNITED SATES OR ANY STATE OR OTHER POLITICAL SUBDIVISION
THEREOF OR OF ANY GOVERNMENTAL ENTITY OR AGENCY THEREOF, OR (II) THE CREATION OF
ANY MORTGAGE, PLEDGE, LIEN, ENCUMBRANCE, OR CHARGE UPON ANY OF THE PROPERTIES OR
ASSETS OF SUCH PURCHASER THAT, IN THE CASE OF ANY SUCH MATTER REFERRED TO IN
EITHER CLAUSE (I) OR (II), WOULD REASONABLY BE EXPECTED TO HAVE AN ADVERSE
EFFECT UPON ITS ABILITY TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY.
4.7 GOVERNMENTAL CONSENT, ETC. NO CONSENT,
GOVERNMENTAL AUTHORITY ON THE PART OF SUCH PURCHASER IS REQUIRED IN CONNECTION
WITH THE VALID EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE PURCHASE OF THE
SHARES, OR THE CONSUMMATION OF ANY OTHER TRANSACTION CONTEMPLATED HEREBY.
4
4.8 TAX LIABILITY. IT HAS REVIEWED WITH ITS OWN
TAX ADVISORS THE FEDERAL, STATE, LOCAL, AND FOREIGN TAX CONSEQUENCES OF THIS
INVESTMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT IF AND TO THE
EXTENT IT DEEMS SUCH REVIEW TO BE ADVISABLE. IT HAS RELIED SOLELY ON SUCH
ADVISORS AND NOT ON ANY STATEMENTS OR REPRESENTATIONS OF THE COMPANY OR OF ANY
AGENTS OF THE COMPANY. IT UNDERSTANDS THAT, EXCEPT AS OTHERWISE SPECIFICALLY
CONTEMPLATED BY THIS AGREEMENT, IT (AND NOT THE COMPANY) SHALL BE RESPONSIBLE
FOR ITS OWN TAX LIABILITY THAT MAY ARISE AS A RESULT OF THIS INVESTMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
4.9 PURCHASERS’ REPRESENTATIVE. EACH PURCHASER
HEREBY APPOINTS THE PURCHASERS’ REPRESENTATIVE ITS AGENT AND ATTORNEY-IN-FACT
AND AUTHORIZES THE PURCHASERS’ REPRESENTATIVE TO, AND REPRESENTS AND AGREES THAT
THE PURCHASERS’ REPRESENTATIVE MAY ACT ON ITS BEHALF WITH RESPECT TO, ALL
MATTERS AS TO WHICH THE PURCHASERS’ REPRESENTATIVE IS REQUIRED TO ACT HEREUNDER.
SECTION 5
CONDITIONS
5.1 CONDITIONS TO CLOSING OF PURCHASERS. THE
OBLIGATION OF PURCHASERS TO PURCHASE THE SHARES AT CLOSING IS, AT THE OPTION OF
PURCHASERS, ACTING THROUGH THE PURCHASERS’ REPRESENTATIVE, SUBJECT TO THE
FULFILLMENT OF THE FOLLOWING CONDITIONS AS OF THE CLOSING DATE:
(A) REPRESENTATIONS AND WARRANTIES CORRECT.
THE REPRESENTATIONS AND WARRANTIES MADE BY THE COMPANY IN SECTION 3 HEREOF SHALL
BE TRUE AND CORRECT AS OF THE CLOSING DATE.
(B) BRINGDOWN CERTIFICATE. THE COMPANY SHALL
HAVE DELIVERED TO PURCHASERS’ REPRESENTATIVE A CERTIFICATE OF THE COMPANY,
EXECUTED BY AN EXECUTIVE OFFICER OF THE COMPANY, DATED THE CLOSING DATE, AND
CERTIFYING TO THE FULFILLMENT OF THE CONDITIONS SPECIFIED IN CLAUSE (A) OF THIS
SECTION 5.1, ACCOMPANIED BY A CERTIFICATE OF THE COMPANY’S CORPORATE SECRETARY
AS TO THE INCUMBENCY OF SUCH EXECUTIVE OFFICER AND THE INCUMBENCY OF EACH
EXECUTIVE OFFICER EXECUTING THIS AGREEMENT.
5.2 CONDITIONS TO CLOSING OF COMPANY. THE
COMPANY’S OBLIGATION TO SELL AND ISSUE THE SHARES IS, AT THE OPTION OF THE
COMPANY, SUBJECT TO THE FULFILLMENT OF THE FOLLOWING CONDITIONS AS OF THE
CLOSING DATE:
THE REPRESENTATIONS AND WARRANTIES MADE BY EACH PURCHASER IN SECTION 4 HEREOF
SHALL BE TRUE AND CORRECT WHEN MADE AND SHALL BE TRUE AND CORRECT ON THE CLOSING
DATE.
(B) BRINGDOWN CERTIFICATE. PURCHASERS’
REPRESENTATIVE SHALL HAVE DELIVERED TO THE COMPANY A CERTIFICATE OF PURCHASERS,
EXECUTED BY AN EXECUTIVE OFFICER OF PURCHASERS’ REPRESENTATIVE, DATED THE
CLOSING DATE, AND CERTIFYING TO THE FULFILLMENT OF THE CONDITIONS SPECIFIED IN
CLAUSE (A) OF THIS SECTION 5.2, ACCOMPANIED BY A CERTIFICATE OF THE SECRETARY
(OR OTHER APPROPRIATE OFFICER) OF PURCHASERS’ REPRESENTATIVE AS TO THE
INCUMBENCY OF SUCH EXECUTIVE OFFICER AND THE INCUMBENCY OF EACH EXECUTIVE
OFFICER EXECUTING THIS AGREEMENT.
5
SECTION 6
MISCELLANEOUS
6.1 GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED IN ALL RESPECTS BY THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT
REFERENCE TO THE CONFLICTS OF LAW PROVISIONS THEREOF.
6.2 SURVIVAL. THE REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS MADE HEREIN SHALL SURVIVE THE CLOSING OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
6.3 SUCCESSORS AND ASSIGNS. EXCEPT AS OTHERWISE
PROVIDED HEREIN, THE PROVISIONS HEREOF SHALL INURE TO THE BENEFIT OF, AND BE
BINDING UPON, THE SUCCESSORS, ASSIGNS, HEIRS, EXECUTORS AND ADMINISTRATORS OF
THE PARTIES HERETO.
6.4 ENTIRE AGREEMENT; AMENDMENT. THIS AGREEMENT
AND THE OTHER DOCUMENTS DELIVERED PURSUANT HERETO AT THE CLOSING CONSTITUTE THE
FULL AND ENTIRE UNDERSTANDING AND AGREEMENT BETWEEN THE PARTIES WITH REGARD TO
THE SUBJECTS HEREOF AND THEREOF, AND NO PARTY SHALL BE LIABLE OR BOUND TO ANY
OTHER PARTY IN ANY MANNER BY ANY WARRANTIES, REPRESENTATIONS OR COVENANTS EXCEPT
AS SPECIFICALLY SET FORTH HEREIN OR THEREIN. EXCEPT AS EXPRESSLY PROVIDED
HEREIN, NEITHER THIS AGREEMENT NOR ANY TERM HEREOF MAY BE AMENDED, WAIVED,
DISCHARGED OR TERMINATED OTHER THAN BY A WRITTEN INSTRUMENT SIGNED BY THE PARTY
AGAINST WHOM ENFORCEMENT OF ANY SUCH AMENDMENT, WAIVER, DISCHARGE OR TERMINATION
IS SOUGHT.
6.5 NOTICES, ETC. ALL NOTICES AND OTHER
COMMUNICATIONS REQUIRED OR PERMITTED HEREUNDER SHALL BE IN WRITING AND SHALL BE
MAILED BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, OR OTHERWISE DELIVERED
BY HAND OR BY MESSENGER, ADDRESSED (A) IF TO A PURCHASER, TO THE PURCHASERS’
REPRESENTATIVE AT ITS ADDRESS AS SET FORTH UNDER ITS NAME ON SCHEDULE 1, OR TO
SUCH OTHER ADDRESS AS THE PURCHASERS’ REPRESENTATIVE SHALL HAVE FURNISHED TO THE
COMPANY IN WRITING, AND (B) IF TO THE COMPANY, TO ITS PRINCIPAL EXECUTIVE
OFFICES AND ADDRESSED TO THE ATTENTION OF THE CHIEF EXECUTIVE OFFICER, OR TO
SUCH OTHER ADDRESS AS THE COMPANY SHALL HAVE FURNISHED TO THE PURCHASERS’
REPRESENTATIVE.
Each such notice or other communication shall for all purposes of this Agreement
be treated as effective or having been given when delivered if delivered
personally, or, if sent by mail, at the earlier of its receipt or 72 hours after
the same has been deposited in a regularly maintained receptacle for the deposit
of the United States mail, addressed and mailed as aforesaid.
6.6 SPECIFIC PERFORMANCE. THE COMPANY AND EACH
PURCHASER ACKNOWLEDGE AND AGREE THAT IRREPARABLE DAMAGE TO THE OTHER PARTY WOULD
OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS AGREEMENT WERE NOT
PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE OTHERWISE BREACHED.
IT IS ACCORDINGLY AGREED THAT EACH PARTY SHALL BE ENTITLED TO AN INJUNCTION,
INJUNCTIONS OR OTHER EQUITABLE RELIEF TO PREVENT OR CURE BREACHES OF THE
PROVISIONS OF THIS AGREEMENT AND TO ENFORCE SPECIFICALLY THE TERMS AND
PROVISIONS HEREOF, THIS BEING IN ADDITION TO ANY OTHER REMEDY TO WHICH THE
PARTIES MAY BE ENTITLED BY LAW OR EQUITY.
6
6.7 EXPENSES. THE COMPANY AND PURCHASERS SHALL
BEAR THEIR OWN RESPECTIVE EXPENSES INCURRED ON ITS BEHALF WITH RESPECT TO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.
6.8 COUNTERPARTS. THIS AGREEMENT MAY BE
EXECUTED IN ANY NUMBER OF COUNTERPARTS, EACH OF WHICH SHALL BE ENFORCEABLE
AGAINST THE PARTIES ACTUALLY EXECUTING SUCH COUNTERPARTS, AND ALL OF WHICH
TOGETHER SHALL CONSTITUTE ONE INSTRUMENT.
6.9 SEVERABILITY. IN THE EVENT THAT ANY
PROVISION OF THIS AGREEMENT BECOMES OR IS DECLARED BY A COURT OF COMPETENT
JURISDICTION TO BE ILLEGAL, UNENFORCEABLE OR VOID, THIS AGREEMENT SHALL CONTINUE
IN FULL FORCE AND EFFECT WITHOUT SAID PROVISION; PROVIDED THAT NO SUCH
SEVERABILITY SHALL BE EFFECTIVE IF IT MATERIALLY CHANGES THE ECONOMIC BENEFIT OF
THIS AGREEMENT TO ANY PARTY.
6.10 TITLES AND SUBTITLES. THE TITLES AND SUBTITLES
USED IN THIS AGREEMENT ARE USED FOR CONVENIENCE ONLY AND ARE NOT CONSIDERED IN
CONSTRUING OR INTERPRETING THIS AGREEMENT.
7
This STOCK PURCHASE AGREEMENT is hereby executed as of the date first above
written.
“COMPANY”
FIRST COMMUNITY BANCORP,
a California corporation
By:
Name:
Title:
“PURCHASERS”
[name of purchaser]
By:
Name:
Title:
By:
Name:
Title:
By:
Name:
Title:
Address for notices for all Purchasers:
8
Schedule 1 – List of Purchasers
Purchaser Name
Number of Shares Purchased
Purchasers’ Representative:
9
Schedule 2.2(a) – Purchasers’ Share Instructions
Schedule 2.2(b) – Seller’s Wire Instruction
|
Exhibit 10.4
FORBEARANCE AND AMENDMENT AGREEMENT
THIS FORBEARANCE AND AMENDMENT AGREEMENT (this “Agreement”) is made as of
September 3, 2009, by and among THE MERIDIAN RESOURCE CORPORATION, a Texas
corporation (“Meridian”), THE MERIDIAN RESOURCE & EXPLORATION LLC, a Delaware
limited liability company (“TMRX”), and TMR DRILLING CORPORATION, a Texas
corporation (“TMR Drilling,” and together with Meridian and TMRX, the “Meridian
Group”), and ORION DRILLING COMPANY LLC, a Texas limited liability company and
successor to Orion Drilling Company, LP (“Orion”). Each of Meridian, TMRX, TMR
Drilling, and Orion may be referred to herein individually as a “Party” and
collectively as the “Parties.”
RECITALS
WHEREAS, TMRX and Orion have entered into (a) that certain Drilling Bid
Proposal and Daywork Drilling Contract — U.S., dated as of February 12, 2007, as
amended by the Triton Letter Agreement (as hereinafter defined), relating to the
Triton Rig (as so amended, the “Triton Drilling Contract”), and (b) that certain
Drilling Bid Proposal and Daywork Drilling Contract — U.S., dated as of
August 9, 2007, as amended by letter, dated September 4, 2008, and further
amended by the Taurus Letter Agreement (as hereinafter defined), relating to the
Taurus Rig (as so amended, the “Taurus Drilling Contract,” and together with the
Triton Drilling Contract, the “Drilling Contracts”), pursuant to which Orion has
agreed to provide daily drilling, equipment, and labor services to TMRX in
connection with the operation of certain oil and/or natural gas wells owned by
TMRX;
WHEREAS, TMR Drilling and Orion have entered into that certain Equipment
Lease (Rig No. 8) dated as of February 12, 2007, as amended from time to time
(the “Equipment Lease”), pursuant to which TMR Drilling leased the Triton Rig
and related equipment to Orion;
WHEREAS, Orion is successor by merger to Orion Drilling Company, LP and has
succeeded by operation of law to all of the obligations of Orion Drilling
Company, LP, including, without limitation, the obligations thereof under the
Equipment Lease and each of the Drilling Contracts;
WHEREAS, as of the date hereof, certain defaults and events of default as
set forth in Annex A to this Agreement have occurred and are continuing, or are
anticipated to occur, under the Equipment Lease and each of the Drilling
Contracts (the “Existing Events of Default”);
WHEREAS, the Meridian Group acknowledges that as a result of the occurrence
and continuance of the Existing Events of Defaults, Orion is entitled to seek
immediate payment in full of any unpaid obligations (if any) under the Equipment
Lease and any unpaid obligations under each of the Drilling Contracts and to
exercise any and all of its other rights and remedies (if any) with respect to
such Existing Events of Default under the Equipment Lease and Drilling
Contracts;
WHEREAS, the Meridian Group has requested that Orion forbear from taking
any present action to collect payment in full of the obligations of the Meridian
Group (if any) under the Equipment Lease and Drilling Contracts and from
exercising any of its other rights and remedies (if any) under the Equipment
Lease and Drilling Contracts or under any other agreement, document, or
instrument as a result of the Existing Events of Default or any and all other
breaches, defaults, or events of default that may hereafter occur, arise, or
exist under the Equipment Lease, either of the Drilling Contracts, or any
agreement, document, or instrument executed in connection therewith, or any
amendment, supplement, or modification of any of the foregoing (collectively,
the “Designated Events of Default”), and Orion has agreed to so forbear on the
terms and subject to the conditions set forth in this Agreement;
sufficiency of which are hereby acknowledged, and intending to be legally bound,
each of the Parties hereby agrees as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions.
1.1.1 Certain Defined Terms. Capitalized terms defined in the preamble
and the Recitals sections of this Agreement are incorporated herein by reference
and are used herein as so defined. Other capitalized terms used and not defined
in this Agreement shall have the meanings ascribed to such terms in the
Equipment Lease and Drilling Contracts, as applicable.
1.1.2 Additional Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:
“CIT” means The CIT Group/Equipment Financing, Inc., a Delaware
corporation.
“CIT Credit Agreement” means that certain Credit Agreement, dated May 2,
2008, among TMR Drilling and CIT, as amended from time to time (including by the
CIT Forbearance Agreement).
“CIT Forbearance Agreement” means that certain Forbearance and Amendment
Agreement dated September 3, 2009, by and among TMR Drilling, Meridian, TMRX,
and CIT, as administrative agent and lender under the CIT Credit Agreement.
“CIT Maturity Date” means the date that is the earlier to occur of (a) the
Maturity Date, (b) the date on which the CIT Note is paid in full by TMR
Drilling, or otherwise satisfied and discharged in full, and (c) the expiration
or termination of the CIT Forbearance Agreement and the commencement by CIT of
the exercise of its remedies as a secured creditor.
“CIT Note” means that certain Term Note Due May 2, 2013, dated May 2, 2008,
made by TMR Drilling to the order of CIT evidencing the indebtedness of TMR
Drilling to CIT under the CIT Credit Agreement.
“Expiration Period” means the period of time in duration less than a full
calendar quarter in which the Forbearance Period expires or terminates, which
period commences on the day immediately following the last day of the
immediately preceding full calendar quarter and ends on either (a) the CIT
Maturity Date, if the Forbearance Period ends on the CIT Maturity Date, or
(b) on the thirtieth (30th) day immediately following the termination or
expiration of the Forbearance Period, if the Forbearance Period ends on any date
other than the CIT Maturity Date.
“Forbearance Period” means the period commencing on the date of this
Agreement and ending on the earlier to occur of (a) the date that is fifteen
(15) days after the CIT Maturity Date, (b) the commencement of any bankruptcy or
insolvency proceedings filed by or against Meridian, (c) the expiration or
termination of the CIT Forbearance Agreement or the commencement by CIT of the
exercise of its remedies as a secured creditor, (d) a default by the Meridian
Group under this Agreement or the Security Agreement, (e) the failure or
failures by TMR Drilling to perform or make when due cash payments exceeding,
individually or in the aggregate, $50,000 with respect to obligations owing to
any one or more of Orion or third parties (respectively) pursuant to the express
terms of the Equipment Lease and which failure or failures remain
Forbearance and Amendment Agreement (Orion)
Page 2 of 13
uncured thirty (30) days after receipt of written notice thereof by Orion to TMR
Drilling, including, but not limited to, such failure or failures under
Sections 8 or 9 of the Equipment Lease (but excluding any failure to pay taxes
when due if such taxes are being contested in good faith pursuant to proceedings
diligently conducted), and (f) the date TMR Drilling transfers title to the
Triton Rig Assets to a Person other than Orion or any subsidiary or affiliate of
TMR Drilling.
“Lien” means a lien, deed of trust, mortgage, security interest,
hypothecation, pledge, or other encumbrance.
“Maturity Date” shall have the meaning set forth in the CIT Credit
Agreement.
“Meridian Quarterly Obligations” means any and all sums, amounts, and
obligations due and owing by or through the Meridian Group (or any of them or
any of their subsidiaries or affiliates) to Orion (or any of its subsidiaries
and affiliates) under the Equipment Lease, either or both of the Drilling
Contracts, or any agreement, document, or instrument executed in connection
therewith, for a single calendar quarter commencing with the calendar quarter
ended September 30, 2009 or for the Expiration Period (as applicable).
“Net Quarterly Obligations” means the net amount resulting at the end of a
single calendar quarter or at the end of the Expiration Period (as applicable)
upon the offset, setoff, and application of the Meridian Quarterly Obligations,
on the one hand, and the Orion Quarterly Obligations, on the other hand, against
each other.
“Net Cumulative Balance” means the net cumulative sums, amounts, and
obligations (without duplication) due, owing, and unpaid by or through the
Meridian Group (or any of them or any of their subsidiaries or affiliates) to
Orion (or any of its subsidiaries and affiliates), on the one hand, and by or
through Orion (or any of its subsidiaries and affiliates) to the Meridian Group
(or any of them or any of their subsidiaries or affiliates), on the other hand,
under the Equipment Lease, either or both of the Drilling Contracts, or any
agreement, document, or instrument executed in connection therewith, including,
but not limited to, the amounts referenced in Section 1.2.4 hereof to the extent
not paid or offset prior to the date of determination.
“Orion Quarterly Obligations” means any and all sums, amounts, and
obligations due and owing by or through Orion (or any of its subsidiaries and
affiliates) to the Meridian Group (or any of them or any of their subsidiaries
or affiliates) under the Equipment Lease, either or both of the Drilling
“Other Meridian Obligations” means the aggregate amount of payments
pursuant to each such Drilling Contract and Equipment Lease that Orion would
have received through the respective terms of such Drilling Contracts (as
presently in effect) through the fifteenth (15th) day after the CIT Maturity
Date but for the release contemplated in Section 1.3.4 hereof and which are not
included in such unpaid Accrued Meridian Obligations
“Permitted Liens” means those Liens identified in Annex B.
“Person” means any individual, firm, association, incorporated or
unincorporated organization, partnership, business, trust, estate, joint stock
company, joint venture, club, syndicate, limited liability company, corporation,
governmental authority, or other legal entity.
Page 3 of 13
“Put Option” means the right of TMR Drilling, exercisable at any time
within fifteen (15) days after the CIT Maturity Date at TMR Drilling’s sole
discretion and election and in full satisfaction of all unpaid Accrued Meridian
Obligations as of the CIT Maturity Date, to require Orion or its designee to
acquire the Triton Rig Assets free and clear of all Liens other than Permitted
Liens.
“Taurus Rig” means that certain land based drilling rig designated as Rig
No. 5, and identified as the Taurus rig at
http://www.oriondrilling.com/rig-taurus.html, and equipped with IDM equipment
drawworks (1500 horsepower) powered by two 800 horsepower DC traction motors,
with diesel electric generators, a Canrig 350 ton AC top drive, and other
equipment as described at such website.
“Triton Rig” means that certain land based drilling rig designated as Rig
No. 8, and identified as the Triton Rig at
http://www.oriondrilling.com/rig-triton.html, and equipped with IDM drawworks
(1500 horsepower) powered by two 800 horsepower DC traction motors, with diesel
electric generators, a Canrig 350 ton AC top drive, and other equipment as
described at such website, and further identified as being that rig presently
encumbered by a security interest and Lien in favor of CIT pursuant to the CIT
Credit Agreement.
“Triton Rig Equipment” means all equipment and accessories appurtenant to,
installed on, or attached to the Triton Rig, including, without limitation,
(a) the portable 350 ton AC top drive, model 1035 AC, and all related
accessories and appurtenances, including, but not limited to, the blower system,
control console, control and interface panel, hydraulic power unit, torque
guide, interface materials, control valve configuration, tool kit, elevator
position arm and wash pipe installation and removal tool, and the Triton
Rig-specific top drive and torque guide interfaces, manufactured by Canrig
Drilling Technology Ltd., (b) the hydraulic catwalk, and (c) those items of
equipment listed in Annex C hereto.
“Triton Rig Assets” means the Triton Rig, the Triton Rig Equipment, and the
additional assets listed in Annex D hereto relating thereto.
“Triton Letter Agreement” means that certain letter agreement, dated
April 2, 2009, between TMRX and Orion.
“Taurus Letter Agreement” means that certain letter agreement, dated
1.2 Agreement to Forbear.
1.2.1 Forbearance. During the Forbearance Period, in consideration of
the Meridian Group’s agreements and covenants contained in this Agreement, and
subject to the other terms and conditions of this Agreement, Orion hereby agrees
to forbear from exercising, and to postpone in effect, any and all of its rights
and remedies under the Equipment Lease (except as to Meridian Group obligations
under Sections 8 or 9 thereof, other than obligations to pay taxes when due, to
the extent that such obligations are for taxes being contested in good faith by
appropriate proceedings diligently conducted), each of the Drilling Contracts,
and any agreement, document, or instrument executed in connection therewith, or
any letter agreement, amendment, supplement, or modification of any of the
foregoing, arising as a result of the Designated Events of Default, other than
as provided in Sections 1.3 and 1.3.2 below. Upon the expiration or termination
of the Forbearance Period (a) such forbearance by Orion shall automatically
terminate, and (b) Orion shall be entitled to exercise, without any further
notice, any and all of its rights and remedies under this Agreement, the
Equipment Lease, each of the Drilling
Page 4 of 13
Contracts, but subject to the Intercreditor Agreement and the Security
Agreement. In consideration of Orion’s agreements and covenants contained in
this Agreement, the Meridian Group hereby agrees that all statutes of limitation
applicable to any and all defaults, rights, remedies, or one or more of the
provisions of the Equipment Lease, Drilling Contracts, and any agreement,
document, or instrument executed in connection therewith, or any letter
agreement, amendment, supplement, or modification thereof, shall be tolled,
suspended, and shall not run for a period of time concurrent with the
Forbearance Period and the thirty (30) days immediately following the date of
expiration thereof.
1.2.2 No Extension. The Meridian Group agrees that Orion shall have no
obligation to extend the Forbearance Period.
1.2.3 No Waiver, Restatement, or Amendment. Notwithstanding Orion’s
agreement to forbear set forth in Section 1.2.1 above, (a) such forbearance by
Orion is not intended to and shall not constitute, and shall not be construed or
interpreted to constitute, a waiver of the Designated Events of Default,
(b) this Agreement and such forbearance by Orion shall not constitute a
restatement of the obligations of the Meridian Group under the Equipment Lease
or either of the Drilling Contracts, and (c) this Agreement and such forbearance
by Orion shall not constitute an amendment or modification of any of the terms
of the Equipment Lease or either of the Drilling Contracts, except as expressly
set forth herein. Except as expressly set forth herein, (i) the terms and
conditions of the Equipment Lease and each of the Drilling Contracts are and
shall remain in full force and effect, and the same are hereby ratified and
confirmed in all respects by the Meridian Group, and (ii) Orion reserves all
rights, privileges, and remedies granted under this Agreement, the Equipment
Lease and each of the Drilling Contracts, and such rights, privileges, and
remedies may, at Orion’s sole election, be exercised at any time and from time
to time and without notice, except to the extent notice is required (and is not
waived) under such agreements, contracts, and instruments.
1.2.4 Outstanding Obligations. The Meridian Group hereby acknowledges
that (a) as of July 31, 2009, the accrued and unpaid obligations of TMR Drilling
under the Equipment Lease are equal to zero, (b) as of July 31, 2009, the
accrued, past due, and unpaid obligations of TMRX under the Triton Drilling
Contract are equal to $195,450.89, after giving effect to any offset and setoff
agreements pertaining thereto; (c) as of July 31, 2009, the accrued, past due,
and unpaid obligations of TMRX under the Taurus Drilling Contract are equal to
$1,830,546.97, after giving effect to any offset and setoff agreements
pertaining thereto; and (d) the payment of such amounts is not subject to any
defense, counterclaim, recoupment, or offset of any kind, except as otherwise
provided in this Agreement (including Section 1.3 below), provided, that such
amounts shall be subject to confirmation and proposals for revision (based on
audit or other review of the applicable drilling contract) by the Meridian Group
on or before the earlier of December 31, 2010 and the CIT Maturity Date, and
Orion hereby agrees that the Meridian Group and their representatives and
affiliates shall be entitled, upon forty eight (48) hours notice and during
normal business hours, to full access (i) to review and make copies of the books
and records and other reports of Orion and its affiliates related to such
amounts and (ii) to speak with the employees of Orion about any and all matters
pertaining thereto, provided, further, that such access shall be conducted in a
manner that does not materially interfere with the normal business operations of
Orion and its affiliates. The Parties agree that except for the amounts set
forth above, as of the dates set forth above there are no other or additional
unpaid sums, amounts, or obligations outstanding under the Equipment Lease,
either of the Drilling Contracts, or any agreement, document, or instrument
executed in connection therewith, or any letter agreement, amendment,
supplement, or modification of any of the foregoing, and that from and after
such dates additional obligations have and will continue to accrue and be owing
(subject to deferred payment in accordance with Section 1.3 below) under and
pursuant to the terms of such agreements.
Page 5 of 13
1.3 Additional Agreements of the Parties.
1.3.1 Offset and Accrual of Amounts Due. The Parties hereby agree
that, during the Forbearance Period and notwithstanding any provision to the
contrary in the Equipment Lease or either of the Drilling Contracts or any other
agreement, document, or instrument by or among any of the Parties (which shall
be deemed amended hereby as applicable), at the end of each full calendar
quarter commencing with the calendar quarter ended September 30, 2009 and at the
end of the Expiration Period (as applicable), the Meridian Quarterly Obligations
and the Orion Quarterly Obligations shall be offset, setoff, and applied against
each other, and such amounts shall be discharged to the extent of such offset,
setoff, and application. For the avoidance of doubt, the Parties acknowledge and
agree that (i) the Net Cumulative Balance is to be redetermined each calendar
quarter, and (ii) for purposes of the initial calculation of the Net Cumulative
Balance as of September 30, 2009, such calculation shall be effected by first
determining the sum of (A) the accrued and unpaid obligations of each member of
the Meridian Group under the Triton Drilling Contract and the Taurus Drilling
Contract as of July 31, 2009, using the amounts as set forth in Section 1.2.4,
plus (B) the accrued and unpaid obligations of each member of the Meridian Group
under the Drilling Contracts and the Equipment Lease for the two month period
ended September 30, 2009, and then netting, offsetting and applying such sum
against the accrued and unpaid obligations of Orion under the Drilling Contracts
and the Equipment Lease for the two-month period ending September 30, 2009.
After September 30, 2009, the Net Quarterly Obligations for such calendar
quarter or Expiration Period (as applicable) shall be offset, setoff, and
applied against (without duplication) the Net Cumulative Balance existing as of
the end of the immediately preceding calendar quarter, and such Net Cumulative
Balance shall be discharged to the extent of such offset, setoff, and
application, with the resulting Net Cumulative Balance for such calendar quarter
being carried over for offset, setoff, and application at the end of the
immediately subsequent full calendar quarter(s) or Expiration Period (as
applicable and to the extent thereof). Such offsets, setoffs, and applications
shall be effected (without duplication) within thirty (30) days after the end of
each such full calendar quarter and Expiration Period (as applicable). If at the
end of each such full calendar quarter and Expiration Period (as applicable)
there is a Net Cumulative Balance owing by the Meridian Group (or any of them or
and affiliates), such Net Cumulative Balance shall be accrued on the books and
records of the Parties but shall not be payable until fifteen days after the CIT
Maturity Date (collectively, the “Accrued Meridian Obligations”). If at the end
of each such calendar quarter and Expiration Period (as applicable) there is a
Net Cumulative Balance owing by Orion (or any of its subsidiaries and
or affiliates), such Net Cumulative Balance shall be accrued on the books and
Maturity Date (collectively, the “Accrued Orion Obligations”). Within thirty
(30) days of the end of each such full calendar quarter and Expiration Period
(as applicable), Orion agrees to provide to the Meridian Group (a) a true and
accurate accounting of the Net Cumulative Balance as of the end of such period
and all of the obligations accrued and offset hereunder during such period,
(b) any and all calculations and methodologies or other information related to
such Net Cumulative balance and accruals and offsets, and (c) any and all
additional information pertaining thereto as the Meridian Group (or any of them
or their representatives or affiliates) may reasonably request. Orion agrees
that the Meridian Group and their representatives and affiliates shall be
entitled, upon forty eight (48) hours notice and during normal business hours,
to full access (i) to review and make copies of the books and records and other
reports of Orion and its affiliates related to such accruals and offsets and
(ii) to speak with the employees of Orion about any and all matters pertaining
thereto; provided, that such access shall be conducted in a manner that does not
materially interfere with the normal business operations of Orion and its
affiliates.
Page 6 of 13
1.3.2 Triton Rig Lien. As security for the payment in full of any
unpaid Accrued Meridian Obligations (as the same exist from time to time and be
accrued pursuant to Section 1.3 above) by the Meridian Group, the Meridian Group
hereby grants to Orion a security interest in the Triton Rig Assets, which
security interest is granted on the terms and subject to the conditions set
forth in the Security Agreement and Intercreditor Agreement and is junior and
subordinated in all respects to any and all rights, claims, and Liens of CIT and
its affiliates in and to the Triton Rig Assets; and provided, further, that
Orion shall not exercise any of its remedies under the applicable Uniform
Commercial Code, or at common law, with respect to any collateral (or proceeds
thereof) for such security interest as and to the extent provided in the
Intercreditor Agreement (and CIT shall be a third party intended beneficiary of
the foregoing subordination provisions). The Meridian Group hereby authorizes
Orion at any time and from time to time to file in any applicable Uniform
Commercial Code jurisdiction any initial financing statement and amendments
Triton Rig Assets.
1.3.3 Settlement of Accrued Meridian Obligations.
(a) Election. If on the CIT Maturity Date there is a positive
unpaid Net Cumulative Balance owing by the Meridian Group (or any of them or any
of their subsidiaries or affiliates) to Orion (or any of its subsidiaries or
affiliates) and Other Meridian Obligations, then within fifteen (15) days after
the CIT Maturity Date, the Meridian Group shall satisfy in full such unpaid Net
Cumulative Balance and Other Meridian Obligations by electing, in the Meridian
Group’s sole discretion, to either (i) make a cash payment to Orion in an amount
equal to such unpaid Net Cumulative Balance and Other Meridian Obligations as of
the CIT Maturity Date (the “Meridian Cash Payment”), or (ii) except as otherwise
provided in the other provisions of this Section 1.3.3, exercise the Put Option
and consummate Orion’s acquisition of the Triton Rig Assets contemplated
thereby. In the event that on the CIT Maturity Date neither TMR Drilling nor one
of its affiliates has title to the Triton Rig Assets for any reason other than
the destruction or damage to the Triton Rig Assets as described in
Section 1.3.3(c) below, the Meridian Group must satisfy such unpaid Accrued
Meridian Obligations by making the Meridian Cash Payment described in clause (i)
above and the Put Option shall be null and void. Further, in the event of any of
the following occurs, the Meridian Group must satisfy such unpaid Net Cumulative
Balance and Other Meridian Obligations by making the Meridian Cash Payment
described in clause (i) above and the Put Option shall be null and void: (1) the
Forbearance Period has expired due to the occurrence of an event described in
clause (c) or (e) of the definition of “Forbearance Agreement” in Section 1.1.2
hereof, (2) the Triton Rig and Triton Rig Equipment are damaged due to a
casualty and (A) such damage is not repaired, restored, or rebuilt to the same
market value and functionality thereof immediately prior to such casualty, or
(B) the reasonable amount of cash necessary (as determined by mutual agreement
of the Parties) to make such all repairs, restoration or rebuilding is not paid
to Orion on the Option Settlement Date (defined below) at the time of conveyance
of the Triton Rig Assets effected pursuant to the exercise of the Put Option, or
(3) the Triton Rig and Triton Rig Equipment are not maintained as required under
Section 5 of the Security Agreement.
(b) Meridian Cash Payment. In the event the Meridian Parties
elect to make a Meridian Cash Payment to Orion pursuant to clause 1.3.3(a)(i)
above, such payment shall be made within ten (10) days of such election by wire
transfer of immediately available funds to an account designated in writing by
Orion. Orion (for itself an on behalf of its subsidiaries and affiliates) hereby
agrees that any and all unpaid Accrued Meridian Obligations as of the CIT
Maturity Date shall be deemed to be satisfied and discharged in full upon the
consummation of the Meridian Cash Payment, without any other action by any
Party.
(c) Put Option. Subject to Section 1.3.3(a) above, the Put Option
may be exercised by the Meridian Group at any time within fifteen (15) days
after the CIT Maturity Date by
Page 7 of 13
delivery of a put option notice (a “Put Option Notice”) to Orion or its designee
stating the date on which the transfer of title to the Triton Rig Assets shall
occur, which date shall in no event be more than ten (10) days after the date of
such Put Option Notice (the “Option Settlement Date”). Upon receipt of a Put
Option Notice, Orion or its designee hereby unconditionally and irrevocably
agrees to accept and acquire from TMR Drilling, and TMR Drilling unconditionally
and irrevocably agrees to transfer to Orion or its designee, good and complete
or indefeasible title to the Triton Rig Assets free and clear of all Liens other
than Permitted Liens, in each case on the Option Settlement Date, such transfer
to be effected by delivery by the TMR Drilling to Orion of a Bill of Sale
substantially in the form of Exhibit C hereto. To the extent the Triton Rig
Assets have been in the possession, use, operation, or control of Orion or any
of its affiliates, lessees, licensees, or subsidiaries at all times from the
date hereof through and including the Option Settlement Date, the transfer of
the Triton Rig Assets shall otherwise be “AS IS WHERE IS” with no representation
or warranty as to the condition of the Triton Rig Assets, and all warranties,
express or implied, as to the condition of such assets, merchantability, or
fitness for their intended purpose, are hereby expressly disclaimed and
excluded. To the extent the Triton Rig Assets are not in the possession, use,
operation, or control of Orion or any of its affiliates, lessees, licensees, or
subsidiaries as of the CIT Maturity Date, the Triton Rig Assets shall be
transferred to Orion in a condition substantially similar to the condition of
the Triton Rig Assets at the time such assets ceased to be in the possession,
use, operation, or control of Orion or any of its affiliates, lessees,
licensees, or subsidiaries, reasonable wear and tear excepted (the “Asset Put
Condition”). Orion and TMR Drilling shall jointly (and if the Parties are unable
to agree, then independently) establish and document the condition of the Triton
Rig Assets immediately prior to the time when the Triton Rig Assets are removed
from Orion’s possession, using a joint inspection process, outside inspectors,
or such other means as each Party may reasonably require (and at their own
respective costs for any inspectors or advisors hired by each such Party). Prior
to acceptance of the Triton Rig by Orion in connection with the exercise of the
Put Option, Orion shall be entitled to order (at its sole cost) an inspection by
an independent third party acceptable to the Meridian Group and Orion to confirm
that the condition of such assets satisfies the Asset Put Condition. Any such
inspection shall be completed within ten (10) days of the date of the Put Option
Notice and shall be binding upon the parties. Upon confirmation by such
inspection that the condition of the Triton Rig Assets meets the Asset Put
Condition, Orion agrees that the transfer of the Triton Rig Assets shall be
pursuant to a Bill of Sale substantially in the form of Exhibit C hereto and “AS
IS WHERE IS” with no representation or warranty as to the condition of the
Triton Rig Assets, and all warranties, express or implied, as to the condition
of such assets, merchantability, or fitness for their intended purpose, are
hereby expressly disclaimed and excluded. If such inspection confirms that the
Triton Rig Assets do not meet the Asset Put Condition, then the Meridian Group
shall satisfy the unpaid Net Cumulative Balance and Other Meridian Obligations
by making the Meridian Cash Payment described in Section 1.3.3(a)(i) above.
The Parties agree that if at any time prior to the Option Settlement Date, the
Triton Rig Assets (or any portion thereof) suffer a casualty and as a result
thereof are destroyed, irreparably damaged, or uneconomical to repair, the
Meridian Group shall be entitled to satisfy their delivery obligation under the
Put Option by remitting to Orion (in lieu of the Triton Rig Assets) a cash
payment equal to the fair market value, as of the date immediately preceding
such casualty, of the Triton Rig Assets subject to such casualty. At least ten
(10) days immediately preceding the Option Settlement Date, the Meridian Group
shall provide its calculation of such fair market value (the “Meridian Value
Notice”). If Orion disagrees with such fair market value calculation of the
Meridian Group, Orion shall notify the Meridian Group of such disagreement (the
“Orion Disagreement Notice”) within ten (10) days of Orion’s receipt of the
Meridian Value Notice, and within five (5) days of the Orion Disagreement Notice
each party shall appoint an independent appraiser that is a member of the
American Society of Appraisers and is qualified in the appraisal of rigs of a
type similar to the Triton Rig as evidenced by a current designation in such
regard from the American Society of Appraisers. Such appraisers shall have ten
(10) days to submit an appraisal of the Triton Rig to the parties, which
appraisal shall be consistent with the principles of the
Page 8 of 13
Uniform Standards of Appraisal Practice and the parties shall negotiate in good
faith for no longer than ten (10) days thereafter to resolve the disputed matter
with a final calculation of such fair market value. If the parties are unable to
reach a resolution based on the reports of such appraisers, then within ten days
(10) of the expiration of such negotiation period, the parties shall appoint a
mutually agreeable independent arbitrator and promptly submit to such arbitrator
and each other each of their last, best offers with respect to such fair market
value calculation. The arbitrator shall be limited to awarding only one or the
other of the two offers so submitted, which award shall be made within ten
(10) days after appointment of such arbitrator. Orion (for itself an on behalf
of its subsidiaries and affiliates) hereby agrees that any and all unpaid
Accrued Meridian Obligations as of the date of consummation of the Put Option
shall be deemed to be satisfied and discharged in full upon the consummation of
the Put Option, without any other action by any Party.
(d) Settlement of Accrued Orion Obligations. If on the CIT
Maturity Date the positive balance of unpaid Accrued Orion Obligations exceeds
the Other Meridian Obligations, then within fifteen (15) days after the CIT
Maturity Date, Orion shall satisfy in full such excess by making a cash payment
to the Meridian Group in an amount equal to such excess (the “Orion Cash
Payment”), which payment shall be made by wire transfer of immediately available
funds to an account designated in writing by the Meridian Group. Orion (for
itself an on behalf of its subsidiaries and affiliates) hereby agrees that any
and all unpaid Accrued Meridian Obligations as of the CIT Maturity Date shall be
deemed to be satisfied and discharged in full upon the consummation of the Orion
Cash Payment, without any other action by any Party.
1.3.4 Release of Obligations and Termination of Contracts.
(a) Release of Obligations and Termination of Contracts. Upon and
in connection with the consummation of any Release Event (i) Orion hereby agrees
to release, and shall be deemed to have released without any other action by any
Party, the Meridian Group, each of them, and their subsidiaries and affiliates
from any and all Accrued Meridian Obligations and any other then existing or
future duties, agreements, commitments, covenants, terms, liabilities, claims,
demands, causes of action, and obligations under or with respect to the
Equipment Lease, each of the Drilling Contracts, and any agreement, document, or
instrument executed in connection therewith, or any letter agreement, amendment,
supplement, or modification of any of the foregoing, (ii) the Meridian Group
agrees to release, and shall be deemed to have released upon consummation of the
Put Option, Orion from any and all Accrued Orion Obligations and any other then
existing or future duties, agreements, commitments, covenants, terms,
liabilities, claims, demands, causes of action, and obligations under or with
respect to the Equipment Lease, each of the Drilling Contracts, and (iii) the
Parties hereby agree that the Equipment Lease, each of the Drilling Contracts,
foregoing shall be extinguished, terminated, and discharged and of no further
force or effect effective immediately as of the date thereof. For purposes of
this Agreement, “Release Event” means the occurrence of any one of the
following: (i) the payment in full of the Meridian Cash Payment; (ii) the
closing of the transaction to be consummated pursuant to the exercise of the Put
Option; (iii) the closing of the transaction to be consummated pursuant to the
exercise of the Option (as defined in Section 15.5(c) of the Equipment Lease)
along with the cash repayment by the Meridian Group to Orion as contemplated in
Section 1.3.4(c) hereof; or (iv) the Orion Cash Payment. Notwithstanding the
preceding provisions of this Section 1.3.4(a), in the event an applicable
Release Event is subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required, by a court of competent jurisdiction,
to be repaid to a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law, or equitable cause, then the releases made in
accordance with this Section 1.3.4(a) shall be null and void ab initio.
Page 9 of 13
(b) Documents. Upon and in connection with the consummation of
any of the Meridian Cash Payment, the Put Option, or the Orion Cash Payment, the
Parties hereby agree to execute and deliver any and all additional documents,
instruments, and agreements of sale, transfer, conveyance, assignment,
confirmation, release, or otherwise as may be necessary or desirable to effect
the transactions contemplated thereby, including a Release and Termination of
Equipment Lease substantially in the form of Exhibit A hereto, a Release and
Termination of Drilling Contracts substantially in the Form of Exhibit B hereto,
and, in the case of the exercise of the Put Option, a Bill of Sale substantially
in the form of Exhibit C hereto.
(c) Repayment to Orion for Rig Purchase Price. In the event the
transaction to be consummated pursuant to Orion’s exercise of the Option (as
defined in Section 15.5(c) of the Equipment Lease) closes (the “Consummated
Transaction”), then the Meridian Group shall have the right to pay Orion, within
180 days of such closing, an amount equal to the purchase price for the Triton
Rig Assets at such closing, and in consideration for such payment timely made,
the Parties shall deliver the releases contemplated in Section 1.3.4(a) hereof;
provided, however, in the event the Consummated Transaction is subsequently
required, by a court of competent jurisdiction, to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law, or equitable cause, then the releases made in accordance with
Section 1.3.4(a) and this Section 1.3.4(c) shall be null and void ab initio.
1.3.5 CIT Debt. From and after the date hereof, TMR Drilling and any
other borrowers party to the CIT Credit Agreement shall remain as primary
obligors thereunder and shall continue to timely and fully pay all amounts owing
thereby under the CIT Credit Agreement.
1.3.6 Triton Drilling Contract. The Parties hereby agree, ratify, and
confirm that effective as of May 17, 2009, Section 4 of the Triton Drilling
Contract was amended such that each reference therein to “**$25,000.00” was
deleted and replaced with “**$20,000.00.”
1.3.7 [Intentionally omitted]
1.3.8 Notice of Location. Within ten (10) day of any move or change in
location of the Triton Rig Assets or at such other times as Meridian may
request, Orion agrees to provide Meridian with a written notice describing in
reasonable detail the location or site to which such Triton Rig Assets are being
moved (including, without limitation, the state, city, and county of any such
site) and the full legal names, physical addresses, email addresses, and phone
numbers of all owners of such location or site.
ARTICLE 2
RATIFICATIONS, REPRESENTATIONS AND WARRANTIES.
2.1 Ratification of Contracts. The Parties hereby agree that, except as
expressly modified, postponed in effect and superseded by Article 1 and any
other provisions of this Agreement, the terms and provisions of the Equipment
Lease and each of the Drilling Contracts shall remain in full force and effect,
including Section 8.1 of the Equipment Lease, and shall continue to be legal,
valid, binding, and enforceable against the Parties thereto in accordance with
their respective terms.
2.2 General Representations and Warranties. Each of Meridian, TMRX, and TMR
Drilling hereby represent and warrant to Orion that (a) the execution, delivery,
and performance of this Agreement has been duly authorized by all requisite
corporate action on the part of each of them and will not violate the
constituent organizational documents of any of them, contravene or violate any
contractual restriction, any law, rule, regulation, or court or administrative
decree or order binding on or affecting any of them, or result in, or require
the creation or imposition of any Lien on any of the their respective
Page 10 of 13
properties; (b) this Agreement has been duly executed and delivered by each of
them and is the legal, valid and binding obligation of each of them, enforceable
in accordance with its terms; (c) subject to the existence of the Designated
Events of Default, the representations and warranties contained in the Equipment
Lease and each of the Drilling Contracts are true and correct in all material
respects on and as of the date hereof as though made on and as of such date;
(d) except for the Designated Events of Default, no default or event of default
(however denominated) under the Equipment Lease or the Drilling Contracts has
occurred and is continuing as of the date hereof; (e) except for the Designated
Events of Default, the Meridian Group is in compliance in all material respects
with all covenants and agreements contained in the Equipment Lease and Drilling
Contracts, as applicable; (f) absent the effectiveness of this Agreement, Orion
is entitled to exercise immediately its rights and remedies under the Equipment
Lease and Drilling Contracts; (g) Meridian owns, directly or indirectly, all of
the equity interests issued by TMRX and TMR Drilling; and (h) the Security
Agreement, when duly executed and delivered by the “debtor” thereunder to the
“secured party” thereunder, will a valid, binding obligation of TMR Drilling,
enforceable against TMR Drilling under Texas law in accordance with its terms,
subject only to bankruptcy, insolvency, and similar laws.
ARTICLE 3
CONDITIONS
The effectiveness of this Agreement is conditioned upon the occurrence or
the execution and delivery, prior to or concurrently herewith, of each of the
following:
3.1 A prepayment to CIT in an amount equal to One Million and No/Dollars
($1,000,000) by TMR Drilling and any other borrowers party to the CIT Credit
Agreement on the principal amount outstanding under the CIT Credit Agreement as
of the date hereof, which prepayment shall not be subject to any breakage costs,
penalty fees, or similar charges under the CIT Credit Agreement or otherwise;
3.2 A Second Amendment to Equipment Lease, in form and substance mutually
agreed by the Parties, duly executed by each of TMR Drilling and Orion;
3.3 A Security Agreement, substantially in the form attached hereto as
Exhibit D (the “Security Agreement”), duly executed by each of TMR Drilling as
“debtor” and Orion as “secured party”;
3.4 A subordination and intercreditor agreement, in form and substance
mutually agreed by the Parties and CIT (the “Intercreditor Agreement”), duly
executed by each of Orion and CIT;
3.5 The CIT Forbearance Agreement, duly executed by each of TMR Drilling,
TMRX, Meridian, and CIT, in which CIT agrees to forbear from exercising any and
all of its rights and remedies under the CIT Credit Agreement with respect to
certain defaults and events of default thereunder for a period of ninety
(90) days from the date thereof; and
3.6 Copies of the resolutions of the boards of directors (or equivalent
governing body) of each of the Parties authorizing the execution and delivery
thereby of this Agreement and the other agreements contemplated hereby, and the
performance of the transactions contemplated hereby and thereby, certified by
the Secretary or Assistant Secretary of such Party.
Page 11 of 13
ARTICLE 4
MISCELLANEOUS PROVISIONS
4.1 Survival of Representations and Warranties. All representations and
warranties made in the Equipment Lease and each of the Drilling Contracts shall
survive the execution and delivery of this Agreement, and no investigation by
Orion or any closing shall affect such representations and warranties or the
right of Orion to rely upon them.
4.2 Limitation on Relationship between Parties. The relationship of Orion,
on the one hand, and the Meridian Group, on the other hand, has been and shall
continue to be, at all times, that of creditor and debtor. Nothing contained in
this Agreement, any instrument, document or agreement delivered in connection
therewith or in the Equipment Lease or Drilling Contracts shall be deemed or
construed to create a fiduciary relationship, joint venture, or partnership
between the Parties.
4.3 Severability. Any provision of this Agreement held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
4.4 Successors and Assigns; Third Party Beneficiaries. This Agreement shall
respective successors and assigns, and no other Person (other than CIT as set
forth in Section 1.3.2) shall have any right, benefit, or interest under or
because of the existence of this Agreement.
4.5 Amendments; Interpretation. No amendment or modification of any
provision of this Agreement shall be effective without the written agreement of
each of the Parties, and no waiver of any provision of this Agreement or consent
to any departure by any Party therefrom, shall in any event be effective without
the written concurrence of the other Parties hereto. Any waiver or consent shall
which it was given.
4.6 Counterparts. This Agreement may be executed by one or more of the
Parties in any number of separate counterparts, each of which when so executed
shall be deemed to be an original, but all of which when taken together shall
constitute one and the same instrument, and all signature pages transmitted by
facsimile or other electronic transmission shall be considered as original
executed counterparts. Each Party agrees that it will be bound by its own
facsimile or electronic signature and that it accepts the facsimile or
electronic signatures of each other Party.
4.7 Headings. The headings, captions, and arrangements used in this
Agreement are for convenience only and shall not affect the interpretation of
this Agreement.
4.8 Further Assurances. Each Party agrees to execute and deliver, or cause
to be executed and delivered, such other and further documents and instruments
as the other Party may reasonably request and to take, or cause to be taken,
such further or other actions as may be reasonably necessary, from time to time,
to implement the provisions of this Agreement and to perfect and protect the
Liens contemplated hereby.
4.9 Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE CHOICE OF
LAW PRINCIPLES THEREOF.
4.10 Submission to Jurisdiction. All disputes among any of the Meridian
Group and Orion or any of their respective affiliates or representatives arising
out of, connected with, related to, or
Page 12 of 13
incidental to the relationship established between them in this Agreement,
whether arising in contract, tort, equity, or otherwise, shall be resolved only
by the courts of the State of Texas, the federal courts sitting in the Southern
District of Texas, and appellate court from any thereof. The Meridian Group and
Orion (for themselves and on behalf of any of their respective affiliates or
representatives) waive in all disputes any objection that any of them may have
to the location of the court considering the dispute which court shall have been
chosen in accordance with the foregoing.
4.11 FINAL AGREEMENT. THIS AGREEMENT, THE SECURITY AGREEMENT, THE EQUIPMENT
LEASE, AND THE DRILLING CONTRACTS REPRESENT THE AGREEMENT AND UNDERSTANDING OF
THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE THIS AGREEMENT
IS EXECUTED AND SUPERSEDE ALL PRIOR UNDERSTANDINGS, AGREEMENTS, OR
REPRESENTATIONS BY OR BETWEEN THE PARTIES, WRITTEN OR ORAL, TO THE EXTENT THEY
RELATE IN ANY WAY TO THE SUBJECT MATTER HEREOF OR THE TRANSACTIONS CONTEMPLATED
HEREIN. NEITHER THIS AGREEMENT, THE SECURITY AGREEMENT, THE EQUIPMENT LEASE, NOR
THE DRILLING CONTRACTS MAY BE CONTRADICTED BY EVIDENCE OF PRIOR,
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. NO MODIFICATION, RESCISSION,
WAIVER, RELEASE, OR AMENDMENT OF ANY PROVISION OF THIS AGREEMENT SHALL BE MADE,
EXCEPT BY A WRITTEN AGREEMENT SIGNED BY EACH OF THE PARTIES.
4.12 Notices. All notices and other communications required or authorized
hereunder shall be in writing and shall be delivered to the address of the
applicable Party shown on the signature page hereof.
4.13 Interpretation. Unless expressly provided for elsewhere in this
Agreement, this Agreement shall be interpreted in accordance with the following
provisions: (a) all references herein to Articles, Sections, Clauses, Exhibits,
and Annexes are to Articles, Sections, Clauses, Exhibits, and Annexes attached
to and forming part of this Agreement; (b) a defined term has its defined
meaning throughout this Agreement and each Annex or Exhibit to this Agreement,
regardless of whether it appears before or after the place where it is defined;
(c) in the event of any conflict between the main body of this Agreement and the
Annexes and Exhibits hereto, the provisions of the main body of this Agreement
shall prevail; (d) except where specifically stated otherwise, any reference to
any statute, regulation, rule, or agreement shall be a reference to the same as
amended, supplemented, or re-enacted from time to time; (e) whenever the words
“include,” “including,” or “includes” appear in this Agreement, they shall be
read as if followed by the words “without limitation” or words having similar
import; (f) whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine, or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa; (g) a reference to any agreement or document (including a reference to
this Agreement) is to the agreement or document as amended, varied,
supplemented, novated, or replaced, except to the extent prohibited by this
Agreement or that other agreement or document; (h) a reference to a statute,
regulation or law shall include any amendment thereof or any successor thereto
and any rules and regulations promulgated thereunder; (i) the word “or” will
have the inclusive meaning represented by the phrase “and/or”; (j) “shall” and
“will” have equal force and effect; (k) all references to “day” or “days” shall
mean calendar days unless specified as a “business day”; (l) time periods within
or following which any payment is to be made or act is to be done shall be
calculated by excluding the day on which the time period commences and including
the day on which the time period ends and by extending the period to the next
business day following if the last day of the time period is not a business day.
Page 13 of 13
duly executed as of the day and year first written above.
MERIDIAN GROUP:
THE MERIDIAN RESOURCE CORPORATION
By: /s/ Steven G. Ives Steven G. Ives Vice President
THE MERIDIAN RESOURCE & EXPLORATION LLC
TMR DRILLING CORPORATION
ADDRESS FOR NOTICES TO THE MERIDIAN GROUP:
1401 Enclave Parkway
Suite 300
Houston, Texas 77077
Tel: (281) 597-7003
Fax: (281) 597-7216
Attn: Steven G. Ives
Signature Page
ORION DRILLING COMPANY LLC
By: /s/ Wayne Squires Wayne Squires President
ADDRESS FOR NOTICES TO ORION:
674 Flato Road
Corpus Christi, Texas 78405
Tel: (361) 299-9800
Fax: (361) 299-1388
Attn: Wayne Squires
Signature Page
ANNEX A
EXISTING EVENTS OF DEFAULT
1. Any and all breaches, defaults, or events of default resulting from any act
or omission by, any misstatement of, the breach of any representation or
warranty of, or the breach of or failure to perform any covenant or agreement
of, any of Meridian, TMRX, TMR Drilling, or any subsidiary or affiliate of any
of them under the Equipment Lease, whether now existing or hereafter occurring
or arising, or any document or agreement executed in connection therewith.
2. Any and all breaches, defaults, or events of default resulting from any act
warranty of, the breach of or failure to perform any covenant or agreement of,
any of Meridian, TMRX, TMR Drilling, or any subsidiary or affiliate of any of
them under the Triton Drilling Contract or the Taurus Drilling Contract, whether
now existing or hereafter occurring or arising, or any document or agreement
executed in connection therewith.
3. The failure by Meridian, TMRX, TMR Drilling, or any subsidiary or affiliate
of any of them to provide timely notice of any of the foregoing to Orion.
Annex A
ANNEX B
PERMITTED LIENS
1. All Liens in favor of Orion or any subsidiary or affiliate thereof arising
under, created by, or contemplated in the Equipment Lease, Triton Drilling
Contract, Taurus Drilling Contract, or any other agreement, contract, document,
or certificate that creates or purports to create a Lien in favor of Orion or
any subsidiary or affiliate thereof.
2. Any and all statutory liens, claims, or other rights, including mechanic’s
and materialmen’s liens and tax liens, arising as a result of or in connection
with the use, operation, or possession of any of the Triton Rig Assets by Orion
or any of its affiliates.
3. Any other Liens that are immaterial in character, amount and extent and that
do not materially detract from the value or materially interfere with the
present or proposed use of the Triton Rig Assets.
Annex B
ANNEX C
TRITON RIG EQUIPMENT
1. See attached schedule of equipment.
Annex C
ANNEX D
TRITON RIG ASSETS
1. To the extent transferrable, any and all permits of every kind under which
TMR Drilling has or may acquire benefits or rights or by which TMR Drilling or
the Triton Rig or Triton Rig Equipment may be subject or bound and that relate
to or are used in the operation thereof;
2. To the extent transferrable, all warranties, reimbursements, and indemnities
from the various manufacturers of the component parts of the Triton Rig and the
Triton Rig Equipment relating to the condition thereof from and after the date
of this Agreement;
3. All of TMR Drilling’s right, title, and interest in, to and under all
purchase agreements pertaining to the Triton Rig and Triton Rig Equipment,
including (a) all claims for damages in respect of the Triton Rig and the Triton
Rig Equipment arising under any purchase agreements to which TMR Drilling is a
party, including all warranty and indemnity provisions contained in such
purchase agreements, (b) all rights to demand, accept, and retain all rights in
and all property, data, and service which Orion is obligated to provide or does
provide pursuant to any such purchase agreements to which TMR Drilling is a
party in respect of the Triton Rig and the Triton Rig Equipment, (c) any and all
other rights of the “purchaser” that survive “delivery” of the Triton Rig and
the Triton Rig Equipment, and (d) all claims in respect of the top drive motor
that is part of the Triton Rig Equipment arising under the sales terms and
conditions in any purchase agreement pertaining thereto to which TMR Drilling is
a party, including all warranty and indemnity provisions contained in the
purchase agreement executed by TMR Drilling in connection with the purchase
thereby of the Triton Rig and the Triton Rig Equipment; and
4. All instruction, maintenance, and repair manuals relating to the Triton Rig
and the Triton Rig Equipment.
Annex D
|
ITEMID: 001-96151
LANGUAGEISOCODE: ENG
RESPONDENT: UKR
BRANCH: CHAMBER
DATE: 2009
DOCNAME: CASE OF SHASTIN AND SHASTINA v. UKRAINE
IMPORTANCE: 4
CONCLUSION: Violation of Article 6 - Right to a fair trial
JUDGES: Isabelle Berro-Lefèvre;Karel Jungwiert;Mykhaylo Buromenskiy;Peer Lorenzen;Rait Maruste;Renate Jaeger;Zdravka Kalaydjieva
TEXT: 4. The applicants were born in 1932. The first applicant lives in Slovyansk. The second applicant lived in the same town before his death.
5. At the material time the applicants worked at the State Soda Plant (ВАТ «Содовий завод»).
6. On 24 October 1997 and 5 June 1998 the Slovyansk Town Court awarded the first applicant 1,752.56 and 717.74 Ukrainian hryvnias (UAH) in salary arrears to be paid by the above-mentioned company.
7. On 24 October 1997 and 28 March 2001 the Slovyansk Town Court awarded the second applicant UAH 940.84 and UAH 715.63 in salary arrears to be paid by the above-mentioned company.
8. These decisions became final and the State Bailiffs' Service instituted proceedings to enforce them.
9. On 3 January 2001 the Donetsk Regional Arbitration Court (after June 2001 the Donetsk Regional Commercial Court) instituted insolvency proceedings against the debtor company. On 4 September 2003 the court, having declared the debtor insolvent, ordered its liquidation, which is still pending.
10. The decisions given in the applicants' favour have not been executed.
11. The relevant domestic law is summarised in the judgment of Romashov v. Ukraine (no. 67534/01, §§ 16-19, 27 July 2004).
VIOLATED_ARTICLES: 6
|
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMISSION. ASTERISKS DENOTE OMISSIONS.
Exhibit 10.3
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the “Agreement”) is made effective as of March 23,
2006, between ACCESS BUSINESS GROUP INTERNATIONAL LLC, acting as agent for
ACCESS BUSINESS GROUP LLC (“Access”), a Michigan limited liability company,
having its principal office at 7575 East Fulton Road, Ada, Michigan 49355,
United States; and INTERLEUKIN GENETICS, INC., a Delaware corporation having its
principal office at 135 Beaver Street, Waltham, MA 02453 (“Seller”). Access and
Seller may also be referred to separately as a “party” and collectively as
“parties.”
RECITALS
Seller is engaged in the business of providing genetic testing services and has
indicated its willingness to act as supplier of the Services (defined in
Section 1(a), below) to Access for resale to Quixtar Inc., an Affiliate of
Access, which will then sell the Services and kits to be used for collection of
genetic material from end-users (“Collection Kits”).
Seller and Access were parties to that certain Distribution Agreement dated
February 26, 2004, as amended on February 28, 2005, whereby Seller agreed to
sell to Access, and Access agreed to purchase, at least 20,000 Genetic Tests (as
defined in the Distribution Agreement) during the term of such agreement, at a
price of $70 per test.
The Distribution Agreement terminated on March 22, 2006.
Access paid Seller $2,000,000 in April, 2005, as an advance payment for Genetic
Tests (the “Prepayment”) under the Distribution Agreement and the parties have
agreed that $600,000 of the Prepayment shall be applied to purchases under this
Agreement through December 31, 2006.
The parties wish to enter into this Agreement to set forth the terms of Seller’s
supply of the Services.
For purposes of this Agreement, “Affiliate” means, with respect to the
applicable party, any corporation, company, partnership, trust, sole
proprietorship or other entity or individual which: (a) is owned or controlled
by such party, in whole or in part; (b) owns or controls such party, in whole or
in part; or (c) is under common ownership or control with such party, in whole
or in part; provided that for the purposes of this Agreement, Seller shall not
be deemed an Affiliate of Access or its Affiliates.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and commitments set
forth in this Agreement, the parties agree as follows:
-1-
1. Definition of and Specifications for Services.
(a) Service(s). As used in this Agreement, the term “Service” or
“Services” shall mean the genetic testing services listed on Exhibit A, which is
attached to and made part of this Agreement, the provision of a report prepared
by Seller in accordance with CLIA requirements (a “Report”), to end-users, a
sample copy of which is included in Exhibit A, as well as any genetic counseling
services provided by Seller to end-users regarding such Services.
(b) Specifications. As used in this Agreement, the term
“Specifications” shall mean those specifications for the Services that are set
forth in Exhibit A, which is attached to and made part of this Agreement.
(c) Changes to Specifications. Access may from time to time request
modifications or additions to the Specifications. If Seller believes that
Access’s modifications or additions to the Specifications will result in an
increase in the price of [materials, parts, or] labor paid or incurred by Seller
in providing the Services, Seller will promptly notify Access and the parties
shall in good faith negotiate an appropriate adjustment to the purchase price.
Seller shall provide Access with such information as Access may request from
time to time to determine the cost of a prospective change in the
Specifications.
2. Purchase and Sale of Services.
(a) General. During the term of this Agreement, Access shall purchase
Services from Seller and Seller shall sell the Services to Access, all in
accordance with the terms of this Agreement. Access is under no obligation to
order any minimum quantity of Services or to use Seller as its exclusive
supplier for the Services.
(b) Invoices. Seller will submit invoices for charges related to the
Services on a monthly basis to the address set forth above. Except as provided
herein, each undisputed invoice shall be due and payable within thirty (30) days
of the receipt of a properly payable invoice. Seller shall credit invoices for
purchases of Services on or before December 31, 2006 against the $600,000
remaining of the Prepayment described above.
(c) Location for Performing the Services. Seller shall perform the
Services at Seller’s clinical laboratory located in Waltham, Massachusetts.
Except as provided herein, Seller shall not subcontract part or all of the
performance of the Services to any other person or entity without Access’s prior
written consent, which shall not be unreasonably withheld. Access agrees and
acknowledges that, at certain volumes, Seller may subcontract the Services to
other laboratories (“Reference Labs”), provided that any such Reference Lab meet
required certifications under the Clinical Laboratory Improvement Act of 1988,
as amended (“CLIA”), and Seller provides such documentation to Access at least
thirty (30) days prior to the effectiveness of any subcontract. Seller shall not
change or modify part or all of the provision of the Services without Access’s
prior written consent.
-2-
3. Prices.
(a) General. The price to be paid by Access for Services described in
this Agreement are set forth in Exhibit B to this Agreement, which is attached
and made part of this Agreement. Such prices are exclusive of value-added, sales
or other applicable taxes. The prices for the Services set forth in Exhibit B
are firm during the initial two year term of this Agreement and may not be
increased by Seller for any reason during the initial two year term of this
Agreement.
(b) Modifications to Specifications. Notwithstanding Section 3(a),
Seller may increase the price to be charged for the Services at any time to
cover any additional expenses incurred by Seller as a result of modifications to
the Specifications requested by Access and agreed upon by the parties. Seller
will provide to Access reasonable documentary evidence of such changes in costs
on request. Seller shall give ninety (90) days’ prior written notice of any
price increase allowed hereunder. Access will confirm its approval of such
changed costs in writing to Seller prior to implementation thereof. Price
changes allowed under this Section 3(b) shall not be applicable to Services that
have already been performed, unless otherwise agreed in writing by the parties.
(d) Most Favorable Prices. Prices charged by Seller are not and will
not be in excess of the prices permitted by any applicable government price
regulations and are not and will not be in excess of Seller’s current or future
selling prices of the same or substantially similar items, taking into account
the quantities so sold. In the event it is subsequently determined that the
prices charged are in excess of such prices, Seller will promptly refund such
excess to Access or Access will be entitled an appropriate credit against
invoices submitted by Seller to Access, at Access’s option.
(e) Audit. Seller shall keep accurate books and records of all of its
costs under an accounting system maintained in accordance with the Generally
Accepted Accounting Principles (GAAP) consistently applied so as to ensure the
capability of a proper audit of such costs by Access. Upon prior request, Access
or Access’ authorized auditor shall have access during Seller’s business hours
to such books, records and systems for the purpose of inspecting and examining
the same to confirm the costs and compliance with other terms of this Agreement.
Any audit expense will be borne by Access, except in the event that any audit
reveals a discrepancy greater than five (5%) percent, in which case Seller shall
bear the expense of such audit.
4. Payment.
(a) Payment. Except as provided in Section 2(b) above, Access shall
pay Seller’s invoice for the Services within 30 days of the date of Seller’s
invoice.
(b) Services that do not comply with Specifications. If Access
determines that any of the Services do not comply with the Specifications, or
the other requirements of this Agreement (including the warranties set forth in
Section 6) or in any respect that prevents Access from reselling such Services,
then:
-3-
(i) Access shall give Seller a notice identifying such Services, and
the grounds for the noncompliance;
(ii) (A) Notwithstanding Section 4(a) above, if payment has been made
by Access for those noncomplying Services, Access shall be entitled either to be
reimbursed by Seller’s payment to Access of the appropriate amount or to a
credit of the appropriate amount against any amounts then or subsequently
payable by Access to Seller hereunder, and/or (B) Seller shall, if required by
Access after receipt of such notice, use its best efforts to deliver to Access
as soon as possible, and otherwise in accordance with the provisions of this
Agreement, replacement Services, requested by Access but not exceeding the
number of noncomplying Services.
5. Exclusivity. Unless the parties agree otherwise in writing,
Seller shall not make available the Services to any party other than Access or
Access’ Affiliates.
6. Representations and Warranties.
(a) General. Seller represents and warrants to Access that (a) it
shall have and maintain necessary qualifications, expertise, authority,
registrations, licenses, and permits to enable it to perform its obligations
under and contemplated by this Agreement, including CLIA registration for its
laboratory where the Services are performed; (b) the Services and Reports
included in connection therewith shall be performed in a professional manner in
accordance with industry standards, free from material faults and defects;
(c) the Services shall conform in all material respects to all specifications
and performance criteria standards or other requirements that are set forth on
Exhibit A or otherwise agreed upon by Seller and Access; (d) the Services shall
comply with all applicable (U.S. and Canadian) federal, state, provincial and
local laws and regulations; (e) to the knowledge of Seller, (i) Seller is the
owner of all right, title and interest in and to, or otherwise holds a license
under, the intellectual property associated with the Services and (ii) its
performance of the Services contemplated by this Agreement does not infringe the
patent rights of any third party; (f) Seller shall supervise the Reference Labs
to the extent necessary to provide quality assurance of the Services at the
same level as provided at Seller’s own facility; (g) all information supplied by
Seller to Access on or before the date of this Agreement was when furnished, and
is as of the date of this Agreement, true, correct and complete in all material
respects and that it will promptly notify Access if any such information changes
materially during the term of this Agreement; (h) Seller has and will maintain
sufficient capacity to satisfy Access’s requirements for the Services during the
term of this Agreement; and (i) Seller will comply with, and shall take no
action which subjects Access to risk of noncompliance with, all applicable laws
and regulations, including without limitation the U.S. Foreign Corrupt Practices
Act and all laws and regulations regarding Seller’s working conditions for its
employees during the term of this Agreement.. Seller has and follows, and will
continue to have and follow, adequate quality and security procedures that will
assure that the Services will comply with the foregoing representations and
warranties. Upon written request, Seller shall give Access certificates of
compliance with respect to applicable laws and regulations. Access’ approval of
any specification or other standards shall not relieve Seller of any of its
warranties under this Section. Seller’s warranties extend to future performance
of the services
-4-
and survive inspection, tests, acceptance and payment. Seller shall extend to
all end-users to which it provides Reports the warranty set forth on Exhibit C
attached hereto and incorporated herein by reference (the “End-User Warranty”).
(b) Seller’s Agreements Regarding Website. Seller will maintain
Seller’s website on its own server and shall take commercially reasonable
security precautions to prevent unauthorized access thereto. Seller will provide
reasonable and customary backups to its publishing server and maintain and store
backup tapes. Seller will perform restorations to its publishing server in the
event of a service failure. Seller will respond to Access’ requests for
restoring files within one (1) business day. Seller will provide Access with a
copy of Seller’s privacy policy. Seller shall not collect, store or use any
End-User Information (as defined herein) not voluntarily provided by such
end-user. Seller shall not disclose any End-User Information of any kind to any
third party without valid legal process and only in compliance with all
applicable laws. Seller shall not send any literature or solicitation materials
targeted specifically to end-users or specifically solicit end-users for any
products or services not offered through this Agreement. “End-User Information”
means all: (a) navigational information relating to an end-user, including but
not limited to usage of other hyperlinks within or available through Seller’s
Website; and (b) information relating to an end-user including, but not limited
to, Internet address and/or other identifying information such as actual name or
address.
7. Access to Facilities. During the term of this Agreement, Access
may designate one or more Access employees or other persons who shall be allowed
to visit Seller’s laboratory during business hours for the purposes of
inspecting Seller’s processes for provision of the Services by Seller.
8. Term and Termination.
(a) General Term. The initial term of this Agreement shall commence on
the date of this Agreement and shall continue for two years thereafter. This
Agreement may be renewed from year-to-year after the initial term upon written
agreement of the parties.
(b) Termination Upon Default. At any time during the term of this
Agreement, either party may terminate this Agreement by written notice to the
other party if the other party is in material default in the performance of any
of its obligations hereunder and fails to remedy such default within thirty (30)
days after receiving written notice of such default.
(c) Termination by Either Party for Cause. Either party may
immediately terminate this Agreement by written notice to the other:
(i) If the other party has ceased its business activities or has
otherwise begun winding up its business affairs;
(ii) If bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or similar law
or laws for the relief of debtors, are instituted by or against the other party
and are consented to or are not dismissed within sixty (60) days after such
institution;
-5-
(iii) If a custodian, liquidator, receiver or trustee is appointed for
the other party or the major part of its property and is not discharged within
sixty (60) days after such appointment;
(iv) If the other party becomes insolvent or bankrupt, is generally not
paying its debts as they become due, makes any assignment for the benefit of its
creditors or makes any comparable arrangement with its creditors; or
(v) Upon the occurrence of any Force Majeure Event (defined below)
that delays or is anticipated to delay performance of the other party of this
Agreement for more than thirty (30) days.
(d) Additional Termination by Access for Cause. Access may immediately
terminate this Agreement for Seller’s inability for any reason to meet Access’s
request for Services for a period exceeding 30 days beyond receipt by Seller of
a testing kit from an end-user or failure to meet the Specifications for the
Services at any time.
(e) Survival of Certain Provisions. The termination of this Agreement
shall not affect any of the provisions of this Agreement that by their nature
are intended to continue after termination, including but not limited to
Section 6 (Representations and Warranties), Section 8 (Term and Termination),
Section 9 (Confidential Information) and Section 10 (Indemnification).
(f) Liability for Termination. Access in exercising its rights to
terminate this Agreement in accordance with the terms and conditions hereof
shall not incur any liability whatsoever for any damage, loss or expense of any
kind suffered or incurred by Seller (or for any compensation to Seller) arising
from or incident to any such termination, expiration or non-renewal. Any
termination hereof shall not impair any rights nor discharge any obligations
which have accrued to Access as of the effective date of such termination.
(a) Confidentiality Obligations. During the term of this Agreement and
at all times thereafter, Seller agrees to hold in confidence and not otherwise
use or disclose the Specifications and all other information of Access and its
Affiliates, including without limitation, any information relating to the
Services, Access’ and its Affiliates’ business operations, price lists,
manufacturing data, marketing information strategies, customer or product lists,
research and development information and all other information disclosed by
Access or its Affiliates to Seller, in confidence and not to use any of the
foregoing commercially for its own benefit or that of any other party nor for
the purpose of developing or improving a product or method for any other party
except Access. Seller agrees to limit dissemination of and access to the
Services and/or Specifications or such information only to the persons within
Seller’s organization, performing Services under this Agreement, and then only
to those persons who have a need for access thereto, and who have entered into a
restrictive agreement prohibiting such personnel from doing anything with
respect to the Services and/or Specifications and such information that Seller
would itself be prohibited from doing under this Agreement. The confidentiality
-6-
obligations within this Section 9 shall survive termination or expiration of
this Agreement for a period of three (3) years from the date of termination of
this Agreement and deemed to cover all Confidential Information provided
pursuant to this transaction. Should either Seller or Access disclose to third
parties such as agents or subcontractors confidential information belonging to
the other party to this Agreement, the disclosing party must, before making such
disclosure, notify the other party of this Agreement that the disclosure will be
made and obtain from the third party to whom the disclosure will be made a
confidentiality agreement similar to the Confidentiality Agreement with a term
not shorter than the term of the Confidentiality Agreement as extended by this
Section 9. The parties acknowledge that all confidential information of the
other party shall be owned solely by the other party, and each party agrees to
return all items containing confidential information to the other party as
requested upon termination of this Agreement. Seller and Access recognize and
agree that nothing contained in this Agreement shall be construed as granting
any rights, by license or otherwise, to any confidential information disclosed
(b) Legally Required Disclosures. If either party is required under
applicable law to disclose the Specifications for the Services, or any other
confidential information, to any governmental or regulatory agency or pursuant
to any court order or subpoena, it shall do so only after giving prompt notice
to that effect to the other party so the other party may review the scope of any
such disclosure and, in the case of any legal or regulatory proceeding, so that
the other party may seek to prevent such disclosure or production or, if that
cannot be achieved, the entry of a protective order or other appropriate device
or procedure. If the party subject to the obligation to disclose is unsuccessful
in seeking a protective order or other remedy satisfactory to the other party,
the party shall disclose only that portion of the formula or Specifications for
the Services or confidential information as to which the party is advised by
independent legal counsel is legally required to be disclosed or furnished (with
a copy of a written opinion of such counsel to that effect to be simultaneously
furnished to the other party).
10. Indemnification.
(a) Indemnification by Seller. Seller shall defend, indemnify and hold
Access (including its Affiliates, members, managers, directors, officers,
employees, and agents) harmless from and against any damages, claims, costs and
expenses (including actual attorneys’ fees and recall costs and expenses)
arising from or relating to (i) any breach or misrepresentation by Seller under
this Agreement, or (ii) any claim by an end-user of the Services, including any
breach of the End-User Warranty.
(b) Indemnification by Access. Access shall defend, indemnify and hold
Seller (including its members, managers, directors, officers, employees, agents
and end-users) harmless from and against any damages, claims, costs and expenses
(including actual attorneys’ fees and recall expenses) arising from or relating
to (i) any breach or misrepresentation by Access under this Agreement, or
(ii) the manufacture, use or sale by Access, or the use by an end-user, of any
collection kit necessary for the performance of the Services.
-7-
(c) Procedures. If any action, suit, proceeding or claim shall be
commenced in respect of which a party may demand indemnification, the
indemnified party shall notify the indemnifying party to that effect with
reasonable promptness. The indemnifying party shall have the opportunity to
defend against such action, suit, proceeding or claim. The indemnified party
shall have the right to employ its own counsel and participate in the defense of
any matter at its own expense. If the indemnifying party fails to defend as
required hereunder, the indemnified party may defend itself at the indemnifying
party’s expense. Each party shall render to the other assistance as may be
reasonably required in connection with the defense of any such matter.
(d) Recall of Collection Kits. If the Collection Kits constitute a
health or safety hazard or risk, or if the Collection Kits or their distribution
becomes the subject of heightened governmental regulation, then Access shall
have the right to recall such Collection Kits at its sole expense; provided,
that, if the reason for the recall is the inability to perform, as currently
anticipated, the Services without violating applicable law, then Seller shall
pay the reasonable costs of such recall.
11. Insurance. Seller shall maintain in effect at all times during the
term of this Agreement insurance, from an insurance company acceptable to
Access, of the types and in the amounts set forth below protecting against
losses, claims, demands, proceedings, damages, costs, charges and expenses for
injuries (including death) or damage to person or property arising out of the
sale of the Services to the extent such injuries or damage are due to the fault
or negligence of Seller or its agents or subcontractors:
Product Liability
U.S. $5,000,000 (per occurrence)
General Liability
Workers’ Compensation
Statutorily Required Coverage
Excess Liability (Umbrella Form)
U.S. $3,000,000
Seller further agrees to furnish to Access, concurrently with the execution of
this Agreement, insurance certificates which will confirm its insurance coverage
in the amounts referenced above, to arrange for its liability insurance carriers
to include Access and its Affiliates as additional insureds under its standard
vendor’s product liability insurance policy and to arrange for its insurance
carriers to include as part of all such certificates the requirement to furnish
thirty (30) days advance written notice to Access of any material change in, or
cancellation or termination of, such insurance policies.
12. Force Majeure. Subject to the other provisions of this
Agreement, in the event that either party is unable to perform any of its
obligations under this Agreement because of natural disaster, actions or decrees
of governmental bodies or events or causes beyond the control of the affected
party (a “Force Majeure Event”) all obligations of the affected party under this
Agreement shall be immediately suspended, provided that such affected party
promptly gives the other party notice of the occurrence of the Force Majeure
Event. The affected party shall make its best efforts to eliminate the obstacles
preventing its performance and to resume its performance under the Agreement as
soon as possible. Under no circumstances shall any delay or failure to perform
as a result of a labor dispute or strike be interpreted to be a Force Majeure
Event.
-8-
13. Miscellaneous Provisions.
(a) Assignment. Neither party shall assign, transfer or subcontract
this Agreement or any part of this Agreement, directly or indirectly, without
the other party’s prior written consent; provided, however, that Access may
assign its rights and obligations under this Agreement to any Affiliate of
Access without the prior written consent of Seller, in which case Access shall
not be released from any of its obligations, financial or otherwise, under this
Agreement. This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by and against the respective successors and permitted assigns of
each of the parties to this Agreement. The Affiliates of Access shall have the
right to specifically enforce this Agreement and are intended third parties
(b) Notices. All notices and other communications under this Agreement
shall be in the English language, in writing and shall be deemed to have been
duly given when either personally delivered, or sent by facsimile or sent by
express delivery service with charges prepaid and receipt requested, or, when
mailed (postage prepaid) by certified mail with return receipt requested, to the
parties at their respective addresses set forth below. Any party may change its
address by written notice to the other party.
Access Business Group International LLC
7575 Fulton Street East
Ada, Michigan 49355
Attn: Strategic Procurement
Interleukin Genetics, Inc.
135 Beaver Street — 2nd floor
Waltham, Massachusetts 03452
Attn: ______________________
(c) Entire Agreement; Amendments. This Agreement contains the entire
agreement of the parties and replaces all prior agreements and understandings.
This Agreement may be amended, modified, superseded, or canceled and any of the
terms or conditions in this Agreement may be waived, only by a written
instrument signed by each party to this Agreement or, in the case of a waiver,
by or on behalf of the party waiving compliance. The failure of any party at any
time to require performance of any provision in this Agreement shall not affect
the right at a later time to enforce that or any other provision. No waiver by
any party of any condition, or of any breach of any term contained in this
Agreement, in any one or more instances, shall be deemed to be a further or
continuing waiver of that or any other condition or breach. No course of dealing
between the parties or usage of trade shall be effective to amend, supplement,
modify, or otherwise alter, in whole or in part, the express terms of this
Agreement.
(d) Severability. This Agreement shall be interpreted in all respects
as if any invalid or unenforceable provision were omitted from this Agreement.
All provisions of this Agreement shall be enforced to the full extent permitted
by law.
-9-
(e) No Agency. This Agreement does not in any way create the
relationship of principal and agent, employer and employee, partner or joint
venturer between Seller and Access. Under no circumstances shall Seller or its
employees be considered to be the agents or employees of Access, or vice versa.
Neither Seller nor Access shall (a) act or attempt to act or represent itself
directly or by implication, as agent or employee of the other or in any manner,
(b) assume or create or attempt to assume or create, any obligation on behalf of
or in the name of the other, or (c) make any representations, guarantees, or
warranties on behalf of or in the name of the other with respect to any matter.
(f) Governing Law; Venue. This Agreement shall be governed by and
shall be construed in accordance with the internal laws of the State of
Michigan, without regard to conflicts of law principles and without regard to
the United Nations Convention on Contracts for the International Sale of Goods
(the “CISG”). The parties agree that the CISG shall not apply to this Agreement.
Each party (i) agrees that any litigation arising out of this Agreement may be
brought only in the state or federal courts whose jurisdiction includes Kent
County, Michigan, (ii) consents to the jurisdiction of such courts, and
(iii) waives any argument that any such court is an inconvenient forum.
one and the same Agreement. A facsimile copy of the signed Agreement will be
deemed to be an original of this Agreement for purposes of execution by
counterparts.
(h) Headings. The section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the
parties and shall not in any way affect the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date
first set forth above.
ACCESS BUSINESS GROUP
INTERLEUKIN GENETICS,
INTERNATIONAL LLC, acting as agent
INC.
for ACCESS BUSINESS GROUP LLC
By:
/s/ Jay G. Ertl
By:
/s/ Philip R. Reilly
Print Name:
Jay G. Ertl
Print Name:
Philip R. Reilly, MD, JD
Its:
Vice President - Product Supply
Its:
Chief Executive Officer
“Access”
“Seller”
-10-
Exhibit A
-11-
Exhibit B
-12-
Exhibit C
[end user warranty]
-13-
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Name: Commission Implementing Regulation (EU) Noà 436/2012 of 23à May 2012 amending the Annex to Regulation (EU) Noà 37/2010 on pharmacologically active substances and their classification regarding maximum residue limits in foodstuffs of animal origin, as regards the substance azamethiphos Text with EEA relevance
Type: Implementing Regulation
Subject Matter: NA; marketing; animal product; foodstuff; fisheries
Date Published: nan
24.5.2012 EN Official Journal of the European Union L 134/10 COMMISSION IMPLEMENTING REGULATION (EU) No 436/2012 of 23 May 2012 amending the Annex to Regulation (EU) No 37/2010 on pharmacologically active substances and their classification regarding maximum residue limits in foodstuffs of animal origin, as regards the substance azamethiphos (Text with EEA relevance) THE EUROPEAN COMMISSION, Having regard to the Treaty on the Functioning of the European Union, Having regard to Regulation (EC) No 470/2009 of the European Parliament and of the Council of 6 May 2009 laying down Community procedures for the establishment of residue limits of pharmacologically active substances in foodstuffs of animal origin, repealing Council Regulation (EEC) No 2377/90 and amending Directive 2001/82/EC of the European Parliament and of the Council and Regulation (EC) No 726/2004 of the European Parliament and of the Council (1), and in particular Article 14 in conjunction with Article 17 thereof, Having regard to the opinion of the European Medicines Agency formulated by the Committee for Medicinal Products for Veterinary Use, Whereas: (1) The maximum residue limit (hereinafter MRL) for pharmacologically active substances intended for use in the Union in veterinary medicinal products for food-producing animals or in biocidal products used in animal husbandry should be established in accordance with Regulation (EC) No 470/2009. (2) Pharmacologically active substances and their classification regarding MRLs in foodstuffs of animal origin are set out in the Annex to Commission Regulation (EU) No 37/2010 of 22 December 2009 on pharmacologically active substances and their classification regarding maximum residue limits in foodstuffs of animal origin (2). (3) Azamethiphos is currently included in Table 1 of the Annex to Regulation (EU) No 37/2010 as an allowed substance, for salmonidae species. (4) An application for the extension of the existing entry for azamethiphos applicable to fin fish species has been submitted to the European Medicines Agency. (5) The Committee for Medicinal Products for Veterinary Use recommended the extension of that entry and the absence of the need to establish an MRL for azamethiphos in fin fish species. (6) The entry for azamethiphos in Table 1 of the Annex to Regulation (EU) No 37/2010 should therefore be amended accordingly. (7) The measures provided for in this Regulation are in accordance with the opinion of the Standing Committee on Veterinary Medicinal Products, HAS ADOPTED THIS REGULATION: Article 1 The Annex to Regulation (EU) No 37/2010 is amended as set out in the Annex to this Regulation. Article 2 This Regulation shall enter into force on the third day following that of its publication in the Official Journal of the European Union. This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 23 May 2012. For the Commission The President Josà © Manuel BARROSO (1) OJ L 152, 16.6.2009, p. 11. (2) OJ L 15, 20.1.2010, p. 1. ANNEX The entry corresponding to azamethiphos in Table 1 of the Annex to Regulation (EU) No 37/2010 is replaced by the following: Pharmacologically active Substance Marker residue Animal Species MRL Target Tissues Other Provisions (according to Article 14(7) of Regulation (EC) No 470/2009) Therapeutic classification Azamethiphos NOT APPLICABLE Fin fish No MRL required NOT APPLICABLE NO ENTRY Antiparasitic agents/Agents against ectoparasites |
FORM 6-K SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 REPORT OF FOREIGN ISSUER Pursuant to Section 13a-16 or 15d-16 of the Securities Exchange Act of 1934 For the month of April 2014 CERAGON NETWORKS LTD. Translation of registrant’s name into English) 24 Raoul Wallenberg Street, Tel Aviv 69719, Israel (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F xForm 40-F o Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes oNo x If “Yes” is marked, indicate below the file number assigned to the registration in connection with Rule 12g3(b): 82 - Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CERAGON NETWORKS LTD. Date: April 30, 2014 By: /s/ Donna Gershowitz Name: Donna Gershowitz Title: VP and General Counsel Exhibit Description Exhibit A – Tier 1 US Carrier Selects Ceragon for Continued 4G/LTE Network Expansion - 2 -
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Name: 83/318/EEC: Decision of the European Parliament of 18 May 1983 on the discharge to be granted to the Commission of the European Communities in respect of the utilization of the appropriations of the Fifth European Development Fund in the 1981 financial year
Type: Decision
Subject Matter: nan
Date Published: 1983-06-30
Avis juridique important|31983D031883/318/EEC: Decision of the European Parliament of 18 May 1983 on the discharge to be granted to the Commission of the European Communities in respect of the utilization of the appropriations of the Fifth European Development Fund in the 1981 financial year Official Journal L 174 , 30/06/1983 P. 0020 - 0026+++++( 1 ) OJ NO L 347 , 22 . 12 . 1980 , P . 2 . ( 2 ) OJ NO L 347 , 22 . 12 . 1980 , P . 210 . ( 3 ) OJ NO C 344 , 31 . 12 . 1982 . ( 4 ) PENDING THE RECEIPT OF RESOURCES FROM THE FIFTH EUROPEAN DEVELOPMENT FUND , EXPENDITURE WAS COVERED BY A REPAYABLE ADVANCE FROM THE FOURTH DEVELOPMENT FUND IN THE SUM OF 209 966 306,76 ECU AND A STABEX RESIDUE IN THE SUM OF 10 563 902 ECU . DECISION OF THE EUROPEAN PARLIAMENT OF 18 MAY 1983 ON THE DISCHARGE TO BE GRANTED TO THE COMMISSION OF THE EUROPEAN COMMUNITIES IN RESPECT OF THE UTILIZATION OF THE APPROPRIATIONS OF THE FIFTH EUROPEAN DEVELOPMENT FUND IN THE 1981 FINANCIAL YEAR ( 83/318/EEC ) THE EUROPEAN PARLIAMENT , - HAVING REGARD TO THE TREATY ESTABLISHING THE EUROPEAN ECONOMIC COMMUNITY , AND IN PARTICULAR ARTICLE 206B THEREOF , - HAVING REGARD TO THE SECOND ACP-EEC CONVENTION OF LOME ( 1 ) , - HAVING REGARD TO THE INTERNAL AGREEMENT ON THE FINANCING AND ADMINISTRATION OF COMMUNITY AID ( 2 ) , - HAVING REGARD TO THE REVENUE AND EXPENDITURE ACCOUNT , THE BALANCE SHEET AND THE REPORT ON THE ACTIVITIES OF THE FIFTH EUROPEAN DEVELOPMENT FUND , - HAVING REGARD TO THE REPORT OF THE COURT OF AUDITORS ON THE REVENUE AND EXPENDITURE ACCOUNT FOR THE 1981 FINANCIAL YEAR AND THE REPLIES OF THE INSTITUTIONS TO THE REPORT ( 3 ) , - HAVING REGARD TO THE COUNCIL RECOMMENDATION OF 28 MARCH 1983 CONCERNING THE IMPLEMENTATION OF THE FIFTH EUROPEAN DEVELOPMENT FUND IN THE 1981 FINANCIAL YEAR ( DOC . 1-125/83 ) , - HAVING REGARD TO THE REPORT OF THE COMMITTEE ON BUDGETARY CONTROL AND THE OPINION OF THE COMMITTEE ON DEVELOPMENT AND COOPERATION ( DOC . 1-275/83 ) , 1 . GRANTS A DISCHARGE TO THE COMMISSION IN RESPECT OF THE FOLLOWING AMOUNTS SHOWN IN THE REVENUE AND EXPENDITURE ACCOUNT FOR THE 1981 FINANCIAL YEAR AND VERIFIED BY THE COURT OF AUDITORS PURSUANT TO ARTICLE 206A ( 1 ) OF THE EEC TREATY : - REVENUE : - - EXPENDITURE ( PAYMENTS ) : 195 915 208,76 ECU ( 4 ) 2 . INSTRUCTS ITS PRESIDENT TO COMMUNICATE THIS DECISION TO THE COMMISSION OF THE EUROPEAN COMMUNITIES , TO FORWARD IT TO THE OTHER INSTITUTIONS AND TO ARRANGE FOR ITS PUBLICATION IN THE OFFICIAL JOURNAL OF THE EUROPEAN COMMUNITIES ( L SERIES ) . THE SECRETARY GENERAL H . - J . OPITZ THE PRESIDENT P . DANKERT |
FILE NOS. 33-12947 811-5079 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Pre-Effective Amendment No. Post-Effective Amendment No. 30 and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 31 (Check appropriate box or boxes) JOHN HANCOCK TAX-EXEMPT SERIES FUND (Exact Name of Registrant as Specified in Charter) 601 Congress Street Boston, Massachusetts 02210-2805 (Address of Principal Executive Offices) Registrant's Telephone Number including Area Code (617) 663-4324 ALFRED P. OUELLETTE, ESQ. John Hancock Advisers, LLC 601 Congress Street Boston, Massachusetts 02210-2805 (Name and Address of Agent for Service) APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: It is proposed that this filing will become effective (check appropriate box) [ ] immediately upon filing pursuant to paragraph (b) of Rule 485 [X] on January 1, 2008 pursuant to paragraph (b) of Rule 485 [ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485 [ ] on (date) pursuant to paragraph (a)(1) of Rule 485 [ ] 75 days after filing pursuant to paragraph (a)(2) of Rule 485 [ ] on (date) pursuant to paragraph (a)(2) of Rule 485 if appropriate, check the following box: [ ] This post-effective amendment designates a new effective date for a previously filed post-effective amendment. Table of contents Fund summary Fund details Your account A concise look at the funds investment More about topics covered in the sum- How to place an order to buy, sell or goal, its main strategies and main mary section, including descriptions of exchange fund shares, as well as infor- risks, its past performance and the the various risk factors that investors mation about the funds business policies costs of investing. should understand before investing. and any distributions it may pay. 2 New York Tax-Free Income Fund 4 Risks of investing 8 Choosing a share class 4 Whos who 8 How sales charges are calculated 6 Financial highlights 9 Sales charge reductions and waivers 10 Opening an account 11 Buying shares 12 Selling shares 14 Transaction policies 16 Dividends and account policies 16 Additional investor services For more information See back cover Fund summary John Hancock New York Tax-Free Income Fund Class / Ticker A JHNYX B JNTRX C JNYCX Goal and strategy The fund seeks a high level of current income, consistent with preservation of capital, that is exempt from federal, New York State and New York City personal income taxes. Investments Relevant limits/policies Bonds exempt from federal and New York state Normally at least 80% of net assets plus amounts and city personal income tax borrowed for investment; most are investment grade when purchased Bonds that are exempt from federal and New Limited to 33% of net assets York state and city personal income tax and that have ratings as low as BB/Ba or are the unrated equivalent The fund may buy bonds of any maturity. If a bonds credit rating falls, the fund does not have to sell it unless the adviser or subadviser determines a sale is in the funds best interest. The fund is non-diversified and may invest more than 5% of net assets in securities of any given issuer. The fund may make limited investments in certain derivatives (contracts whose value is based on indexes or other securities), generally for use in managing interest rate risk. The funds investment management team looks for bonds that are undervalued, based on both broad and security-specific factors, such as issuer creditworthiness, bond structure, general credit trends and the relative attractiveness of different types of issuers. The team uses detailed analysis of an appropriate index to model portfolio performance and composition, then blends the macro assessment with security analysis in a comprehensive and disciplined fashion. The fund does not intend to use frequent trading as part of its strategy. In general, the team favors bonds backed by revenue from a specific public project or facility, such as a power plant (revenue bonds), as they tend to offer higher yields than general obligation bonds. The team also favors bonds that have limitations on being paid off early (call protection), as this can help minimize the effect that falling interest rates may have on the funds yield. To the extent that the fund invests in bonds that are subject to the alternative minimum tax (AMT), the income paid by the fund may not be entirely tax-free to all investors. In unusual circumstances, the fund can invest more than 20% of net assets in taxable investment-grade short-term securities as a temporary defensive measure. In these and other cases, the fund might not achieve its goal. Day-to-day investment management MFC Global Investment Management (U.S.), LLC Founded in 1979, currently manages more than $33.4 billion (as of 9-30-07) Subsidiary of John Hancock Financial Services, Inc. Supervised by the adviser, John Hancock Advisers, LLC For more about the adviser, subadviser and team members, see pages 4 and 5. About bonds A bond is essentially a loan. In buying a bond, the fund is lending money to the bonds issuer. In return, the issuer pays interest to the fund. Municipal bonds are issued by, or under the authority of, a municipal issuer, such as a city, a state or a governmental authority. The interest paid by municipal bonds is generally tax free out of recognition that the money is being borrowed for civic purposes. Bonds with ratings below BBB/Baa are sometimes called junk bonds. The junk bond category spans a wide range of creditworthiness. Bonds at the higher end of the junk spectrum can be very close to investment grade. Main risks The funds shares will go up and down in price, meaning that you could lose money by investing in the fund. Many factors influence a mutual funds performance. The funds main risk factors are listed below, in alphabetical order. Before investing, be sure to read additional information on these and other risks on page 4. Credit risk Medium- and lower-quality bonds typically are more sensitive to market or economic shifts, and more likely to default, when compared to higher-quality bonds. Derivatives risk Investing in derivatives can magnify losses incurred by the underlying assets. Interest rate risk A rise in interest rates typically causes bond prices to fall. The longer the funds average maturity, the more sensitive the fund is likely to be to interest rate changes. Management risk The fund teams investment strategy may fail to produce the intended result. Municipal bond risk Municipal bond prices can decline due to fiscal mismanagement or tax shortfalls. Revenue bond prices can decline if related projects become unprofitable. Non-diversification risk Investing heavily in any one issuer increases exposure to losses in the issuers securities. State-specific risk Because the fund invests mainly in bonds from a single state, its performance is affected by local, state and regional factors. Who may want to invest This fund may be appropriate for investors who: are subject to federal and New York personal income tax seek regular monthly income want to lower their tax burden This fund may NOT be appropriate if you: are not subject to a high level of federal or New York taxes want an investment whose income is completely free from AMT liability are investing through a tax-deferred retirement account, such as an IRA are investing for maximum return over a long time horizon 2 Average annual total returns (%) 1 Year 5 Years 10 Years Inception as of 12-31-06 04-01-99 Class A before tax 0.01 4.07 4.78 After tax on distributions 0.01 4.07 4.75 After tax on distributions, with sale 1.42 4.11 4.76 Class B before tax 1.05 3.97 4.67 Class C before tax 1 2.95 4.31 4.00 Lehman Brothers Municipal Bond Index 4.84 5.53 5.76 5.30 Investor costs Shareholder transaction expenses (%) Class A Class B Class C Maximum front-end sales charge (load) as a percentage of purchase price 4.50 Maximum deferred sales charge (load) as a percentage of purchase or redemption price, whichever is less 2 5.00 1.00 Annual operating expenses (%) Class A Class B Class C Management fee 0.50 0.50 0.50 Distribution and service (12b-1) fees 0.30 1.00 1.00 Other expenses 0.23 0.23 0.23 Total fund operating expenses Expense example ($) Class A Class B Class C Shares sold Shares kept Shares sold Shares kept 1 Year 550 676 176 276 176 3 Years 763 845 545 545 545 5 Years 993 1,139 939 939 939 10 Years 1,653 1,856 1,856 2,041 2,041 Calendar year total returns These do not include sales charges and would have been lower if they did. They are shown only for Class A and would be different for other classes. How a funds returns vary from year to year can give an idea of its risk; however, as always, past performance (before and after taxes) does not indicate future results. All figures assume dividend reinvestment. Average annual total returns These include sales charges. Performance of a broad-based index is included for comparison. Indexes have no sales charges and you cannot invest in them directly. All figures assume dividend reinvestment. After-tax returns These are shown only for Class A and would be different for other classes. They reflect the highest individual federal marginal income tax rates in effect at the time and do not reflect any state or local taxes. Your actual after-tax returns may be different. After-tax returns are not relevant to shares held in an IRA, 401(k) or other tax-advantaged investment plan. Lehman Brothers Municipal Bond Index An unmanaged index of municipal bonds. 1 Adjusted to reflect elimination of front-end sales charges as of 7-15-04. Shareholder transaction expenses These are charged directly to your account. There is also a $4 fee when you sell shares and have the proceeds sent by wire. Annual operating expenses These are paid from fund assets; shareholders, therefore, pay these costs indirectly. Expense example A hypothetical example showing the expenses on a $10,000 investment during the various time frames indicated. The example assumes a 5% average annual return and the reinvestment of all dividends. The example is for comparison only and does not reflect actual expenses and returns, either past or future. 2 Except on investments of $1 million or more; see page 9. New York Tax-Free Income Fund Fund summary 3 Fund details Risks of investing Below are descriptions of the factors that may play a role in shaping the funds overall risk profile. The descriptions appear in alphabetical order, not in order of importance. For further details about fund risks, including additional risk factors that are not discussed in this prospectus because they are not considered primary factors, see the funds Statement of Additional Information (SAI). Main risks Credit risk Medium- and lower-quality bonds typically are more sensitive to market or economic shifts, and more likely to default, when compared to higher quality bonds. A bonds credit rating is a reflection of an independent rating agencys assessment of the issuers ability to make timely payments of principal and interest. An agency may lower the rating of a bond if it believes the issuers creditworthiness has become weaker. This may occur for reasons related to the overall bond market, the issuers industry or sector, the issuer itself or the structure of the bond. Derivatives risk The risks associated with derivatives vary widely, depending on the type of derivative involved and the way it is being used by the fund. With derivatives that create leverage, a fund could lose more money than it paid for the derivative. With some derivatives, the maximum loss is theoretically unlimited. When a fund uses a derivative for speculative purposes, the derivative could erode existing gains or add to existing losses. When a fund uses a derivative to cancel out other risks (hedging), that derivative can have the effect of lowering the funds overall risk. However, to the extent that the derivative does not serve as a perfect hedge, it can add to the funds overall risk. Because a derivative is a contract, there is also the risk that the counterparty may fail to honor its contractual responsibilities. If this happens, the fund could lose both the cost of the derivative and any benefit the derivative would have provided. Interest rate risk A rise in interest rates typically causes bond prices to fall. The longer the funds average maturity, the more sensitive the fund is likely to be to interest rate changes. Bonds with higher credit quality also tend to be more sensitive to interest rate risk than medium- or lower-quality bonds. Management risk A strategy used by the fund management team may fail to produce the intended result. For example, the team may be inaccurate in its assessments of securities, issuers or relative values of certain types of securities, or in its expectations about market trends, economic trends, interest rate trends or other factors. To the extent that the team invests fund assets in securities that are not in the funds benchmark index, there is a greater risk that the funds performance will deviate from that of its benchmark. Municipal bond risk With general obligation bonds, which are backed by the municipal issuers ability to levy taxes, the main risk is that the issuers overall credit quality will decline. In extreme cases, a municipal issuer could declare bankruptcy or otherwise become unable to honor its commitments to bondholders. Although rare, this can be prompted by many possible reasons, ranging from fiscal mismanagement to erosion of the tax base. With revenue bonds, which are backed only by income associated with a specific facility (such as a power plant or stadium), the risk is generally higher, because any circumstance that reduces or threatens the economic viability of that particular facility can affect the bonds credit quality. Non-diversification risk When a fund invests a significant portion of assets in any one issuer, it will become more sensitive to the specific risks of that issuer. This can make the funds share price more volatile, and can increase the risk that the fund will significantly underperform diversified municipal bond funds, or the funds benchmark. State-specific risk Because the fund invests mainly in bonds from a single state, its performance is affected by local, state and regional factors. These may include economic or policy changes, erosion of the tax base, and state legislative changes (especially those regarding budgeting and taxes). Although the fund invests mainly in investment-grade bonds, which generally have a relatively low level of credit risk, any factors that might lead to a credit decline statewide would be likely to cause widespread decline in the credit quality of the funds holdings. Additional risk Liquidity risk To the extent that a security is difficult to sell (whether because the security cannot be traded publicly or because of unusual market conditions), the fund may either be forced to accept a lower price for it or may have to continue to hold it. Either outcome could hurt fund performance. Whos who Below are the names of the various entities involved with the funds investment and business operations, along with brief descriptions of the role each entity performs. Trustees Oversee the funds business activities and retain the services of the various firms that carry out the funds operations. With 60 days notice to shareholders, the trustees can change the funds name without shareholder approval. Investment adviser Manages the funds business and investment activities. John Hancock Advisers, LLC 601 Congress Street Boston, MA 02210-2805 Founded in 1968, John Hancock Advisers, LLC is a wholly owned subsidiary of John Hancock Financial Services, Inc., which in turn is a subsidiary of Manulife Financial Corporation. As of September 30, 2007, John Hancock Advisers, LLC managed approximately $33 billion in assets. During its most recent full fiscal year, the fund paid the investment adviser a management fee consisting of 0.61% of net assets. Out of this fee, the investment adviser in turn paid the fees of the subadviser and certain other service providers. The fee was approved by the board of trustees. The basis for their approval of this fee, the investment advisory agreement overall and the funds subadvisory agreement are discussed in the funds August 31, 2007 annual report. 4 Subadviser Handles the funds day-to-day portfolio management. MFC Global Investment Management (U.S.), LLC (formerly Sovereign Asset Management LLC) 101 Huntington Avenue Boston, MA 02199 Below are brief biographical profiles of the leaders of the funds investment management team, in alphabetical order. These managers share portfolio management responsibilities. For more about these individuals, including information about their compensation, other accounts they manage and any investments they may have in the fund, see the SAI. Frank A. Lucibella, CFA On fund team from 19882002 and from 2005 to present Vice president, MFC Global Investment Management (U.S.), LLC (2006 to present) Former vice president, John Hancock Advisers (8/200512/2005) Former senior fixed-income trader, Columbia Management Group (20022005) Former second vice president, John Hancock Advisers (19882002) Began business career in 1982 Dianne M. Sales, CFA Joined fund team in 1995 Vice president, MFC Global Investment Management (U.S.), LLC (2006 to present) Former vice president, John Hancock Advisers (19892005) Began business career in 1984 Custodian Holds the funds assets, settles all portfolio trades and collects most of the valuation data required for calculating the funds net asset value (NAV). The Bank of New York One Wall Street New York, NY 10286 Principal distributor Markets the fund and distributes shares through selling brokers, financial planners and other financial representatives. John Hancock Funds, LLC 601 Congress Street Boston, MA 02210-2805 Transfer agent Handles shareholder services, including recordkeeping and statements, distribution of dividends and processing of buy and sell requests. John Hancock Signature Services, Inc. P.O. Box 9510 Portsmouth, NH 03802-9510 New York Tax-Free Income Fund Fund details 5 Financial highlights These tables detail the performance of each share class, including total return information showing how much an investment in the fund has increased or decreased each year. Figures were audited by PricewaterhouseCoopers LLP. Class A Shares Per share operating performance period ended 8-31-03 8-31-04 8-31-05 8-31-06 8-31-07 Net asset value, beginning of period Net investment income 1 0.56 0.54 0.52 0.52 0.52 Net realized and unrealized gain (loss) on investments (0.38) 0.36 0.15 (0.21) (0.37) Total from investment operations Less distributions From net investment income (0.56) (0.54) (0.52) (0.52) (0.52) Net asset value, end of period Total return 2 (%) 3 3 3 3 Ratios and supplemental data Net assets, end of period (in millions) $46 $44 $44 $43 $40 Ratio of net expenses to average net assets (%) 1.00 1.01 1.06 1.03 1.03 Ratio of gross expenses to average net assets (%) 1.02 4 1.02 4 1.06 1.03 4 1.03 4 Ratio of net investment income to average net assets (%) 4.55 4.35 4.18 4.20 4.22 Portfolio turnover (%) 17 43 25 32 17 Class B Shares Per share operating performance period ended 8-31-03 8-31-04 8-31-05 8-31-06 8-31-07 Net asset value, beginning of period Net investment income 1 0.47 0.45 0.43 0.43 0.43 Net realized and unrealized gain (loss) on investments (0.38) 0.36 0.15 (0.21) (0.37) Total from investment operations Less distributions From net investment income (0.47) (0.45) (0.43) (0.43) (0.43) Net asset value, end of period Total return 2 (%) 3 3 3 3 Ratios and supplemental data Net assets, end of period (in millions) $22 $20 $17 $14 $11 Ratio of net expenses to average net assets (%) 1.70 1.71 1.76 1.73 1.73 Ratio of gross expenses to average net assets (%) 1.72 4 1.72 4 1.76 1.73 4 1.73 4 Ratio of net investment income to average net assets (%) 3.85 3.65 3.48 3.50 3.52 Portfolio turnover (%) 17 43 25 32 17 6 New York Tax-Free Income Fund Fund details Financial highlights, continued Class C Shares Per share operating performance period ended 8-31-03 8-31-04 8-31-05 8-31-06 8-31-07 Net asset value, beginning of period Net investment income 1 0.47 0.45 0.43 0.43 0.43 Net realized and unrealized gain (loss) on investments (0.38) 0.36 0.15 (0.21) (0.37) Total from investment operations Less distributions From net investment income (0.47) (0.45) (0.43) (0.43) (0.43) Net asset value, end of period Total return 2 (%) 3 3 3 3 Ratios and supplemental data Net assets, end of period (in millions) $5 $5 $5 $3 $4 Ratio of net expenses to average net assets (%) 1.70 1.71 1.76 1.73 1.73 Ratio of gross expenses to average net assets (%) 1.72 4 1.72 4 1.76 1.73 4 1.73 4 Ratio of net investment income to average net assets (%) 3.81 3.65 3.48 3.50 3.51 Portfolio turnover (%) 17 43 25 32 17 1 Based on the average of the shares outstanding. 3 Total returns would have been lower had certain expenses not been 2 Assumes dividend reinvestment and does not reflect the effect of reduced during the periods shown. sales charges. 4 Does not take into consideration expense reductions during the period shown. New York Tax-Free Income Fund Fund details 7 Your account Choosing a Share Class Each share class has its own cost structure, including a Rule 12b-1 plan that allows it to pay fees for the sale, distribution and service of its shares. Your financial representative can help you decide which share class is best for you. Class A A front-end sales charge, as described in the section HOW SALES CHARGES ARE CALCULATED Distribution and service (12b-1) fees of 0.30% Class B No front-end sales charge; all your money goes to work for you right away Distribution and service (12b-1) fees of 1.00% A deferred sales charge, as described in the section HOW SALES CHARGES ARE CALCULATED Automatic conversion to Class A shares after eight years, thus reducing future annual expenses Class C No front-end sales charge; all your money goes to work for you right away Distribution and service (12b-1) fees of 1.00% A 1.00% contingent deferred sales charge on shares sold within one year of purchase No automatic conversion to Class A shares, so annual expenses con tinue at the Class C level throughout the life of your investment The maximum amount you may invest in Class B shares with any single purchase request is $99,999.99, and the maximum amount you may invest in Class C shares with any single purchase is $999,999.99. John Hancock Signature Services, Inc. (Signature Services) may accept a purchase request for Class B shares for $100,000 or more or for Class C shares for $1,000,000 or more when the purchase is pursuant to the Reinstatement Privilege (see SALES CHARGE REDUCTIONS AND WAIVERS). For actual past expenses of each share class, see the Fund Summary earlier in this prospectus. Because 12b-1 fees are paid on an ongoing basis, they will increase the cost of your investment and may cost shareholders more than other types of sales charges. Your broker-dealer or agent may charge you a fee to effect transactions in fund shares. Additional payments to financial intermediaries Shares of the fund are primarily sold through financial intermediaries (firms), such as brokers, banks, registered investment advisers, financial planners and retirement plan administrators. These firms may be compensated for selling shares of the fund in two principal ways: directly, by the payment of sales commissions, if any; and indirectly, as a result of the fund paying Rule 12b-1 fees. Certain firms may request, and the distributor may agree to make, payments in addition to sales commissions and 12b-1 fees out of the distributors own resources. These additional payments are sometimes referred to as revenue sharing. These payments assist in our efforts to promote the sale of the funds shares. The distributor agrees with the firm on the methods for calculating any additional compensation, which may include the level of sales or assets attributable to the firm. Not all firms receive additional compensation, and the amount of compensation varies. These payments could be significant to a firm. The distributor determines which firms to support and the extent of the payments it is willing to make. The distributor generally chooses to compensate firms that have a strong capability to distribute shares of the fund and that are willing to cooperate with the distributors promotional efforts. The distributor hopes to benefit from revenue sharing by increasing the funds net assets, which, as well as benefiting the fund, would result in additional management and other fees for the investment adviser and its affiliates. In consideration for revenue sharing, a firm may feature the fund in its sales system or give preferential access to members of its sales force or management. In addition, the firm may agree to participate in the distributors marketing efforts by allowing us to participate in conferences, seminars or other programs attended by the intermediarys sales force. Although an intermediary may seek revenue sharing payments to offset costs incurred by the firm in servicing its clients that have invested in the funds, the intermediary may earn a profit on these payments. Revenue sharing payments may provide your firm with an incentive to favor the fund. The SAI discusses the distributors revenue sharing arrangements in more detail. Your intermediary may charge you additional fees other than those disclosed in this prospectus. You can ask your firm about any payments it receives from the distributor or the fund, as well as about fees and/or commissions it charges. The distributor, investment adviser and their affiliates may have other relationships with your firm relating to the provisions of services to the fund, such as providing omnibus account services, transaction processing services or effecting portfolio transactions for funds. If your intermediary provides these services, the investment adviser or the fund may compensate the intermediary for these services. In addition, your intermediary may have other compensated relationships with the investment adviser or its affiliates that are not related to the fund. Rollover program compensation The broker-dealer of record for a pension, profit-sharing or other plan qualified under Section 401(a) or described in Section 457(b) of the Internal Revenue Code of 1986, as amended, which is funded by certain group annuity contracts issued by John Hancock insurance companies, is eligible to receive ongoing compensation (Rollover Compensation) when a plan participant terminates from the qualified plan and rolls over assets into a John Hancock sponsored custodial IRA or a John Hancock custodial Roth IRA invested in shares of John Hancock funds. The Rollover Compensation is paid from a funds 12b-1 fees to the plans broker-dealer of record at an annual rate not expected to exceed 0.25% of the average daily net eligible assets held in John Hancock funds [0.15% for the John Hancock Money Market Fund] under the rollover program. Rollover Compensation is made in the first year and continues thereafter, monthly in arrears. A John Hancock insurance company may also pay the third-party administrator for the plan a one-time nominal fee not expected to exceed $25 per each participant rollover into a John Hancock fund for facilitating the transaction. How Sales Charges are Calculated Class A Sales charges are as follows: Class A sales charges As a % of As a % of your Your investment offering price* investment Up to $99,999 4.50% 4.71% 8 As a % of As a % of your Your investment offering price* investment $100,000$249,999 3.75% 3.90% $250,000$499,999 3.00% 3.09% $500,000$999,999 2.00% 2.04% $1,000,000 and over See page 9 *Offering price is the net asset value per share plus any initial sales charge. You may qualify for a reduced Class A sales charge if you own or are purchasing Class A, Class B, Class C, Class I or all class R shares of John Hancock open-end mutual funds. To receive the reduced sales charge, you must tell your broker or financial representative at the time you purchase a funds Class A shares about any other John Hancock mutual funds held by you, your spouse or your children under the age of 21 living in the same household. This includes investments held in a retirement account, an employee benefit plan or with a broker or financial representative other than the one handling your current purchase. John Hancock will credit the combined value, at the current offering price, of all eligible accounts to determine whether you qualify for a reduced sales charge on your current purchase. You may need to provide documentation for these accounts, such as an account statement. For more information about these reduced sales charges, you may visit the funds Web site at www.jhfunds.com. You may also consult your broker or financial representative, or refer to the section entitled Initial Sales Charge on Class A Shares in a funds SAI. You may request an SAI from your broker or financial representative, access the funds Web site at www.jhfunds.com, or call Signature Services. Investments of $1 million or more Class A shares are available with no front-end sales charge.There is a contingent deferred sales charge (CDSC) on any Class A shares upon which a commission or finders fee was paid that are sold within one year of purchase, as follows: Class A deferred charges on $1 million+ investments CDSC on shares Your investment being sold First $1M$4,999,999 1.00% Next $1$5M above that 0.50% Next $1 or more above that 0.25% For purposes of this CDSC, all purchases made during a calendar month are counted as having been made on the first day of that month. The CDSC is based on the lesser of the original purchase cost or the current market value of the shares being sold, and is not charged on shares you acquired by reinvesting your dividends. To keep your CDSC as low as possible, each time you place a request to sell shares, we will first sell any shares in your account that are not subject to a CDSC. Class B and Class C Shares are offered at their net asset value per share, without any initial sales charge. A CDSC may be charged if a commission has been paid and you sell Class B or Class C shares within a certain time after you bought them, as described in the tables below. There is no CDSC on shares acquired through reinvestment of dividends. The CDSC is based on the original purchase cost or the current market value of the shares being sold, whichever is less. The CDSCs are as follows: Class B deferred charges CDSC on shares Years after purchase being sold 1 st year 5.00% CDSC on shares Years after purchase being sold 2 nd year 4.00% 3 rd or 4 th year 3.00% 5 th year 2.00% 6 th year 1.00% After 6 th year None Class C deferred charges Years after purchase Charge 1 st year 1.00% After 1 st year None For purposes of these CDSCs, all purchases made during a calendar month are counted as having been made on the first day of that month. To keep your CDSC as low as possible, each time you place a request to sell shares, we will first sell any shares in your account that carry no CDSC. If there are not enough of these to meet your request, we will sell those shares that have the lowest CDSC. Sales Charge Reductions and Waivers Reducing your Class A sales charges There are several ways you can combine multiple purchases of Class A shares of John Hancock funds to take advantage of the breakpoints in the sales charge schedule. The first three ways can be combined in any manner. Accumulation Privilege lets you add the value of any class of shares of any John Hancock funds you already own to the amount of your next Class A investment for the purpose of calculating the sales charge. However, Class A shares of money market funds will not qualify unless you have already paid a sales charge on those shares. Letter of Intention lets you purchase Class A shares of the fund over a 13-month period and receive the same sales charge as if all shares had been purchased at once. You can use a Letter of Intention to qualify for reduced sales charges if you plan to invest at least $100,000 in the funds Class A shares during the next 13 months. The calculation of this amount would include accumulation and combinations as well as your current holdings of all classes of John Hancock funds, which includes any reinvestment of dividends and capital gains distributions. However, Class A shares of money market funds will be excluded unless you have already paid a sales charge. When you sign this letter, the fund agrees to charge you the reduced sales charges listed above. Completing a Letter of Intention does not obligate you to purchase additional shares. However, if you do not buy enough shares to qualify for the lower sales charges by the earlier of the end of the 13-month period or when you sell your shares, your sales charges will be recalculated to reflect your actual purchase level. Also available for retirement plan investors is a 48-month Letter of Intention, described in the SAI. Combination Privilege lets you combine shares of all funds for purposes of calculating the Class A sales charge. To utilize any reduction you must: Complete the appropriate section of your application, or contact your financial representative or Signature Services. Consult the SAI for additional details (see the back cover of this prospectus). Group Investment Program A group may be treated as a single purchaser under the accumulation and combination privileges. Each investor has an individual account, but the groups investments are lumped together for sales charge purposes, New York Tax-Free Income Fund Your account 9 making the investors potentially eligible for reduced sales charges. There is no charge or obligation to invest (although initial investments per account opened must satisfy minimum initial investment requirements specified in the section OPENING AN ACCOUNT), and individual inves tors may close their accounts at any time. To utilize this program you must: Contact your financial representative or Signature Services to find out how to qualify. Consult the SAI for additional details (see the back cover of this prospectus). CDSC waivers As long as Signature Services is notified at the time you sell, the CDSC for each share class will be waived in the following cases: to make payments through certain systematic withdrawal plans certain retirement plans participating in Merrill Lynch, The Princeton Retirement Group, Inc. or PruSolutions SM programs redemptions pursuant to the funds right to liquidate an account less than $1,000 redemptions of Class A shares made after one year from the incep tion of a retirement plan at John Hancock to make certain distributions from a retirement plan because of shareholder death or disability To utilize a waiver you must: Contact your financial representative or Signature Services. Consult the SAI for additional details (see the back cover of this prospectus). Reinstatement privilege If you sell shares of a John Hancock fund, you may reinvest some or all of the proceeds back into the same share class of the same John Hancock fund and account from which it was removed, within 120 days without a sales charge, as long as Signature Services or your financial representative is notified before you reinvest. If you paid a CDSC when you sold your shares, you will be credited with the amount of the CDSC. To utilize this privilege you must: Contact your financial representative or Signature Services. Waivers for certain investors Class A shares may be offered without front-end sales charges or CDSCs to the following individuals and institutions: selling brokers and their employees and sales representatives (and their Immediate Family, as defined in the SAI) financial representatives utilizing fund shares in fee-based or wrap investment products under a signed fee-based or wrap agreement with John Hancock Funds, LLC fund trustees and other individuals who are affiliated with these or other John Hancock funds (and their Immediate Family, as defined in the SAI) individuals transferring assets held in a SIMPLE IRA, SEP or SARSEP invested in John Hancock funds directly to an IRA individuals converting assets held in an IRA, SIMPLE IRA, SEP or SARSEP invested in John Hancock funds directly to a Roth IRA individuals recharacterizing assets from an IRA, Roth IRA, SEP, SARSEP or SIMPLE IRA invested in John Hancock funds back to the original account type from which it was converted participants in certain retirement plans with at least 100 eligible employees (one-year CDSC applies) participants in certain 529 plans that have a signed agreement with John Hancock Funds, LLC (one-year CDSC may apply) certain retirement plans participating in Merrill Lynch, The Princeton Retirement Group, Inc. or PruSolutions SM programs terminating participants rolling over assets held in a pension, profit-sharing or other plan qualified under Section 401(a) or described in Section 457(b) of the Internal Revenue Code of 1986, as amended, which is funded by certain John Hancock group annuity contracts, directly to a John Hancock custodial IRA or John Hancock custodial Roth IRA investing in John Hancock funds, including subsequent investments To utilize a waiver you must: Contact your financial representative or Signature Services. Consult the SAI for additional details (see the back cover of this prospectus). Other waivers Front-end sales charges and CDSCs are not imposed in connection with the following transactions: exchanges from one John Hancock fund to the same class of any other John Hancock fund (see Transaction Policies in this prospectus for additional details) dividend reinvestments (see Dividends and Account Policies in this prospectus for additional details) Opening an Account 1 Read this prospectus carefully. 2 Determine how much you want to invest. The minimum initial investments for the fund are as follows: non-retirement account: $1,000 retirement account: $500; there is no minimum initial investment for certain group retirement plans investing using salary deduction or similar group methods of payment group investments: $250 Monthly Automatic Accumulation Plan (MAAP): $25 to open; you must invest at least $25 a month there is no minimum initial investment for fee-based or wrap accounts of selling firms who have executed a fee-based or wrap agreement with John Hancock Funds, LLC 3 All shareholders must complete the account application, carefully following the instructions. If you have any questions, please contact your financial representative or call Signature Services at 1-800-225-5291. 4 Complete the appropriate parts of the account privileges application. By applying for privileges now, you can avoid the delay and inconvenience of having to file an additional application if you want to add privileges later. 5 Make your initial investment using the table on the next page. You and your financial representative can initiate any purchase, exchange or sale of shares. Important information about opening a new account To help the government fight the funding of terrorism and money laun dering activities, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), requires all financial institutions to obtain, verify and record information that identifies each person or entity that opens an account. For individual investors opening an account: When you open an account, you will be asked for your name, residential address, date of birth and Social Security number. For investors other than individuals: When you open an account, you will be asked for the name of the entity, its principal place of business and taxpayer identification number (TIN) and may be requested to provide information on persons with authority or control over the account such as name, residential address, date of birth and Social Security number. You may also be asked to provide documents, such as articles of incorporation, trust instruments or partnership agreements and other information that will help Signature Services identify the entity. Please see the Mutual Fund Account Application for more details. 10 New York Tax-Free Income Fund Your account Buying shares Opening an account Adding to an account By check Make out a check for the investment amount, payable to John Make out a check for the investment amount, payable to John Hancock Signature Services, Inc. Hancock Signature Services, Inc. Deliver the check and your completed application to your financial Fill out the detachable investment slip from an account statement. representative or mail them to Signature Services (address below). If no slip is available, include a note specifying the fund name, your share class, your account number and the name(s) in which the account is registered. Deliver the check and your investment slip or note to your financial representative or mail them to Signature Services (address below). By exchange Call your financial representative or Signature Services to request Log on to www.jhfunds.com to process exchanges between funds. an exchange. Call EASI-Line for automated service 24 hours a day. Call your financial representative or Signature Services to request an exchange. By wire Deliver your completed application to your financial representative or Obtain wiring instructions by calling Signature Services. mail it to Signature Services. Instruct your bank to wire the amount of your investment. Obtain your account number by calling your financial representative or Specify the fund name, your choice of share class, the new account Signature Services. number and the name(s) in which the accounts is registered. Your bank Obtain wiring instructions by calling Signature Services. may charge a fee to wire funds. Instruct your bank to wire the amount of your investment. Specify the fund name, the share class, the new account number and the name(s) in which the accounts is registered. Your bank may charge a fee to wire funds. By Internet See By exchange and By wire. Verify that your bank or credit union is a member of the Automated Clearing House (ACH) system. Complete the Bank Information section on your account application. Log on to www.jhfunds.com to initiate purchases using your authorized bank account. By phone See By exchange and By wire. Verify that your bank or credit union is a member of the Automated Clearing House (ACH) system. Complete the Bank Information section on your account application. Call EASI-Line for automated service 24 hours a day. Call your financial representative or call Signature Services between 8 a.m. and 7 p.m , Eastern Time on most business days. To open or add to an account using the Monthly Automatic Accumulation Program, see Additional investor services. Regular mail Express delivery Web site EASI-Line Customer service Mutual Fund Operations Mutual Fund Operations www.jhfunds.com (24/7 automated service) 1-800-225-5291 John Hancock Signature Services, Inc. John Hancock Signature Services, Inc. 1-800-338-8080 P.O. Box 9510 164 Corporate Drive Portsmouth, NH 03802-9510 Portsmouth, NH 03801 New York Tax-Free Income Fund Your account 11 Selling shares To sell some or all of your shares By letter Accounts of any type. Write a letter of instruction or complete a stock power indicating Sales of any amount. the fund name, your share class, your account number, the name(s) in which the account is registered and the dollar value or number of shares you wish to sell. Include all signatures and any additional documents that may be required (see next page). Mail the materials to Signature Services. A check will be mailed to the name(s) and address in which the account is registered or otherwise according to your letter of instruction. By Internet Most accounts. Log on to www.jhfunds.com to initiate redemptions from your funds. Sales of up to $100,000. By phone Most accounts. Call EASI-Line for automated service 24 hours a day. Sales of up to $100,000. Call your financial representative or call Signature Services between 8 a.m. and 7 p.m , Eastern Time on most business days. By wire or electronic funds transfer (EFT) Requests by letter to sell any amount. To verify that the Internet or telephone redemption privilege is in place Requests by Internet or phone to sell up to $100,000. on an account or to request the form to add it to an existing account, call Signature Services. Funds requested by wire will generally be wired next business day. A $4 fee will be deducted from your account. Your bank may also charge a fee for this service. Funds requested by EFT are generally available by the second business day. Your bank may charge you a fee for this service. By exchange Accounts of any type. Obtain a current prospectus for the fund into which you are Sales of any amount. exchanging by Internet or by calling your financial representative or Signature Services. Log on to www.jhfunds.com to process exchanges between your funds. Call EASI-Line for automated service 24 hours a day. Call your financial representative or Signature Services to request an exchange. Regular mail Express delivery Web site EASI-Line Customer service Mutual Fund Operations Mutual Fund Operations www.jhfunds.com (24/7 automated service) 1-800-225-5291 John Hancock Signature Services, Inc. John Hancock Signature Services, Inc. 1-800-338-8080 P.O. Box 9510 164 Corporate Drive Portsmouth, NH 03802-9510 Portsmouth, NH 03801 12 New York Tax-Free Income Fund Your account Selling shares in writing In certain circumstances, you will need to make your request to sell shares in writing. You may need to include additional items with your request, unless they were previously provided to Signature Services and are still accurate. These items are shown in the table below. You may also need to include a signature guarantee, which protects you against fraudulent orders. You will need a signature guarantee if: your address of record has changed within the past 30 days; you are selling more than $100,000 worth of shares (this requirement is waived for certain entities operating under a signed fax trading agreement with John Hancock Funds, LLC); or you are requesting payment other than by a check mailed to the address of record and payable to the registered owner(s). You will need to obtain your signature guarantee from a member of the Signature Guarantee Medallion Program. Most broker-dealers, banks, credit unions and securities exchanges are members of this program. A notary public CANNOT provide a signature guarantee. Seller Requirements for written requests Owners of individual, joint or UGMA/UTMA accounts (custodial Letter of instruction. accounts for minors). On the letter, the signatures of all persons authorized to sign for the account, exactly as the account is registered. Medallion signature guarantee if applicable (see above). Owners of corporate, sole proprietorship, general partner or Letter of instruction. association accounts. Corporate business/organization resolution, certified within the past 12 months, or a John Hancock Funds business/organization certification form. On the letter and the resolution, the signature of the person(s) autho - rized to sign for the account. Medallion signature guarantee if applicable (see above). Owners or trustees of trust accounts. Letter of instruction. On the letter, the signature(s) of the trustee(s). Copy of the trust document, certified within the past 12 months, or a John Hancock Funds trust certification form. Medallion signature guarantee if applicable (see above). Joint tenancy shareholders with rights of survivorship with a Letter of instruction signed by surviving tenant. deceased co-tenant(s). Copy of death certificate. Medallion signature guarantee if applicable (see above). Inheritance tax waiver (if applicable). Executors of shareholder estates. Letter of instruction signed by executor. Copy of order appointing executor, certified within the past 12 months. Medallion signature guarantee if applicable (see above). Inheritance tax waiver (if applicable). Administrators, conservators, guardians and other sellers or account Call 1-800-225-5291 for instructions. types not listed above. Regular mail Express delivery Web site EASI-Line Customer service Mutual Fund Operations Mutual Fund Operations www.jhfunds.com (24/7 automated service) 1-800-225-5291 John Hancock Signature Services, Inc. John Hancock Signature Services, Inc. 1-800-338-8080 P.O. Box 9510 164 Corporate Drive Portsmouth, NH 03802-9510 Portsmouth, NH 03801 New York Tax-Free Income Fund Your account 13 Transaction Policies Valuation of shares The net asset value (NAV) per share for each class is determined each business day at the close of regular trading on the New York Stock Exchange (typically 4:00 p
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EXHIBIT 31.2 CERTIFICATION I, Kathleen A. Browne, Principal Accounting Officer of CURAEGIS TECHNOLOGIES, INC., hereby certifies that: 1. I have reviewed this quarterly report on Form 10-Q of CURAEGIS TECHNOLOGIES, INC. 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation;and d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materiallyaffected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: August 8, 2017 /s/ Kathleen A. Browne Kathleen A. Browne Principal Accounting Officer
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Exhibit 10.1
AGREEMENT
This Agreement (this “Agreement”) is made and entered into as of March 11, 2019,
by and among GCP Applied Technologies Inc. (the “Company”) and the entities and
natural persons set forth in the signature pages hereto (collectively,
“Starboard”) (each of the Company and Starboard, a “Party” to this Agreement,
and collectively, the “Parties”).
RECITALS
WHEREAS, the Company and Starboard have engaged in discussions and
communications concerning the Company’s business, financial performance and
strategic plans;
WHEREAS, as of the date hereof, Starboard has a beneficial ownership (as
determined under Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended, or the rules or regulations promulgated thereunder (the
“Exchange Act”)) interest in shares of Company’s common stock, par value $0.01
per share (the “Common Shares”), totaling, in the aggregate, 3,180,000 Common
Shares, or approximately 4.4% of the Common Shares issued and outstanding on the
date hereof;
WHEREAS, Starboard submitted a nomination notice to the Company on February 1,
2019 (the “Nomination Notice”) stating its intention to nominate director
candidates to be elected to the Company’s board of directors (the “Board”) at
the 2019 annual meeting of stockholders of the Company (the “2019 Annual
Meeting”); and
WHEREAS, as of the date hereof, the Company and Starboard have determined to
come to an agreement with respect to the composition of the Board and certain
other matters, as provided in this Agreement.
covenants and agreements contained herein, and for other good and valuable
Parties hereto, intending to be legally bound hereby, agree as follows:
1.
Board Appointments and Related Agreements.
(a) Board Appointments.
(i) The Company agrees that as promptly as practicable after the date hereof,
the Board shall take all necessary actions to (A) increase the size of the Board
from nine (9) to eleven (11) members (provided that the size of the Board shall
automatically decrease to ten (10) members at the conclusion of the 2019 Annual
Meeting) and (B) appoint to the Board Clay H. Kiefaber and Marran H. Ogilvie
(each, a “Starboard Designee” and collectively, the “Starboard Designees”) as a
class II director and a class III director, respectively, each with terms
expiring at the 2019 Annual Meeting. The Company agrees that, provided that such
Starboard Designee is able and willing to continue to serve on the Board, the
Company will include the Starboard Designees in the Company’s slate of
recommended nominees standing for election at the 2019 Annual Meeting and will
recommend, support and solicit proxies for the election of the Starboard
Designees at the 2019 Annual Meeting in the same manner as for the Company’s
other nominees at the 2019 Annual Meeting.
(ii) If any Starboard Designee (or any Starboard Replacement Director (as
defined below)) is unable or unwilling to serve as a director, resigns as a
director or is removed as a director prior to the expiration of the Standstill
Period, and at all times since the date of this Agreement and at such time
Starboard beneficially owns (as determined under Rule 13d-3 promulgated under
the Exchange Act) at least the lesser of 3.0% of the Company’s then outstanding
Common Shares and 2,170,000 Common Shares (subject to adjustment for stock
splits, reclassifications, combinations and similar adjustments) (such lesser
amount, the “Minimum Ownership Threshold”), Starboard shall have the ability to
recommend a substitute person(s) for appointment to the Board in accordance with
this Section 1(a)(ii) (any such replacement nominee shall be referred to as a
“Starboard Replacement Director”, and if and when such person becomes a director
of the Board in accordance with this Section 1(a)(ii), such person shall be
deemed a Starboard Designee for purposes of this Agreement). Any Starboard
Replacement Director must (A) be reasonably acceptable to the Nominating and
Governance Committee (such acceptance not to be unreasonably withheld), (B) be
independent of Starboard (for the avoidance of doubt, the nomination by
Starboard of any person to serve on the board of another company shall not (in
and of itself) cause such person not to be deemed independent of Starboard), (C)
qualify as “independent” pursuant to NYSE listing standards, (D) have the
relevant financial and business experience to be a director of the Company, and
(E) satisfy the publicly disclosed guidelines and policies with respect to
service on the Board (in the case of each of (B) through (E), as reasonably
determined by the Nominating and Governance Committee). The Nominating and
Governance Committee shall make its determination and recommendation (which it
shall undertake reasonably and in good faith) regarding whether such person
meets the foregoing criteria within ten (10) business days after (1) such
nominee as a Starboard Replacement Director has submitted to the Company the
documentation required by Section 1(b)(iv) and (2) representatives of the Board
have, if requested by the Company, conducted customary interview(s) of such
nominee. The Company shall use its reasonable best efforts to conduct any
interview(s) contemplated by this Section 1(a)(ii) as promptly as practicable,
but in any case, assuming reasonable availability of the nominee, within ten
(10) business days after Starboard’s recommendation of such nominee. In the
event the Nominating and Governance Committee does not accept a person
recommended by Starboard as the Starboard Replacement Director, Starboard shall
have the right to recommend additional substitute person(s) whose appointment
shall be subject to the Nominating and Governance Committee recommending such
person in accordance with the procedures described above. The Board shall vote
on the appointment of such Starboard Replacement Director to the Board no later
than five (5) business days after the Nominating and Governance Committee
recommendation of such Starboard Replacement Director; provided, however, that
if the Board does not appoint such Starboard Replacement Director to the Board
pursuant to this Section 1(a)(ii), the Parties shall continue to follow the
procedures of this Section 1(a)(ii) until a Starboard Replacement Director is
appointed to the Board. Upon a Starboard Replacement Director’s appointment to
the Board, the Board and all applicable committees of the Board shall take all
necessary actions to appoint such Starboard Replacement Director to any
applicable committee of the Board of which the replaced director was a member
immediately prior to such director’s resignation or removal or, if the Board or
the applicable committee of the Board determines that the Starboard Replacement
Director does not satisfy the requirements of the NYSE and applicable law with
respect to service on the applicable committee (which determination shall be
made reasonably and in good faith), to an alternative committee of the
Board. Until such time as any Starboard Replacement Director is appointed to any
applicable committee, the other Starboard Designee will be permitted to serve as
an interim member of such applicable committee, unless such Starboard Designee
is already serving as a member of such committee or the Board or the applicable
committee of the Board determines that such Starboard Designee does not satisfy
the requirements of the NYSE and applicable law with respect to service on the
applicable committee (which determination shall be made reasonably and in good
faith).
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(iii) Committees. The Company agrees that each Starboard Designee shall be
given the same due consideration for membership to each committee of the Board
as any other independent director.
(iv) Subject to NYSE rules and applicable laws, during the Standstill Period,
the Board and all applicable committees of the Board shall take all action
necessary to ensure that each committee of the Board, including any committee of
the Board formed after the date of this Agreement, includes at least one
Starboard Designee.
(v) During the period commencing upon the conclusion of the 2019 Annual
Meeting and continuing until the expiration of the Standstill Period, the Board
shall take all necessary actions to set the size of the Board at no more than
ten (10) directors, unless Starboard consents in writing to any proposal to
increase the size of the Board.
(b) Additional Agreements.
(i) Starboard shall comply, and shall cause each of its controlled Affiliates
and Associates (collectively, “Covered Persons”) to comply, with the terms of
this Agreement and shall be responsible for any breach of this Agreement by any
such Covered Person. As used in this Agreement, the terms “Affiliate” and
“Associate” shall have the respective meanings set forth in Rule 12b-2
promulgated by the Exchange Act and shall include all persons or entities that
at any time during the term of this Agreement become Affiliates or Associates of
any person or entity referred to in this Agreement.
(ii) Upon execution of this Agreement, Starboard shall not, and shall cause
each of its Covered Persons not to, directly or indirectly, (A) nominate or
recommend for nomination any person for election at the 2019 Annual Meeting,
(B) submit any proposal for consideration at, or bring any other business
before, the 2019 Annual Meeting or (C) initiate, encourage or participate in any
“vote no,” “withhold” or similar campaign with respect to the 2019 Annual
Meeting. Starboard shall not publicly or privately encourage or support any
other stockholder, person or entity to take any of the actions described in this
Section 1(b)(ii).
(iii) Starboard shall appear in person or by proxy at the 2019 Annual Meeting
and vote all Common Shares beneficially owned by Starboard at the 2019 Annual
Meeting (A) in favor of all of the Company’s nominees, (B) in favor of the
ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s
independent registered public accounting firm for the fiscal year ending
December 31, 2019, (C) in accordance with the Board’s recommendation with
respect to the Company’s “say-on-pay” proposal and (D) in accordance with the
Board’s recommendation with respect to any other Company proposal or stockholder
proposal presented at the 2019 Annual Meeting; provided, however, that in the
event Institutional Shareholder Services Inc. (“ISS”) or Glass Lewis & Co., LLC
(“Glass Lewis”) recommends otherwise with respect to the Company’s “say-on-pay”
proposal or any other Company proposal or shareholder proposal presented at the
2019 Annual Meeting (other than proposals relating to the election or removal of
directors), Starboard shall be permitted to vote in accordance with the ISS or
Glass Lewis recommendation. Starboard further agrees that it will appear in
person or by proxy at any special meeting of the Company’s stockholders during
the Standstill Period and vote all Common Shares beneficially owned by Starboard
at such meeting in accordance with the Board’s recommendation on any proposal
relating to the appointment, election or removal of director(s).
(iv) Starboard acknowledges that, on or prior to the date of this Agreement,
the Starboard Designee has submitted to the Company (x) a fully completed copy
of the Company’s
3
standard director and officer questionnaire and other reasonable and customary
director onboarding documentation (including an authorization form to conduct a
background check, a representation agreement, consent to be named as a director
in the Company’s proxy statement and certain other agreements) required by the
Company in connection with the appointment or election of new Board members, and
(y) a written representation that such person, if elected as a director of the
Company, would be in compliance, and will comply with, all applicable publicly
disclosed confidentiality, corporate governance, conflict of interest,
Regulation FD, code of conduct and ethics, and stock ownership and trading
policies and guidelines of the Company that have been provided to such person
prior to such date (collectively, the “Onboarding Documentation”). As a
condition for eligibility for appointment to the Board, each candidate for any
Starboard Replacement Director shall promptly (but in any event prior to being
appointed to the Board in accordance with this Agreement) submit to the Company
the Onboarding Documentation.
(v) Starboard acknowledges that all directors (including the Starboard
Designees and any Starboard Replacement Directors) are (A) governed by, and
required to comply with, all policies, procedures, codes, rules, standards and
guidelines applicable to all members of the Board and (B) required to keep
confidential all Company confidential information and not disclose to any third
parties (including Starboard) any discussions, matters or materials considered
in meetings of the Board or Board committees.
(vi) Starboard, on behalf of itself and its Affiliates, hereby
(A) irrevocably withdraws the Nomination Notice and (B) irrevocably withdraws
any related materials or notices submitted to the Company in connection
therewith.
(vii) The Company agrees that the Board and all applicable committees of the
Board shall, to the extent that the Board and such committees have such
authority and are entitled to so determine, take all necessary actions (other
than amending or modifying any Existing Plans and Agreements (as defined
below)), effective no later than immediately following the execution of this
Agreement, to determine, in connection with their initial appointment as a
director and nomination by the Company at the 2019 Annual Meeting, that each of
the Starboard Designees is deemed to be (A) a member of the “Incumbent Board” or
“Continuing Director” (as such term may be defined in the definition of “Change
in Control,” “Change of Control” (or any similar term) under the Company’s
incentive plans, options plans, deferred compensation plans, employment
agreements, severance plans, retention plans, loan agreements, indentures or any
other related plans or agreements (the “Existing Plans and Agreements”) that
refer to any such plan or agreement’s definition of “Change in Control” or any
similar term) and (B) a member of the Board as of the beginning of any
applicable measurement period for the purposes of the definition of “Change in
Control” or any similar term under such Existing Plans and Agreements. For the
avoidance of doubt, nothing in this Section 1(b)(vii) shall require, or be
deemed to be, an amendment or modification to any Existing Plans and Agreements,
including the outstanding awards thereunder.
(viii) Starboard shall promptly (and in any event within five (5) business
days) inform the Company in writing if Starboard fails to satisfy the Minimum
Ownership Threshold at any time.
2.
Standstill Provisions.
(a) Starboard agrees that, from the date of this Agreement until the earlier
of (x) the date that is fifteen (15) business days prior to the deadline for the
submission of stockholder nominations for the 2020 annual meeting of the
Company’s stockholders (the “2020 Annual Meeting”) pursuant to the Company’s
Amended and Restated By-laws or (y) the date that is one hundred (100) days
prior to
4
the first anniversary of the 2019 Annual Meeting (the “Standstill Period”),
Starboard shall not, and shall cause each Covered Person not to, in each case
directly or indirectly, in any manner:
(i) engage in any solicitation of proxies or consents or become a
“participant” in a “solicitation” (as such terms are defined in Regulation 14A
under the Exchange Act) of proxies or consents, in each case, with respect to
any securities of the Company;
(ii) form, join or in any way participate in any “group” (within the meaning
of Section 13(d)(3) of the Exchange Act) with respect to any securities of the
Company (other than a “group” that includes all or some of the members of
Starboard, but does not include any other entities or persons that are not
members of Starboard as of the date hereof); provided, however, that nothing
herein shall limit the ability of an Affiliate of Starboard to join the “group”
following the execution of this Agreement, so long as any such Affiliate agrees
to be bound in writing by the terms and conditions of this Agreement;
(iii) deposit any Common Shares in any voting trust or subject any Common
Shares to any arrangement or agreement with respect to the voting of any Common
Shares, other than any such voting trust, arrangement or agreement solely among
the members of Starboard and otherwise in accordance with this Agreement;
(iv) seek or submit, or encourage any person or entity to seek or submit,
nomination(s) in furtherance of a “contested solicitation” for the appointment,
election or removal of directors with respect to the Company or seek, encourage
or take any other action with respect to the appointment, election or removal of
any directors; provided, however, that nothing in this Agreement shall prevent
Starboard or its Affiliates or Associates from taking actions in furtherance of
identifying director candidates in connection with the 2020 Annual Meeting so
long as such actions do not create a public disclosure obligation for Starboard
or the Company, are not publicly disclosed by Starboard or its representatives,
Affiliates or Associates and are undertaken on a basis reasonably designed to be
confidential and in accordance in all material respects with Starboard’s normal
practices in the circumstances;
(v) (A) make any proposal for consideration by stockholders at any annual or
special meeting of stockholders of the Company or through any referendum of
stockholders, (B) make any offer or proposal (with or without conditions) with
respect to any merger, takeover offer, acquisition, recapitalization,
restructuring, disposition or other business combination involving the Company,
(C) solicit a third party to make an offer or proposal (with or without
conditions) with respect to any merger, takeover offer, acquisition,
recapitalization, restructuring, disposition or other business combination
involving the Company, or publicly encourage, initiate or support any third
party in making such an offer or proposal, (D) publicly comment on any third
party proposal regarding any merger, takeover offer, acquisition,
recapitalization, restructuring, disposition, or other business combination with
respect to the Company by such third party (provided that this clause (D) shall
not prevent such public comment after such proposal has become generally known
to the public other than as a result of a disclosure by Starboard), or (E) call
or seek to call a special meeting of stockholders;
(vi) seek, alone or in concert with others, representation on the Board,
except as specifically permitted in Section 1;
(vii) advise, encourage, support or influence any person or entity with
respect to the voting or disposition of any securities of the Company at any
annual or special meeting of stockholders, except in accordance with Section 1;
or
5
(viii) make any request or submit any proposal to amend the terms of this
Agreement other than through non-public communications with the Company that
would not be reasonably determined to trigger public disclosure obligations for
any Party.
(b) Except as expressly provided in Section 1 or Section 2(a), Starboard
shall be entitled to (i) vote the Common Shares that it beneficially owns as it
determines in its sole discretion and (ii) disclose, publicly or otherwise, how
it intends to vote or act with respect to any securities of the Company on any
shareholder proposal or other matter to be voted on by the shareholders of the
Company and the reasons therefor.
(c) Nothing in Section 2(a) shall be deemed to limit the exercise in good
faith by the Starboard Designee (or the Starboard Replacement Director, as
applicable) of such person’s fiduciary duties solely in such person’s capacity
as a director of the Company and in a manner consistent with such person’s and
Starboard’s obligations under this Agreement.
3.
Representations and Warranties of the Company.
The Company represents and warrants to Starboard that (A) the Company has the
corporate power and authority to execute this Agreement and to bind it thereto,
(B) this Agreement has been duly and validly authorized, executed and delivered
by the Company, constitutes a valid and binding obligation and agreement of the
Company, and is enforceable against the Company in accordance with its terms,
except as enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or similar laws
generally affecting the rights of creditors and subject to general equity
principles and (C) the execution, delivery and performance of this Agreement by
the Company does not and will not (1) violate or conflict with any law, rule,
regulation, order, judgment or decree applicable to the Company or (2) result in
any breach or violation of or constitute a default (or an event which with
notice or lapse of time or both would constitute such a breach, violation or
default) under or pursuant to, or result in the loss of a material benefit
under, or give any right of termination, amendment, acceleration or cancellation
of, any organizational document or agreement to which the Company is a party or
by which it is bound.
4.
Representations and Warranties of Starboard.
Starboard represents and warrants to the Company that (A) the authorized
signatory of Starboard set forth on the signature page hereto has the power and
authority to execute this Agreement and any other documents or agreements to be
entered into in connection with this Agreement and to bind Starboard thereto,
(B) this Agreement has been duly authorized, executed and delivered by
Starboard, and is a valid and binding obligation of Starboard, enforceable
against Starboard in accordance with its terms except as enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or similar laws generally affecting the rights of
creditors and subject to general equity principles, (C) the execution of this
Agreement, the consummation of any of the transactions contemplated hereby, and
the fulfillment of the terms hereof, in each case in accordance with the terms
hereof, will not conflict with, or result in a breach or violation of the
organizational documents of Starboard as currently in effect, (D) the execution,
delivery and performance of this Agreement by Starboard does not and will not
(1) violate or conflict with any law, rule, regulation, order, judgment or
decree applicable to Starboard or (2) result in any breach or violation of or
constitute a default (or an event which with notice or lapse of time or both
would constitute such a breach, violation or default) under or pursuant to, or
result in the loss of a material benefit under, or give any right of
termination, amendment, acceleration or cancellation of, any organizational
document, agreement, contract, commitment, understanding or arrangement to which
such member is a party or by which it is bound, (E) as of the date of this
Agreement, Starboard
6
beneficially owns (as determined under Rule 13d-3 promulgated under the Exchange
Act) 3,180,000 Common Shares, (F) as of the date hereof, and except as set forth
in clause (E) above, Starboard does not currently have, and does not currently
have any right to acquire, any interest in any securities of the Company (or any
rights, options or other securities convertible into or exercisable or
exchangeable (whether or not convertible, exercisable or exchangeable
immediately or only after the passage of time or the occurrence of a specified
event) for such securities or any obligations measured by the price or value of
any securities of the Company or any of its controlled Affiliates, including any
swaps or other derivative arrangements designed to produce economic benefits and
risks that correspond to the ownership of Common Shares, whether or not any of
the foregoing would give rise to beneficial ownership (as determined under Rule
13d-3 promulgated under the Exchange Act), and whether or not to be settled by
delivery of Common Shares, payment of cash or by other consideration, and
without regard to any short position under any such contract or arrangement) and
(G) Starboard will not, directly or indirectly, compensate or agree to
compensate any director or director nominee of the Company for his or her
respective service as a director of the Company, including any Starboard
Designee, with any cash, securities (including any rights or options convertible
into or exercisable for or exchangeable into securities or any profit sharing
agreement or arrangement), or other form of compensation directly or indirectly
related to the Company or its securities. For the avoidance of doubt, nothing
herein shall prohibit Starboard for compensating or agreeing to compensate any
person for his or her respective service as a nominee or director of any other
company.
5.
Press Release.
Promptly following the execution of this Agreement, the Company and Starboard
shall jointly issue a mutually agreeable press release (the “Press Release”)
announcing certain terms of this Agreement in the form attached hereto as
Exhibit A. Prior to the issuance of the Press Release and subject to the terms
of this Agreement, neither the Company (including the Board and any committee
thereof) nor Starboard shall issue any press release or make any public
announcement regarding this Agreement or the matters contemplated hereby without
the prior written consent of the other Party. During the Standstill Period,
neither the Company nor Starboard shall make any public announcement or
statement that is inconsistent with or contrary to the terms of this Agreement.
6.
Specific Performance.
Each of Starboard, on the one hand, and the Company, on the other hand,
acknowledges and agrees that irreparable injury to the other Party hereto would
occur in the event any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached and that such
injury would not be adequately compensable by the remedies available at law
(including the payment of money damages). It is accordingly agreed that
Starboard, on the one hand, and the Company, on the other hand (the “Moving
Party”), shall each be entitled to specific enforcement of, and injunctive
relief to prevent any violation of, the terms hereof, and the other Party hereto
will not take action, directly or indirectly, in opposition to the Moving Party
seeking such relief on the grounds that any other remedy or relief is available
at law or in equity. This Section 6 is not the exclusive remedy for any
violation of this Agreement.
7.
Expenses.
The Company shall reimburse Starboard for its reasonable, documented
out-of-pocket fees and expenses (including legal expenses) incurred in
connection with Starboard’s involvement at the Company prior to the execution of
this Agreement, including, but not limited to the negotiation and execution of
this Agreement, provided that such reimbursement shall not exceed $200,000 in
the aggregate.
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8.
Severability.
If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
or invalidated. It is hereby stipulated and declared to be the intention of the
Parties that the Parties would have executed the remaining terms, provisions,
covenants and restrictions without including any of such which may be hereafter
declared invalid, void or unenforceable. In addition, the Parties agree to use
their best efforts to agree upon and substitute a valid and enforceable term,
provision, covenant or restriction for any of such that is held invalid, void or
enforceable by a court of competent jurisdiction.
9.
Notices.
Any notices, consents, determinations, waivers or other communications required
or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered: (A) upon receipt, when delivered
personally; (B) upon confirmation of receipt, when sent by email (provided such
confirmation is not automatically generated); or (C) one (1) business day after
deposit with a nationally recognized overnight delivery service, in each case
properly addressed to the Party to receive the same. The addresses for such
communications shall be:
GCP Applied Technologies Inc.
62 Whittemore Avenue
Cambridge, Massachusetts 02140
Attention:
Naren B. Srinivasan
Email:
[email protected]
51 West 52nd Street
Attention:
Adam O. Emmerich, Esq.
Gregory E. Ostling, Esq.
Viktor Sapezhnikov, Esq.
Email:
[email protected]
[email protected]
[email protected]
If to Starboard or any member thereof, to:
Starboard Value LP
777 Third Avenue, 18th Floor
Attention:
Jeffrey C. Smith
Email:
[email protected]
8
Olshan Frome Wolosky LLP
1325 Avenue of the Americas
Attention:
Steve Wolosky, Esq.
Andrew Freedman, Esq.
Email:
[email protected]
[email protected]
10.
Applicable Law.
This Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware without reference to the conflict of laws
principles thereof that would result in the application of the law of another
jurisdiction. Each of the Parties hereto irrevocably agrees that any legal
action or proceeding with respect to this Agreement and the rights and
obligations arising hereunder, or for recognition and enforcement of any
judgment in respect of this Agreement and the rights and obligations arising
hereunder brought by the other Party hereto or its successors or assigns, shall
be brought and determined exclusively in the Delaware Court of Chancery and any
state appellate court therefrom within the State of Delaware (or, if the
Delaware Court of Chancery declines to accept jurisdiction over a particular
matter, any federal court within the State of Delaware). Each of the Parties
hereto hereby irrevocably submits with regard to any such action or proceeding
for itself and in respect of its property, generally and unconditionally, to the
personal jurisdiction of the aforesaid courts and agrees that it will not bring
any action relating to this Agreement in any court other than the aforesaid
courts. Each of the Parties hereto hereby irrevocably waives, and agrees not to
assert in any action or proceeding with respect to this Agreement, (A) any claim
that it is not personally subject to the jurisdiction of the above-named courts
for any reason, (B) any claim that it or its property is exempt or immune from
jurisdiction of any such court or from any legal process commenced in such
courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise)
and (C) to the fullest extent permitted by applicable legal requirements, any
claim that (1) the suit, action or proceeding in such court is brought in an
inconvenient forum, (2) the venue of such suit, action or proceeding is improper
or (3) this Agreement, or the subject matter hereof, may not be enforced in or
by such courts.
11.
Counterparts.
be considered one and the same agreement and shall become effective when
counterparts have been signed by each of the Parties and delivered to the other
Party (including by means of electronic delivery or facsimile).
12.
Mutual Non-Disparagement.
Subject to applicable law, each of the Parties covenants and agrees that, during
the Standstill Period, or if earlier, until such time as the other Party or any
of its agents, subsidiaries, controlled affiliates, successors, assigns,
partners, members, officers, key employees or directors shall have breached this
Section 12, neither it nor any of its respective agents, subsidiaries,
controlled affiliates, successors, assigns, partners, members, officers, key
employees or directors, shall in any way publicly criticize, disparage, call
into disrepute, or otherwise defame or slander the other Party or such other
Party’s subsidiaries, affiliates, successors, assigns, partners, members,
officers (including any current officer of a Party or a Party’s subsidiaries who
no longer serves in such capacity following the
9
execution of this Agreement), directors (including any current director of a
Party or a Party’s subsidiaries who no longer serves in such capacity following
the execution of this Agreement), employees, stockholders, agents, attorneys or
representatives, or any of their businesses, products or services, in any manner
that would reasonably be expected to damage the business or reputation of such
other Party, their businesses, products or services or their subsidiaries,
affiliates, successors, assigns, officers (or former officers), directors (or
former directors), employees, stockholders, agents, attorneys or
representatives.
13.
Securities Laws.
Starboard acknowledges that it is aware, and will advise each of its
representatives who are informed as to the matters that are the subject of this
Agreement, that the United States securities laws may prohibit any person who
directly or indirectly has received from an issuer material, non-public
information from purchasing or selling securities of such issuer or from
communicating such information to any other person under circumstances in which
it is reasonably foreseeable that such person is likely to purchase or sell such
securities.
14.
Entire Agreement; Amendment and Waiver; Successors and Assigns; Third Party
Beneficiaries; Term.
This Agreement contains the entire understanding of the Parties with respect to
its subject matter. There are no restrictions, agreements, promises,
representations, warranties, covenants or undertakings between the Parties other
than those expressly set forth herein. No modifications of this Agreement can be
made except in writing signed by an authorized representative of each the
Company and Starboard. No failure on the part of any Party to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of such right, power or
remedy by such Party preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law. The
terms and conditions of this Agreement shall be binding upon, inure to the
benefit of, and be enforceable by the Parties hereto and their respective
successors, heirs, executors, legal representatives, and permitted assigns. No
Party shall assign this Agreement or any rights or obligations hereunder
without, with respect to Starboard, the prior written consent of the Company,
and with respect to the Company, the prior written consent of Starboard. This
Agreement is solely for the benefit of the Parties and is not enforceable by any
other persons or entities. This Agreement shall terminate at the end of the
Standstill Period, except the provisions of Sections 6, 9, 10, 13 and 14, which
shall survive such termination; provided, however, that any Party may bring an
action following such termination alleging a breach of this Agreement occurring
prior to the end of the Standstill Period.
[The remainder of this page intentionally left blank]
10
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly authorized signatories of the Parties as of the date first set forth above.
THE COMPANY:
GCP APPLIED TECHNOLOGIES INC.
By: /s/ Gregory E. Poling
Name: Gregory E. Poling
[Signature Page to Agreement by and among GCP and Starboard]
STARBOARD:
STARBOARD VALUE AND
OPPORTUNITY MASTER FUND LTD
By: Starboard Value LP,
its investment manager
STARBOARD VALUE AND
OPPORTUNITY S LLC
its manager
STARBOARD VALUE AND
OPPORTUNITY C LP
By: Starboard Value R LP,
its general partner
STARBOARD VALUE R LP
By: Starboard Value R GP LLC,
its general partner
STARBOARD VALUE AND
OPPORTUNITY MASTER FUND L LP
By: Starboard Value L LP,
its general partner
STARBOARD VALUE L LP
its general partner
STARBOARD VALUE LP
By: Starboard Value GP LLC,
its general partner
STARBOARD VALUE GP LLC
By: Starboard Principal Co LP,
its member
STARBOARD PRINCIPAL CO LP
By: Starboard Principal Co GP LLC,
its general partner
STARBOARD PRINCIPAL CO GP LLC
STARBOARD VALUE R GP LLC
By: /s/ Jeffrey C. Smith
Name:
Title:
Jeffery C. Smith
Authorized Signatory
/s/ Jeffrey C. Smith JEFFREY C. SMITH
/s/ Peter A. Feld PETER A. FELD
EXHIBIT A
PRESS RELEASE |
Exhibit 10.1 No.: 2unan Bao 0005# CONTRACT OF GUARANTEE NOTE: The contract is made based on equality and free will under a negotiation pursuant to relevant Laws; any Articles of the contract shall be a true representation of both parties’ Position. To protect the legal equity of Guarantor, the Creditor friendly reminds Guarantor to pay more attention to the text written in bold. CREDITOR: INDUSTRIAL & COMMERCIAL BANK OF CHINA CO., LTD JUNAN BRANCH hereinafter referred as “Party A” Principal: CHUNCANG ZHANG Business Add: Shiquan Rd. Junan county Tel & Fax: 0539-7223715 GUARANTOR: SHANDONG LONGKONG TRAVEL MANAGEMENT CO., LTD hereinafter referred as “Party B” Corporate representative: SHANJIU ZHANG Business Add/Residence Add: Yishui County, Linyi City Tel & Fax: 0539-2553788 To ensure Party A’s equity getting realized, Party B provide the Party A the Guarantee (Counter-Guarantee) of its own accord. To confirm each party’s rights and obligations, both parties agreed to sign the Contract under an equal negotiation pursuant to Contract Law, Security Law, and other relevant Regulations. Article 1: Guaranteed Main Creditor’s Right The main Creditor’s Right is contained in the main contract: Working capital Loan Contract No.: 2unan 0006 (hereinafter referred as Main Contract) signed between Party A and Party B Shandong Green Food Co., Ltd, hereinafter referred as Debtor. on 27th -1-2011. The amount and period of the Main Debt describing under Main Contract. Article 2: Guarantee Type The type of Guarantee provided by Party B shall be Joint Guarantee. Article 3: Scope of Guarantee The scope of Guarantee provided by Party B shall contains of Main debt principal, interest, compound interest, penalty interest, penalty, compensation, exchange rate loss (loss caused by exchange rate floating) and cost to realize the creditor’s right(including but not limited to, lawsuit expense, attorney fee). Article 4: Period of Guarantee The Main Contract is a contract of loan, the period of Guarantee under the Contract shall be 2 years starting from the date that loan is due; Part A declares the loan is due in advance, the period of Guarantee shall be 2 years starting from the due date in advance. The Main Contract is a bank acceptance agreement, the period of Guarantee shall be 2 years starting from the date that the next day when Party A accepts the bills. The Main Contract is an agreement of Guarantee, the period of Guarantee shall be 2 years starting from the date that the next day when Party A carries out the guarantee obligation. The Main Contract is a contract of opening L/C, the period of Guarantee shall be 2 years starting from the date that the next day when Party B pays the money under the L/C. The Main Contract is other financing document, the period of Guarantee shall be 2 years starting from the date that the Main Debt is due or due in advance. Article 5: Statements and Warranties of Party B Party B states and guarantees as following: 5.1 Qualified for a Guarantor by laws; the Guarantee provided to Party A that already got all necessary approval or permit pursuant to the procedure and authoring power of Articles of Association, without breaching any laws, regulations and other relevant rules. 5.2 Party B is a public company or controlled by a public company, it shall ensure that provide the disclosure related to the information of carrying out the Guarantee pursuant to Security Act, or Security Exchange Act, or other laws, regulations and rules. Party B has sufficient power to carry out the Guarantee responsibility; any dictates, changing on financial situation, any agreement signed with a third party shall cause no any exemption and deduction to the Guarantee obligation. 5.4 Party B shall acknowledge the purpose of the debt under Main Contract completely, provide the Guarantee for Debtor with a free-will; the representation of the position shall be true. Any data or information provided to Party B shall be real, correct, and complete, without false record, material missing or misleading statement. 5.6 Party B is a natural person, he shall state and guarantee as following: A. a person with complete capacity for civil rights and civil conduct; B. with a legal earning and sufficient debt repaying capacity; C. without a bad credit record related to overdue loan, owning interest, intentionally overdrawing a credit card, welshing. D. without a bad habit, such as gambling or drug abuse, etc., and criminal record. E. a guarantee related to consent from his/her wife/husband shall be provided to Party A. Article 6: Commitment of Party B Party B commits to Party A as following: In one of such events, the Guarantee obligation shall be carried out by Party B in 5 days after informed by Party A. A. The debtor fails to repay as the Main Debt due (including due in advance) B. Such events occur to Party B or Debtor: bankrupt, dismiss, liquidation, suspension, business license withdrawn, cancellation. The Main Debt to Party A is under a security for thing which provided by debtor or by a third party, Party A may request Party B to carry out the Guarantee first, or request Party B and Guarantor under a thing to carry out the guarantee at the same time, Party B shall not plead it. The Guarantee obligation shall remain unchanged even if Party B waives or changes or loses the other Guarantee. provide financial information, tax return and other information related to financial situation; Such events occur, the consent from Party B may not need; and Party B shall continue to carry on the Guarantee obligation under the Contract. A. Party A and Debtor both agree to change the Main Contract, but not add more obligation and undertaking. B. A floating rate is taken in the Main contract or People’s Bank of China adjusts the Stand Loan Rate, which causes the amount in Main Contract changed. C. Party A transfers the Main creditor’s right to a third party. Providing other Guarantee to a third party shall not affect Party B’s equities. In such events, reform to a shareholding company, joint venture, consolidation, merger, business affiliated, stock ownership, transfer material asset, transfer creditor’s right, and other matters may cause a negative influence on Party A’s equities under the Contract, Party B shall inform Party A in 30days advance about above matters, and a writing consent shall be obtain from Party A, or provide an arrangement related to the guarantee under the Contract accepted by Party A, otherwise, such above actions shall not be carried out. One of following matters occurs, inform Party A in time. A. Any changing or amendment or modifying on such items: Articles of association, business scope, registered capital, corporate representative, stock ownership. B. Suspended, dismissed, liquidation, suspend for rectification, bushiness license withdrawn, cancelled or bankrupt requird. C. involved or being involved a material economic dispute, a lawsuit, arbitration; or asset and property is sealed up, seized or supervised. D. Party B is a natural person, living address, company working with, contact method changed. To sign the received informing letter from Party A in time. Article 7: Party A’s commitment Party A commits that: to keep such items confidential that provided by Party B, relevant documents, financial information and the non-disclosing information contained in other relevant documents. Article 8: Breach of Faith The contract becomes effective, any party fails to carry out the obligation under the Contract, or breach any statement, guarantee, commitment under the Contract, which shall be regarded as Breach Contract. Any loss caused by above Breach Contract, the compensation shall be provided to another party. Party B fails to carry out the Guarantee obligation under the Contract, Party A may draw or deduct the money to repay the Debt under the Main Contract from the accounts that Party B opened with Industrial & Commercial Bank of China or its branch or affiliated agency. The basis currency of above accounts is different from the Debt, a current foreign exchange rate shall be taken to calculate the amount shall be drawn or deducted at the date that the money is drawn or deducted. 8.3 Any party breaches the Contract, another party may take any legal actions under the Laws, Regulations or rules of People’s Republic Country of China with an exception that stipulated under another agreement. Articles 9: Becomes Effective, Alteration and Termination The Contract shall be effective from the day signed. Any alteration to the Contract shall be carried out in writing under a negotiation between both parties. The altered clauses or agreement shall be the part of the Contract with the same legal effect. The rest part except the altered sections of the Contract remains unchanged legal effect, prior to going effective of the altered sections. 9.3 Any clause of the Contract becomes invalid or unrealizable, which shall not cause any influence on the other clauses remaining effective and realizable. 9.4 The alteration or termination of the contract, which shall not have any influence on each party to claim a compensation, or the article about dispute settlement. Article 10: Dispute Settlement The signing, effect, explanation, carrying out and dispute settlement of the Contract are applied for laws of People’s Republic Country of China. Any dispute or issue related to the Contract shall be resolved by a negotiation between both parties; otherwise, the option B shall be selected: A.Submit arising dispute to the arbitration associate of NULL, following the current Arbitration Regulations when the dispute is submitted, the arbitration shall take place in NULL(address). The Arbitration award shall be regarded as the final settlement and both parties shall abide by it. B.Go to court locating where the Party A located in. Article 11: Other Provision Without a consent in writing from Party A, Party B shall not transfer total or part rights or obligations of the Contract. Party A fails to carry out or partly carry out or delays to carry out any right under the Contract, which shall not be regarded as waiving the right or waiving/altering other rights, without any influence on carrying out the right or any other right. Pursuant to relevant laws, regulations or other rules under certain regulation documents or requirement of Financial Supervision Authority,party A may provide the information or other relevant information that related to the Contract to the Basic Database of Credit Information of Bank of China or other database set up by laws, such above data may be accessible to qualified organizations and Persons to check up. Also the Party A shall check up the Party B’s information in above database to preparing the Contract. Articles 12: Other Matter Accept by Both Parties NULL. NULL. Party A: Industrial and Commercial Bank of China Junan Branch(sealed) Authorized Representative: Chunchang Zhang (signed) Party B: Shandong Longkong Travel Management Co.,LTD(sealed) Corporate Representative/Authorized proxy:
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Exhibit 10.4
TURNKEY DRILLING CONTRACT
THIS AGREEMENT is made and entered into as of the 26th day of May, 2011 by and
between the parties herein designated as "Partnership" and "Contractor."
Partnership: 2011-D Bayou City Two Well Drilling Program, L.P. Address: 632
Adams Street, Suite 710 Bowling Green, Kentucky 42101 Contractor: Bayou
City Exploration, Inc. Address: 632 Adams Street, Suite 710 Bowling Green,
Kentucky 42101
IN CONSIDERATION of the mutual promises, conditions and agreements herein
contained, Partnership engages Contractor as an Independent Contractor to
furnish the equipment, labor and services to drill, test, and complete its
working interest portion, as per Exhibit “1”, of the wells to be drilled on the
Partnership Prospects in Colorado County, Texas in search of oil and/or gas.
As a Management Fee for the supervision and management of the affairs of the
Partnership during the work over, drilling and testing periods of Initial
Operations, the Managing General Partner will receive an amount equal to the
excess, if any, of the Turnkey Drilling Price over the actual cost of such
operations. Likewise, during the completion period of Initial Operations, if
completion is attempted on the Prospect Wells, the Managing General Partner will
receive an amount equal to the excess, if any, of the Turnkey Completion Price
over the actual costs of such operations. The Managing General Partner intends
to enter into one or more Operating Agreements (the “Operating Agreements”) with
third party operators which will perform certain services with respect to the
work over, drilling, testing and, if applicable, completion of the Prospect
Wells. We cannot accurately predict the actual amount constituting compensation
to be paid to any third party operator for its services under the Operating
Agreements and therefore, it also cannot accurately predict the excess amount,
if any, of the Turnkey Drilling Price over the actual cost of such operations
that the Managing General Partner will receive. Costs to be expended under the
Operating Agreements are a direct result of the work over, drilling, testing and
completion risks encountered. During work over, drilling, testing and completion
operations, a variety of conditions may be encountered, such as loss of
circulation, blowouts, detachment and/or loss of drilling equipment, necessity
for the purchase and installation of down-hole equipment to keep the wellbore
intact, and repair of inadequate cement to hold production casing in place. As
such costs are unpredictable with any degree of certainty, in the event of
totally uneventful operations, compensation payable pursuant to the Operating
Agreements could equal or exceed the actual work over, drilling, testing and
completion costs. Likewise, in the event that a series of major difficulties are
encountered, these costs could equal or exceed the amount of Initial Capital,
and Bayou City Exploration, Inc. would be responsible for such excess costs.
Bayou City Exploration, Inc. may use any funds it receives from management fees
and/or profits, if any, for any purpose, including payment of General and
Administrative Expenses of Bayou City Exploration, Inc. such as employee
salaries and office expenses.
1. LOCATION OF PARTNERSHIP WELL(S):
See Exhibit "1" attached hereto and made a part hereof.
1
2. TERMINATION DATE:
Contractor agrees to use its best efforts to complete operations for the
acquisition, drilling and testing of the Partnership Wells by December 31, 2011,
and Contractor and the Partnership agree that time is of the essence under this
Agreement.
3. BASIS OF DETERMINING AMOUNTS PAYABLE TO CONTRACTOR:
Contractor shall be paid at the following rate for the work performed hereunder:
Turnkey Drilling Price ($593,750) and Completion Price in the event that
completion is attempted ($308,750) = Total $902,500.
4. DEPTH:
Subject to the right of the Partnership to direct the stoppage of work at any
time (as provided in paragraph 7), the Partnership Wells shall be drilled to the
depth as specified in Exhibit “1” or to the depth at which the production casing
(production string) is set, whichever depth is first reached, which depth is
hereinafter referred to as the “Contract Depth.”
5. TIME OF PAYMENT:
5.1 Basis: Payment by the Partnership to the Contractor of the Drilling Price
becomes due and payable upon the receipt by the Partnership of an invoice from
the Contractor. Neither commencement nor completion of Contractor’s performance
shall be a condition precedent to this obligation to pay.
5.2 Attorneys’ Fees: If this Agreement is placed in the hands of an attorney for
collection of any sums due hereunder, or suit is brought on same, or sums due
hereunder are collected through bankruptcy or probate proceedings, then the
Partnership agrees that there shall be added to the amount due reasonable
attorneys' fees and costs.
6. COMPLETION PROGRAM:
The Contractor, in its capacity as Managing General Partner of the Partnership
(the “Managing General Partner”), along with other participating Partnership
Well working interest owners, shall determine whether Contractor shall set a
production string on the Prospect Wells. In the event the Managing General
Partner directs that drilling operations cease and to abandon the Partnership
Wells, Contractor shall plug the Partnership Wells, remove all drilling
apparatus from the well sites and the obligations of the parties hereunder shall
cease. In the event the Managing General Partner directs Contractor to set a
production string on the Prospect Wells and makes timely payment to the
Contractor of the Completion Price, Contractor shall commence the operations
necessary to attempt to complete the Prospect Wells for commercial production,
including the setting of a production string and the acquisition, delivery and
installation of a pump jack, holding tank and all other necessary equipment
needed to extract and contain oil and/or gas from the Partnership Wells.
7. STOPPAGE OF WORK BY THE PARTNERSHIP:
Notwithstanding the provisions of paragraph 3 with respect to the depth to be
drilled, the Managing General Partner shall have the right to direct the
stoppage of the work to be performed by the Contractor hereunder at any time
prior to reaching the Contract Depth and even though Contractor has made no
default hereunder. If the Partnership exercises its right to discontinue
drilling the well(s), the Partnership will not receive a refund for any unused
portion of the Drilling Price allocable to the discontinued well(s).
2
8. REPORTS TO BE FURNISHED BY CONTRACTOR:
8.1 Contractor shall keep and furnish to the Partnership an accurate record of
the work performed and formations drilled on the IADC-API Daily Drilling Report
form or other form acceptable to the Partnership. A legible copy of said form
signed by Contractor’s representative shall be furnished by Contractor to the
Partnership.
8.2 Delivery tickets, if requested by the Partnership, covering any material or
supplies furnished by the Partnership shall be turned in each day with the daily
drilling report. The quantity, description and condition of materials and
supplies so furnished shall be checked by Contractor and such tickets shall be
properly certified by Contractor.
9. RESPONSIBILITY FOR A SOUND LOCATION:
Contractor shall prepare a sound location, adequate in size and capable of
properly supporting the drilling rig. Contractor shall be responsible for a
conductor pipe program adequate to prevent soil and subsoil washout. In the
event subsurface conditions cause a cratering or shifting of the location
surface, and loss or damage to the rig or its associated equipment results
therefrom, the Partnership shall not be responsible for reimbursing Contractor
for any such loss or damage including payment of work stoppage rate during
repair and/or demobilization if applicable.
10. RESPONSIBILITY FOR ROAD AND LOCATIONS:
Contractor agrees at all times to maintain roads to locations and each location
in such a condition that will allow free access and movement to and from the
drilling site in an ordinarily equipped highway type vehicle.
11. PAYMENT OF CLAIMS:
Contractor agrees to pay all claims for labor, material, services and supplies
to be furnished by Contractor hereunder, and agrees to allow no lien or charge
to be fixed upon the lease, the Partnership Wells or other property of the
Partnership or the land upon which said Partnership Wells are located.
12. RESPONSIBILITY FOR LOSS OR DAMAGE:
12.1 Contractor’s Surface Equipment: Contractor shall assume liability at all
times for damage to or destruction of Contractor’s surface equipment, including
but not limited to all drilling tools, machinery and appliances, for use above
the surface, regardless of when or how such damage or destruction occurs.
12.2 Contractor’s In-Hole Equipment Basis: Contractor shall assume liability at
all times for damage to or destruction of Contractor’s in-hole equipment,
including but not limited to drill pipe, drill collars and tool joints, and the
Partnership shall be under no liability to reimburse Contractor for any such
loss.
3
12.3 Partnership’s Equipment: The Partnership shall assume liability at all
times for any defective equipment owned by it, including but not limited to
casing, tubing, well head equipment, and Contractor shall be under no liability
to reimburse the Partnership for any such loss or damage.
12.4 Fire or Blow-Out: Should a fire or blowout occur or should the hole for any
cause attributable to Contractor's operators be lost or damaged while Contractor
is engaged in the performance of work hereunder, all such loss of or damage to
the hole including cost of regaining control of a fire or blowout, shall be
borne by Contractor; and if the hole is not in condition to be carried to the
Contract Depth as herein provided, Contractor shall, if requested by the
Partnership, commence a new hole without delay at Contractor's cost; and the
drilling of the new hole shall be conducted under the terms and conditions of
this Agreement in the same manner as though it were the first hole and
Contractor shall be responsible for replacement of any casing lost in a junked
and abandoned hole as well as the cost of preparing a new drill site for the new
hole and the road thereto. In such case, Contractor shall not be entitled to
any payment or compensation for expenditures made or incurred by Contractor on
or in connection with the abandoned hole.
13. NO WAIVER EXCEPT IN WRITING:
It is fully understood and agreed that none of the requirements of this
Agreement shall be considered as waived by either party unless the same is done
in writing, and then only by the persons executing this Agreement, or other duly
authorized agent or representative of the party.
14. FORCE MAJEURE:
If either party hereto is rendered unable, wholly or in part (and its
performance hereunder is not rendered merely commercially impracticable) by
force majeure to carry out its obligation under this Agreement, it shall give
the other party prompt written notice of the force majeure with reasonably full
particulars. Thereupon, the obligations of the notifying party, so far as they
are affected by the force majeure, shall be suspended during, but not longer
than, the continuance of the force majeure, and the notifying party agrees to
use reasonable diligence to remove the force majeure as quickly as possible.
This paragraph shall not relieve either party hereto for its obligations to
expend sums of money or to indemnify the other party hereto, as provided
elsewhere in this Agreement. The term "force majeure" as herein employed shall
mean an act of God, strike, lockout or other industrial disturbance, act of the
public enemy, war, blockade, public riot, lightning, fire, storm, flood,
explosion, extreme weather conditions, or governmental restraint.
15. INFORMATION CONFIDENTIAL:
Upon written request by the Partnership, information obtained by Contractor in
the conduct of drilling operation on the Partnership Wells, including, but not
limited to depth, formations penetrated, the results of coring, testing and
surveying, shall be considered confidential and shall not be divulged by
Contractor or its employees, to any person, firm or any corporation other than
the Partnership’s designated representative.
16. NOTICES AND PLACE OF PAYMENT:
All notices to be given with respect to this Agreement unless otherwise provided
for shall be given to Contractor and to the Partnership respectively at the
addresses hereinabove shown. All sums payable hereunder to Contractor shall be
payable at the address hereinabove shown unless otherwise specified herein.
4
BAYOU CITY EXPLORATION, INC.
By: /s/ Charles T. Bukowski
Charles T. Bukowski, Jr., President & CEO
2011-D Bayou City Two Well Drilling Program, L.P.,
A KENTUCKY LIMITED PARTNERSHIP
By: Bayou City Exploration, Inc.
Managing General Partner
By: /s/ Stephen C. Larkin
Stephen C. Larkin, Chief Financial Officer
5
EXHIBIT "1" TO EXHIBIT "C"
May 26, 2011
The primary investment objective of the Partnership is, assuming all Units are
sold, the acquisition of up to 5% Working Interest, which is approximately 3.75%
of the Net Revenue Interest in one well to be drilled on the Prairie Bell West
Prospect (the “Prairie Bell West Prospect Well”) and up to 5.0% Working
Interest, which is approximately 3.75% of the Net Revenue Interest, in one well
to be drilled on the Prairie Bell East Prospect (the “Prairie Bell East Prospect
Well”). The Prairie Bell West Prospect will consist of oil and gas leases in
Colorado County, Texas and will be drilled to a depth sufficient to test the
Prairie Bell Sands formation. The Prairie Bell East Prospect will consist of oil
and gas leases in Colorado County, Texas and will be drilled to a depth
sufficient to test the Prairie Bell Sands formations.
6
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April 20, 2012 Transamerica Financial Life Insurance Company 440 Mamaroneck Avenue Harrison, NY 10528 RE:TFLIC Series Life Account TFLIC Freedom Elite Builder Registration No. 333-61654 To The Board of Directors: This opinion is furnished in connection with the filing by Transamerica Financial Life Insurance Company (“Transamerica”) of Post-Effective Amendment No. 15 (the “Amendment”) to the Registration Statement on Form N-6 for the TFLIC Freedom Elite Builder, a flexible premium variable life insurance policy (the "Policy"). The form of the Policy was prepared under my direction, and I am familiar with the Registration Statement and Exhibits thereof. In my opinion: 1) the illustrations of death benefits, cash values, and net surrender values included in the Appendix to the Prospectus are consistent with the provisions of the Policy; 2) the rate structure of the Policy has not been designed, and the assumptions for the illustrations (including sex, age, rating classification, and premium amount and payment schedule) have not been selected, so as to make the relationship between premiums and benefits, as shown in the illustrations, appear to be materially more favorable than for other prospective purchasers with different assumptions; and 3) the illustrations represent a rating classification, premium payment amount, and issue age that are fairly representative of Policies sold. I hereby consent to use of this opinion as an exhibit to the Amendment and to the reference to my name under the heading "Experts" in the Statement of Additional Information. This document is intended exclusively for the purpose of documenting the above-stated opinion on the Appendix B illustrations and the above stated consents.This document may not be appropriate for other purposes. Very truly yours, /s/ Lorne Schinbein Lorne Schinbein Vice President and Assistant Actuary
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POWER OF ATTORNEY Allianz Life Insurance Company of New York Each person whose signature appears below hereby constitutes and appoints Stewart D. Gregg and Erik T. Nelson and each of them, their true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for them and in their names, place and stead, in any and all capacities, to sign any and all documents to be filed under the registration reflected below that has been or will be filed with the Securities and Exchange Commission by Allianz Life Insurance Company of New York pursuant to the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, by means of the Securities and Exchange Commission's electronic disclosure system known as EDGAR or otherwise; and to file the same, with any amendments thereto and all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to sign and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as each of them might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof. Allianz Life of NY Variable Account C 33 Act No. Retirement Pro II New York N-4 Registration Pending Signature Title Date /s/ Walter R. White 04/03/2012 Chairman of the Board and Walter R. WhiteChief Executive Officer /s/ Giulio Terzariol 04/11/2012 Director, Chief Financial Officer and Giulio TerzariolTreasurer /s/ Martha Clark Goss 04/03/2012 Director Martha Clark Goss /s/ John O. Esch 04/10/2012 Director, Vice President, and Appointed John O. Esch Actuary /s/ Thomas P. Burns04/03/2012 Director and President Thomas P. Burns /s/ Yvonne K. Franzese 04/02/2012 Director Yvonne K. Franzese /s/ Michael Baney 04/10/2012 Director Michael Baney
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Exhibit 99.1 MORTGAGE LOAN PURCHASE AGREEMENT This Mortgage Loan Purchase Agreement (the “Agreement”), dated as of March 1, 2007, is between Mortgage Asset Securitization Transactions, Inc., a Delaware corporation (the “Company”), and UBS Real Estate Securities Inc., a Delaware corporation (the “Seller” or “UBSRES”). The Company and the Seller hereby recite and agree as follows: 1.Defined Terms.Terms used without definition herein shall have the respective meanings assigned to them in the Pooling and Servicing Agreement, dated as of March 1, 2007 (the “Pooling and Servicing Agreement”), among the Company, Wells Fargo Bank, National Association, as master servicer (“Master Servicer”), as trust administrator, and as custodian, U.S. Bank National Association, as Trustee (the “Trustee”), and UBSRES, as Transferor, relating to the issuance of the Company’s STARM Mortgage Loan Trust 2007-2, Mortgage Pass Through Certificates, Series 2007-2 (the “Certificates”) or, if not defined therein, in the Underwriting Agreement, dated March 29, 2007 (the “Underwriting Agreement”), between the Company, UBS Securities LLC and SunTrust Capital, Inc. 2.Purchase of Mortgage Loans.The Seller hereby sells, transfers, assigns and conveys, without recourse, and the Company hereby purchases, the mortgage loans (the “Mortgage Loans”), listed in Exhibit I. 3.Purchase Price; Purchase and Sale.The purchase price for the Mortgage Loans shall be payable by the Company to the Seller on the Closing Date either (i)by appropriate notation of an inter company transfer between affiliates of UBS or (ii)in immediately available Federal funds wired to such bank as may be designated by the Seller. Upon payment of the purchase price by the Company, the Seller shall be deemed to have transferred, assigned, set over and otherwise conveyed to the Company all the right, title and interest of the Seller in and to the Mortgage Loans as of the Cut-Off Date, including all interest and principal due on the Mortgage Loans after the Cut-Off Date (including scheduled payments of principal and interest due after the Cut-Off Date but received by the Seller on or before the Cut-Off Date, but not including payments of principal and interest due on the Mortgage Loans on or before the Cut-Off Date), together with all of the Seller’s right, title and interest in and to the proceeds of any related title, hazard, primary mortgage or other insurance policies together with all rights with respect to the related Mortgage Loans, and only with respect to the Mortgage Loans, under the Servicing Agreement (other than those rights under the Servicing Agreement that do not relate to servicing of the Mortgage Loans (including, without limitation, the representations and warranties made by the Servicer (in its capacity as loan seller to the Transferor) and the document delivery requirements of such Servicer and the remedies (including indemnification) available for breaches thereto), which rights were retained by the Transferor pursuant to the Assignment Agreements).The Company hereby directs the Seller, and the Seller hereby agrees, to deliver to the Master Servicer all documents, instruments and agreements required to be delivered by the Company to the Master Servicer under the Pooling and Servicing Agreement and such other documents, instruments and agreements as the Company or the Trustee shall reasonably request.The Seller shall use its reasonable best efforts to cause each Servicer to enter into the related Assignment Agreement in form and substance satisfactory to the Seller and the Company in order to effectuate the assignment to the Company of the Servicing Agreements with respect to the Mortgage Loans. 4.Representations and Warranties.The Seller hereby represents and warrants to the Company with respect to each Mortgage Loan as of the date hereof or such other date set forth herein that as of the Closing Date, and following the transfer of the Mortgage Loans to it, the Seller had good title to the Mortgage Loans and the Mortgage Loans were subject to no offsets, defenses or counterclaims. The Seller hereby represents and warrants to the Company that the Seller has not dealt with any broker, investment banker, agent or other person (other than the Company) who may be entitled to any commission or compensation in connection with the sale of the Mortgage Loans. 5.Underwriting.The Seller hereby agrees to furnish any and all information, documents, certificates, letters or opinions with respect to the Mortgage Loans, reasonably requested by the Company in order to perform any of its obligations or satisfy any of the conditions on its part to be performed or satisfied pursuant to the Underwriting Agreement or the Purchase Agreement at or prior to the Closing Date. 6.Notices.All demands, notices and communications hereunder shall be in writing, shall be effective only upon receipt and shall, if sent to the Company, be addressed to it at Mortgage Asset Securitization Transactions, Inc., 1285 Avenue of the Americas, New York, New York 10019, Attention: [Gregory Walker, Esq.], or, if sent to the Seller, be addressed to it at UBS Real Estate Securities Inc., 1285 Avenue of the Americas, New York, New York 10019, Attn: [Eileen Lindblom]. 7.Miscellaneous.This Agreement shall be governed by and construed in accordance with the laws of the State of New York.Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated except by a writing signed by the party against whom enforcement of such change, waiver, discharge or termination is sought.This Agreement may be signed in any number of counterparts, each of which shall be deemed an original, which taken together shall constitute one and the same instrument.This Agreement shall bind and inure to the benefit of and be enforceable by the Company and the Seller and their respective successors and assigns. [SIGNATURE PAGE FOLLOWS] 2 IN WITNESS WHEREOF, the Company and the Seller have caused this Agreement to be duly executed by their respective officers as of the day and year first above written. MORTGAGE ASSET SECURITIZATION TRANSACTIONS, INC By:/s/ Sameer Tikoo Name:Sameer Tikoo Title:Associate Director By:/s/ Agnes Teng Name:Agnes Teng Title:Associate Director UBS REAL ESTATE SECURITIES INC. By:/s/ Sameer Tikoo Name:Sameer Tikoo Title:Associate Director By:/s/ Agnes Teng Name:Agnes Teng Title:Associate Director 3 EXHIBIT I Mortgage Loan Schedule As delivered to the Custodian on the Closing Date I-1
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Exhibit 10.5
NISSAN AUTO RECEIVABLES 2016-C OWNER TRUST
(a Delaware Statutory Trust)
AMENDED AND RESTATED TRUST AGREEMENT
between
NISSAN AUTO RECEIVABLES CORPORATION II,
as Depositor,
WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Owner Trustee
and
U.S. BANK NATIONAL ASSOCIATION,
as Certificate Registrar and Paying Agent
Dated as of August 10, 2016
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1
SECTION 1.01.
Definitions
1
SECTION 1.02.
Usage of Terms
1
ARTICLE II
CREATION OF ISSUER
1
SECTION 2.01.
Creation of Trust
1
SECTION 2.02.
Office
2
SECTION 2.03.
Purposes and Powers
2
SECTION 2.04.
Appointment of the Owner Trustee
2
SECTION 2.05.
Declaration of Issuer
2
SECTION 2.06.
Liability of the Certificateholders
3
SECTION 2.07.
Title to Trust Property
3
SECTION 2.08.
Situs of Trust
3
SECTION 2.09.
Representations and Warranties of the Depositor
4
SECTION 2.10.
Covenants of the Certificateholder
5
ARTICLE III
CERTIFICATES AND TRANSFER OF INTERESTS
5
SECTION 3.01.
The Certificates
5
SECTION 3.02.
Authentication of Certificates
5
SECTION 3.03.
Registration of Transfer and Exchange of Certificates
6
SECTION 3.04.
Mutilated, Destroyed, Lost or Stolen Certificates
9
SECTION 3.05.
Persons Deemed Certificateholders
9
SECTION 3.06.
Access to List of Certificateholders’ Names and Addresses
9
SECTION 3.07.
Maintenance of Office or Agency
9
SECTION 3.08.
Appointment of Paying Agent
10
SECTION 3.09.
Legending of Certificates
10
SECTION 3.10.
Actions of Certificateholders
11
ARTICLE IV
ACTIONS BY OWNER TRUSTEE OR CERTIFICATEHOLDERS
12
SECTION 4.01.
Prior Notice to Certificateholders with Respect to Certain Matters
12
SECTION 4.02.
Action by Certificateholders with Respect to Certain Matters
13
SECTION 4.03.
Action with Respect to Bankruptcy
13
-i-
TABLE OF CONTENTS
(continued)
Page
SECTION 4.04.
Restrictions on Certificateholders’ Power
13
SECTION 4.05.
Majority of the Certificates Control
13
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES 13
SECTION 5.01.
Establishment of Accounts
13
SECTION 5.02.
Application of Amounts in Trust Accounts
14
SECTION 5.03.
Method of Payment
15
SECTION 5.04.
Accounting and Reports to the Noteholders, the Certificateholders, the
Internal Revenue Service and Others 15
SECTION 5.05.
Signature on Returns; Tax Matters Partner; Partnership Representative
16
SECTION 5.06.
Duties of Depositor on Behalf of Issuer
17
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
17
SECTION 6.01.
General Authority
17
SECTION 6.02.
General Duties
17
SECTION 6.03.
Duties of the Owner Trustee
17
SECTION 6.04.
No Duties Except as Specified in this Agreement or in Instructions
19
SECTION 6.05.
No Action Except Under Specified Documents or Instructions
19
SECTION 6.06.
Restrictions
19
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
20
SECTION 7.01.
Rights of the Owner Trustee
20
SECTION 7.02.
Furnishing of Documents
21
SECTION 7.03.
Representations and Warranties
21
SECTION 7.04.
Reliance; Advice of Counsel
22
SECTION 7.05.
Not Acting in Individual Capacity
22
SECTION 7.06.
Owner Trustee Not Liable for Certificates or Receivables
22
SECTION 7.07.
Owner Trustee May Own Certificates and Notes
23
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
23
SECTION 8.01.
Owner Trustee’s Fees and Expenses
23
SECTION 8.02.
Indemnification
24
-ii-
TABLE OF CONTENTS
(continued)
Page
SECTION 8.03.
Payments to the Owner Trustee
25
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
25
SECTION 9.01.
Termination of Trust Agreement
25
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
26
SECTION 10.01.
Eligibility Requirements for Owner Trustee
26
SECTION 10.02.
Resignation or Removal of Owner Trustee
26
SECTION 10.03.
Successor Owner Trustee
27
SECTION 10.04.
Merger or Consolidation of Owner Trustee
28
SECTION 10.05.
Appointment of Co-Trustee or Separate Trustee
28
ARTICLE XI
MISCELLANEOUS
29
SECTION 11.01.
Supplements and Amendments
29
SECTION 11.02.
No Legal Title to Owner Trust Estate in Certificateholders
30
SECTION 11.03.
Limitations on Rights of Others
30
SECTION 11.04.
Notices
30
SECTION 11.05.
Severability
31
SECTION 11.06.
Counterparts
31
SECTION 11.07.
Successors and Assigns
31
SECTION 11.08.
No Petition
31
SECTION 11.09.
No Recourse
32
SECTION 11.10.
Headings
32
SECTION 11.11.
GOVERNING LAW
33
Exhibit A Form of Certificate Exhibit B Form of Transferee Certification
Letter Exhibit C Form of Transferor Representation Letter
-iii-
AMENDED AND RESTATED TRUST AGREEMENT, dated as of August 10, 2016 (as amended,
supplemented or otherwise modified and in effect from time to time, this
“Agreement”), among NISSAN AUTO RECEIVABLES CORPORATION II, a Delaware
corporation, as depositor (the “Depositor), WILMINGTON TRUST, NATIONAL
ASSOCIATION, a national banking association with trust powers, not in its
individual capacity but solely as owner trustee (in such capacity, the “Owner
Trustee”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association,
as certificate registrar and paying agent (in such capacity, as applicable, the
“Certificate Registrar” or the “Paying Agent”) amending and restating in its
entirety the Trust Agreement, dated as of July 7, 2016 (the “Original Trust
Agreement”), between the same parties, and herein referred to as the “Trust
Agreement” or this “Agreement.”
IN CONSIDERATION of the mutual agreements herein contained, and of other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. Except as otherwise specified herein or if the
context may otherwise require, capitalized terms used but not otherwise defined
herein have the respective meanings assigned to such terms in the Sale and
Servicing Agreement, dated as of the date hereof (the “Sale and Servicing
Agreement”), by and among Nissan Auto Receivables Corporation II, as seller,
Nissan Motor Acceptance Corporation, as servicer, Nissan Auto Receivables 2016-C
Owner Trust, as issuer, and U.S. Bank National Association, as indenture
trustee.
SECTION 1.02. Usage of Terms. With respect to all terms in this Agreement, the
singular includes the plural and the plural the singular; words importing any
gender include the other genders; references to “writing” include printing,
typing, lithography and other means of reproducing words in a visible form;
references to agreements and other contractual instruments include all
subsequent amendments, amendments and restatements and supplements thereto or
changes therein entered into in accordance with their respective terms and not
prohibited by this Agreement; references to Persons include their permitted
successors and assigns; references to laws include their amendments and
supplements, the rules and regulations thereunder and any successors thereto;
and the term “including” means “including without limitation.”
ARTICLE II
CREATION OF ISSUER
SECTION 2.01. Creation of Trust. A Delaware statutory trust known as “Nissan
Auto Receivables 2016-C Owner Trust” was formed in accordance with the
provisions of the Statutory Trust Act pursuant to the Original Trust Agreement,
under which name the Issuer may engage in activities as permitted by the Basic
Documents, make and execute contracts and other instruments and sue and be sued,
to the extent provided herein.
(Nissan 2016-C Amended & Restated Trust Agreement)
SECTION 2.02. Office. The principal place of business of the Issuer for purposes
of Delaware law shall be in care of the Owner Trustee at the Corporate Trust
Office or at such other address in Delaware as the Owner Trustee may designate
by written notice to the Certificateholders and the Servicer. The Issuer may
establish additional offices located at such place or places inside or outside
of the State of Delaware as the Owner Trustee may designate by written notice to
the Certificateholders and the Administrator.
SECTION 2.03. Purposes and Powers.
(a) The purpose of the Issuer is, and the Issuer shall have the power and
authority and is authorized, to engage in the following activities:
(1) to issue Notes pursuant to the Indenture and Certificates pursuant to this
Agreement;
(2) to acquire the Transferred Assets from the Depositor in exchange for the
Notes and Certificates pursuant to the Sale and Servicing Agreement;
(3) to assign, grant, transfer, pledge, mortgage and convey the Owner Trust
Estate pursuant to, and on the terms and conditions set forth in, the Indenture
and to hold, manage and distribute to the Certificateholders pursuant to the
terms of the Sale and Servicing Agreement any portion of the Owner Trust Estate
released from the Lien of, and remitted to the Issuer pursuant to, the Indenture
as set forth therein and in the Sale and Servicing Agreement;
(4) to enter into and perform its obligations under the Basic Documents to which
it is to be a party;
(5) to engage in those activities, including entering into agreements, that are
necessary, suitable or convenient to accomplish the foregoing or are incidental
thereto or connected therewith; and
(6) subject to compliance with the Basic Documents, to engage in such other
activities as may be required in connection with conservation of the Owner Trust
Estate and the making of distributions to the Certificateholders and the
Noteholders and in respect of amounts to be released to the Depositor, the
Servicer, the Administrator and third parties, if any.
The Issuer shall not engage in any activity other than in connection with the
foregoing and as required or authorized by the terms of the Basic Documents.
SECTION 2.04. Appointment of the Owner Trustee. The Seller hereby appoints the
Owner Trustee as trustee of the Issuer effective as of the date hereof, to have
all the rights, powers and duties set forth herein.
SECTION 2.05. Declaration of Issuer. The Owner Trustee hereby declares that it
will hold the Owner Trust Estate in trust upon and subject to the conditions set
forth herein for the use and benefit of the Certificateholders, subject to the
obligations of the Issuer under the Basic Documents. It is the intention of the
parties hereto that the Issuer constitute a statutory trust under the Statutory
Trust Act and that this Agreement constitute the governing instrument of
2 (Nissan 2016-C Amended & Restated Trust Agreement)
such statutory trust. It is the intention of the parties hereto that, for U.S.
federal income tax, state and local income tax and franchise tax purposes, until
the Certificates are beneficially owned by more than one Person (and all such
owners are not treated as the same Person for U.S. federal income tax purposes),
the Issuer will be disregarded as an entity separate from the Depositor (or
another Person that beneficially owns all of the Certificates) (other than for
Tennessee tax purposes, in which case the Issuer will be treated as a
corporation) and the Notes will be characterized as debt. At such time that the
Certificates are beneficially owned by more than one Person (and all such owners
are treated as the same Person for U.S. federal income tax purposes), it is the
intention of the parties hereto that, for income and franchise tax purposes, the
Issuer shall be treated as a partnership (other than for Tennessee tax purposes,
in which case the Issuer will be treated as a corporation), with the assets of
the partnership being the Receivables and other assets held by the Issuer, the
partners of the partnership being the Certificateholders, and the Notes being
debt of the partnership. The Depositor and the Certificateholders, by acceptance
of a Certificate, agree to such treatment and agree to take no action
inconsistent with such treatment. The parties agree that, unless otherwise
required by appropriate tax authorities, until the Certificates are beneficially
owned by more than one Person (and all such owners are not treated as the same
Person for U.S. federal income tax purposes), the Issuer will not file or cause
to be filed annual or other necessary tax returns, reports and other forms
inconsistent with the characterization of the Issuer as a disregarded entity of
its owner (other than for Tennessee tax purposes, in which case the requisite
returns, reports, and/or forms will be filed with the Tennessee Department of
Revenue to obtain and maintain the Issuer’s exemption from Tennessee, Franchise,
Excise, and Hall Taxes). Effective as of the date hereof, the Owner Trustee
shall have all rights, powers and duties set forth herein and, to the extent not
inconsistent herewith, in the Statutory Trust Act with respect to accomplishing
the purposes of the Issuer. At the direction of the Depositor, the Owner Trustee
caused to be filed the Certificate of Trust pursuant to the Statutory Trust Act,
and the Owner Trustee shall file or cause to be filed such amendments thereto as
shall be necessary or appropriate to satisfy the purposes of this Agreement and
as shall be consistent with the provisions hereof.
SECTION 2.06. Liability of the Certificateholders. No Certificateholder
(including the Depositor if the Depositor is a Certificateholder) shall have any
personal liability for any liability or obligation of the Issuer, solely by
reason of it being a Certificateholder.
SECTION 2.07. Title to Trust Property. Legal title to all of the Owner Trust
Estate shall be vested at all times in the Issuer as a separate legal entity.
SECTION 2.08. Situs of Trust. The Issuer will be located in Delaware and
administered in the states of Delaware or New York or Minnesota. All bank
accounts maintained by the Owner Trustee on behalf of the Issuer shall be
located in the State of Delaware or the State of Minnesota. The Issuer shall not
have any employees in any state other than Delaware; provided, however, that
nothing herein shall restrict or prohibit the Owner Trustee from having
employees within or without the State of Delaware. Payments will be received by
the Issuer only in Delaware or New York or Minnesota, and payments will be made
by the Issuer only from Delaware or New York or Minnesota. The principal office
of the Issuer will be at the Corporate Trust Office in Delaware.
3 (Nissan 2016-C Amended & Restated Trust Agreement)
SECTION 2.09. Representations and Warranties of the Depositor. The Depositor
hereby represents and warrants to the Owner Trustee that as of the Closing Date:
(a) Organization and Good Standing. The Depositor is a corporation duly
Delaware, with corporate power and authority to own its properties and to
conduct its business as such properties are currently owned and such business is
presently conducted, and had at all relevant times, and has, corporate power,
authority and legal right to acquire and own the Receivables.
(b) Due Qualification. The Depositor is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or lease of property
or the conduct of its business shall require such qualifications, and where the
failure to so qualify would have a material adverse effect on the ability of the
Depositor to perform its obligations under this Agreement.
(c) Power and Authority. The Depositor has the corporate power and authority to
execute and deliver this Agreement and to carry out its terms. The Depositor has
full power and authority to sell and assign the property to be sold and assigned
to and deposited as part of the Owner Trust Estate and has duly authorized such
sale and assignment to the Issuer by all necessary corporate action; and the
execution, delivery and performance of this Agreement has been duly authorized
by the Depositor by all necessary corporate action.
(d) Binding Obligations. This Agreement is a legal, valid and binding obligation
of the Depositor enforceable in accordance with its terms, subject to the effect
of bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors’ rights generally and by general equitable principles,
regardless of whether such enforceability shall be considered in a proceeding in
equity or law.
(e) No Violation. The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with, result
in any breach of any of the terms and provisions of, nor constitute (with or
without notice or lapse of time) a default under, the certificate of
incorporation or by-laws of the Depositor, or any indenture, agreement or other
instrument to which the Depositor is a party or by which it shall be bound; nor
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than the Basic Documents); nor violate any law or, to the best of the
Depositor’s knowledge, any order, rule or regulation applicable to the Depositor
of any court or of any federal or state regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over the Depositor or
its properties; which breach, default, conflict, Lien or violation in any case
would have a material adverse effect on the ability of the Depositor to perform
(f) No Proceedings. There are no proceedings or investigations pending, or, to
the Depositor’s knowledge, threatened, before any court, regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Depositor or its properties: (i) asserting the invalidity of this
Agreement; (ii) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement; (iii) seeking any determination or ruling that
would materially and adversely affect the performance by the Depositor of its
obligations under, or the validity or enforceability of, this Agreement; or
(iv) relating to the Depositor and that would adversely affect the federal or
any state income tax attributes of the Issuer, the Certificates or the Notes.
4 (Nissan 2016-C Amended & Restated Trust Agreement)
(g) Independent Director. Notwithstanding anything to the contrary in the
Depositor’s Formation Documents, the Depositor shall ensure that at least one
director of the Depositor shall be an Independent Director.
SECTION 2.10. Covenants of the Certificateholder. Each Certificateholder, by
becoming a beneficial owner of the Certificate, hereby acknowledges and agrees
(a) that the Certificateholder is subject to the terms, provisions and
conditions of the Certificate, to which the Certificateholder agrees to be
bound; and (b) that it shall not take any position in such Certificateholder’s
tax returns inconsistent with Section 2.05 herein and Section 2.13 of the
Indenture.
ARTICLE III
SECTION 3.01. The Certificates. The Certificates shall be issued with an initial
face amount equal to the Original Certificate Balance and in minimum
denominations of $25,000 and in integral multiples of $1,000 in excess thereof;
provided, that the final aggregate $52,083,363.58 distributed to the
Certificateholders under the Basic Documents shall be deemed to repay the
Certificate Balance in full and reduce the face amount of the Certificates to
$0. The Certificates shall be executed on behalf of the Issuer by manual or
facsimile signature of an Authorized Officer of the Owner Trustee and
authenticated on behalf of the Owner Trustee or its authenticating agent by the
manual or facsimile signature of an Authorized Officer. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of the Issuer,
shall be validly issued and entitled to the benefits of this Agreement and shall
be valid and binding obligations of the Issuer, notwithstanding that such
individuals or any of them shall have ceased to be so authorized prior to the
authentication and delivery of such Certificates or did not hold such offices at
the date of authentication and delivery of such Certificates.
The Certificates may be printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination in the form of Exhibit A
hereto.
If a transfer of a Certificate is permitted pursuant to Section 3.10, a
transferee of a Certificate shall become a Certificateholder, and shall be
entitled to the rights and subject to the obligations of a Certificateholder
hereunder, upon such transferee’s acceptance of a Certificate duly registered in
such transferee’s name pursuant to Section 3.03.
SECTION 3.02. Authentication of Certificates. Concurrently with the initial
transfer of the Receivables to the Issuer pursuant to the Sale and Servicing
Agreement, the Owner Trustee shall cause to be executed, authenticated and
delivered on behalf of the Issuer to the Depositor, Certificates in an aggregate
principal amount equal to the Original Certificate Balance and evidencing the
ownership of the Issuer. No Certificate shall entitle its Holder to any benefit
5 (Nissan 2016-C Amended & Restated Trust Agreement)
under this Agreement or be valid for any purpose, unless there shall appear on
such Certificate a certificate of authentication substantially in the form set
forth in Exhibit A, executed by the Owner Trustee or the Owner Trustee’s
authenticating agent, by manual or facsimile signature of an Authorized Officer,
and such authentication shall constitute conclusive evidence, and the only
evidence, that such Certificate shall have been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their
authentication. U.S. Bank National Association shall be the initial
authenticating agent of the Owner Trustee hereunder, and all references herein
to authentication by the Owner Trustee shall be deemed to include the
authenticating agent.
SECTION 3.03. Registration of Transfer and Exchange of Certificates.
(a) The Certificate Registrar shall keep or cause to be kept, at its Corporate
Trust Office, a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Issuer shall provide for the registration
of Certificates and of transfers and exchanges of Certificates as herein
provided. U.S. Bank National Association shall be the initial Certificate
Registrar. In the event that the Certificate Registrar shall for any reason
become unable to act as Certificate Registrar, the Certificate Registrar shall
promptly give written notice to such effect to the Depositor, the Owner Trustee
and the Servicer. Upon receipt of such notice, the Servicer shall appoint
another bank or trust company, which shall agree to act in accordance with the
provisions of this Agreement applicable to it and otherwise acceptable to the
Owner Trustee and the Certificateholders, to act as successor Certificate
Registrar under this Agreement.
(b) Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office of the Certificate Registrar or other office or agency
maintained pursuant to Section 3.07, the Owner Trustee shall execute,
authenticate and deliver (or shall cause its authenticating agent to
authenticate and deliver), in the name of the designated transferee or
transferees, one or more new Certificates in authorized denominations of a like
aggregate amount dated the date of authentication by the Owner Trustee or any
authenticating agent. At the option of a Holder, Certificates may be exchanged
for other Certificates of authorized denominations of a like aggregate amount
upon surrender of the Certificates to be exchanged at the office or agency
maintained pursuant to Section 3.07. The preceding provisions of this Section
notwithstanding, the Owner Trustee shall not make and the Certificate Registrar
shall not register transfer or exchanges of Certificates for a period of 15 days
preceding the due date for any payment with respect to the Certificates.
(c) Every Certificate presented or surrendered for registration of transfer or
exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee and the Certificate Registrar duly executed by
the related Certificateholder or such Certificateholder’s attorney duly
authorized in writing. Each Certificate surrendered for registration of transfer
or exchange shall be cancelled and subsequently disposed of by the Certificate
Registrar in accordance with its customary practice.
No transfer of a Certificate (or interest therein) to any transferee shall be
made unless the Certificate Registrar shall have received:
(1) a certification letter from the transferee of such Certificate (or interest
therein) substantially in the form of Exhibit B to the effect that:
6 (Nissan 2016-C Amended & Restated Trust Agreement)
(i) such transferee acknowledges that the Certificates have not been and will
not be registered under the Securities Act or the securities law of any
jurisdiction;
(ii) such transferee acknowledges that if in the future it decides to resell,
assign, pledge or otherwise transfer any Certificates, such Certificates may be
resold, assigned, pledged or transferred only (A) to a United States Person
within the meaning of Section 7701(a)(30) of the Code and (B) (i) pursuant to an
effective registration statement under the Securities Act or (ii) in a
transaction exempt from the registration requirements of the Securities Act and
other securities or “Blue Sky” laws;
(iii) such transferee (and, if different, the Certificate Owner) is not a
Non-U.S. Person;
(iv) such transferee is not a Benefit Plan or any other employee benefit plan or
arrangement that is subject to Similar Law;
(v) after such transfer (or purported transfer), the Issuer would not have more
than 95 direct or indirect beneficial owners of any interest in the
Certificates;
(vi) no such transfer is effected through an established securities market or
secondary market or substantial equivalent thereof within the meaning of Section
7704 of the Code or would make the Issuer ineligible for “safe harbor” treatment
under Section 7704 of the Code;
(vii) the Certificates (or interests therein) are not acquired by or for the
account of a Special Pass-Through Entity;
(viii) if such transferee is acquiring any Certificate (or interest therein) for
the account of one or more Persons, (A) it shall provide to the Owner Trustee
and the Depositor information as to the number of such Persons and any changes
in the number of such Persons and (B) any such change in the number of Persons
for whose account a Certificate is held shall require the written consent of the
Depositor, which consent shall be granted unless the Depositor determines that
such proposed change in number of Persons would create a risk that the Issuer
would be classified for federal or any applicable state tax purposes as an
association (or a publicly traded partnership) taxable as a corporation;
(ix) such transferee understand that the Certificates will bear legends
substantially as set forth in Section 3.09;
(x) prior to December 31, 2017 or such later date that the Amended Partnership
Audit Rules shall apply to the Issuer, (A) such transferee shall provide to the
Owner Trustee and the Depositor any further information required by the Issuer
to comply with the Amended Partnership Audit Rules, including Section 6226(a) of
the Amended Partnership Audit Rules and (B) if such transferee is not the
Certificate Owner, such Certificate Owner shall provide to the Owner Trustee and
the Depositor any further information required by the Issuer to comply with the
Amended Partnership Audit Rules, including Section 6226(a) of the Amended
Partnership Audit Rules and, to the extent
7 (Nissan 2016-C Amended & Restated Trust Agreement)
necessary for the Issuer to make an election under Section 6226(a) of the
Amended Partnership Audit Rules, hereby appoints the transferee as its agent for
purposes of receiving any notifications or information pursuant to the notice
requirements under Section 6226(a)(2) of the Amended Partnership Audit Rules;
(xi) no transfer of the Certificates (or any interest therein) is a transfer of
a Certificate (or any interest therein) with a Certificate Balance of less than
1.1% of the entire Certificate Balance; and
(xii) any attempted transfer that would cause the number of direct or indirect
beneficial owners of Certificates in the aggregate to exceed 95 or otherwise
cause the Issuer to become a publicly traded partnership for income tax purposes
shall be a void transfer.
(2) a representation from the transferor of such Certificate substantially in
the form of Exhibit C; and
(3) an Opinion of Counsel that the transfer of such Certificate is being made
pursuant to an effective registration under the Securities Act or is exempt from
the registration requirements of the Securities Act.
Notwithstanding anything else to the contrary herein, any purported transfer of
a Certificate to, on behalf of, or utilizing the assets of a Benefit Plan or any
other employee benefit plan or arrangement that is subject to Similar Law shall
be void and of no effect.
To the extent permitted under applicable law (including, but not limited to,
ERISA), neither the Owner Trustee nor the Certificate Registrar shall be under
any liability to any Person for any registration of transfer of any Certificate
that is not permitted by this Section 3.03(c) or for making any payments due on
such Certificate to the Certificateholder thereof or taking any other action
with respect to such Holder under the provisions of this Trust Agreement or the
Sale and Servicing Agreement so long as the transfer was registered by the
Certificate Registrar or the Owner Trustee in accordance with the foregoing
requirements.
(d) No service charge shall be made for any registration of transfer or exchange
of Certificates, but the Owner Trustee or the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
(e) For purposes of this Section 3.03, a “Special Pass-Through Entity” means a
(i) grantor trust, S corporation (within the meaning of Section 1361(a)(1) of
the Code), or partnership or (ii) a disregarded entity the sole owner of which
is an entity described in prong (i), where (x) more than 50% of the value of a
beneficial owner’s interest in such pass through entity is attributable to the
pass-through entity’s interest (including through a disregarded entity) in the
Certificates (or interests therein) or (y) it is or will be a principal purpose
of the arrangement involving such pass through entity’s beneficial interest in
any Certificate to permit any partnership to satisfy the 100 partner limitation
of Treasury Regulation Section 1.7704-1(h)(1)(ii).
8 (Nissan 2016-C Amended & Restated Trust Agreement)
SECTION 3.04. Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any
mutilated Certificate shall be surrendered to the Certificate Registrar, or if
the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there shall be delivered
to the Certificate Registrar and the Owner Trustee such security or indemnity as
may be required by them to save each of them harmless, then in the absence of
notice that such Certificate shall have been acquired by a protected purchaser,
the Owner Trustee on behalf of the Issuer shall execute and the Owner Trustee,
or the Certificate Registrar, as the Owner Trustee’s authenticating agent, shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
denomination. In connection with the issuance of any new Certificate under this
Section, the Owner Trustee or the Certificate Registrar may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Certificate issued pursuant to
this Section shall constitute conclusive evidence of ownership in the Issuer, as
if originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
SECTION 3.05. Persons Deemed Certificateholders. Prior to due presentation of a
Certificate for registration of transfer, the Owner Trustee or the Certificate
Registrar may treat the Person in whose name any Certificate shall be registered
in the Certificate Register as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 5.02 and for all other purposes
whatsoever, and neither the Owner Trustee nor the Certificate Registrar shall be
bound by any notice to the contrary.
SECTION 3.06. Access to List of Certificateholders’ Names and Addresses. The
Certificate Registrar shall furnish or cause to be furnished to the Owner
Trustee, the Servicer, the Paying Agent or the Depositor, as the case may be,
within 15 days after its receipt of a request therefor from the Owner Trustee,
the Servicer, the Paying Agent or the Depositor in writing, a list, in such form
as the Owner Trustee, the Servicer, the Paying Agent or the Depositor may
reasonably require, of the names and addresses of the Certificateholders as of
the most recent Record Date. The Certificate Registrar shall also promptly
furnish to the Owner Trustee and the Paying Agent a copy of such list at any
time there is a change therein. If three or more Certificateholders or one or
more Holders of Certificates evidencing, in the aggregate, not less than 25% of
the Certificate Balance apply in writing to the Owner Trustee, and such
application states that the applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Owner Trustee
shall, within five Business Days after the receipt of such application, afford
such applicants access during normal business hours to the current list of
Certificateholders. Each Holder, by receiving and holding a Certificate, shall
be deemed to have agreed not to hold any of the Depositor, the Servicer, the
Certificate Registrar or the Owner Trustee accountable by reason of the
disclosure of its name and address, regardless of the source from which such
information was derived. The Certificate Registrar shall upon the request of the
Owner Trustee provide such list, or access to such list, of Certificateholders
as contemplated by this Section 3.06.
SECTION 3.07. Maintenance of Office or Agency. The Owner Trustee shall maintain
an office or offices or agency or agencies where Certificates may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Owner Trustee in respect
9 (Nissan 2016-C Amended & Restated Trust Agreement)
of the Certificates and the Basic Documents may be served. The Owner Trustee
initially designates the Corporate Trust Office of the Certificate Registrar for
purposes of surrendering Certificates and registration or exchange of
Certificates, and the Corporate Trust Office of the Owner Trustee for all other
purposes. The Issuer shall give prompt written notice to the Depositor and to
the Certificateholders of any change in the location of the Certificate Register
or any such office or agency.
SECTION 3.08. Appointment of Paying Agent. Except during any period when the
Indenture Trustee is authorized and directed to do so under the Indenture (i.e.
prior to the termination of the Indenture and on any Distribution Date on which
any Certificates are then held solely by the Administrator or one of its
Affiliates), the Paying Agent shall make distributions to Certificateholders
from the Collection Account pursuant to Section 5.02 and shall report the
amounts of such distributions to the Owner Trustee. Any Paying Agent shall have
the revocable power to withdraw funds from the Collection Account for the
purpose of making the distributions referred to above. The Owner Trustee may
revoke such power and remove the Paying Agent if the Owner Trustee receives
written notice from the Servicer that the Paying Agent shall have failed to
perform its obligations under this Agreement in any material respect. The Paying
Agent shall initially be U.S. Bank National Association, and any co-paying agent
chosen by the Servicer, and acceptable to the Owner Trustee and the
Certificateholders. The Paying Agent shall be permitted to resign as Paying
Agent upon 30 days’ written notice to the Depositor, the Owner Trustee and the
Servicer. In the event that U.S. Bank National Association shall no longer be
the Paying Agent, the Servicer shall appoint another bank or trust company,
which shall agree to act in accordance with the provisions of this Agreement
applicable to it and otherwise acceptable to the Owner Trustee and the
Certificateholders, to act as successor Paying Agent under this Agreement. The
Servicer shall cause such successor Paying Agent or any additional Paying Agent
appointed by the Servicer to execute and deliver to the Owner Trustee an
instrument in which such successor Paying Agent or additional Paying Agent shall
agree with the Owner Trustee that as Paying Agent, such successor Paying Agent
or additional Paying Agent will hold all sums, if any, held by it for payment to
the Certificateholders in trust for the benefit of the Certificateholders
entitled thereto until such sums shall be paid to such Certificateholders. The
Paying Agent shall return all unclaimed funds to the Owner Trustee and upon
removal of a Paying Agent such Paying Agent shall also return all funds in its
possession to the Owner Trustee. The rights, protections and immunities of the
Indenture Trustee under the Indenture and the Sale and Servicing Agreement shall
apply to U.S. Bank National Association also in its roles as Paying Agent and
Certificate Registrar, for so long as U.S. Bank National Association shall act
as Paying Agent and Certificate Registrar. Any reference in this Agreement to
the Paying Agent shall include any co-paying agent unless the context requires
otherwise.
SECTION 3.09. Legending of Certificates. Each Certificate shall bear a legend in
substantially the following form, unless the Depositor determines otherwise in
accordance with applicable law:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY OTHER
APPLICABLE SECURITIES OR “BLUE SKY” LAWS OF ANY STATE OR OTHER JURISDICTION, AND
MAY NOT BE RESOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE
10 (Nissan 2016-C Amended & Restated Trust Agreement)
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR ANY OTHER APPLICABLE
SECURITIES OR “BLUE SKY” LAWS, PURSUANT TO AN EXEMPTION THEREFROM OR IN A
TRANSACTION NOT SUBJECT THERETO. THE HOLDER HEREOF, BY PURCHASING THIS
CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE RESOLD, ASSIGNED, PLEDGED OR
TRANSFERRED ONLY (A) TO A UNITED STATES PERSON WITHIN THE MEANING OF SECTION
7701(a)(30) OF THE CODE, AND (B) (i) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR (ii) IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND OTHER SECURITIES OR “BLUE
SKY” LAWS. IN SUCH CASE THE OWNER TRUSTEE SHALL REQUIRE (I) THAT THE PROSPECTIVE
TRANSFEREE CERTIFY TO THE OWNER TRUSTEE AND THE DEPOSITOR IN WRITING THE FACTS
SURROUNDING SUCH TRANSFER, WHICH CERTIFICATION SHALL BE IN FORM AND SUBSTANCE
SATISFACTORY TO THE OWNER TRUSTEE AND (II) IF REQUESTED BY THE OWNER TRUSTEE, A
WRITTEN OPINION OF COUNSEL (WHICH SHALL NOT BE AT THE EXPENSE OF THE OWNER
TRUSTEE OR THE DEPOSITOR) SATISFACTORY TO THE OWNER TRUSTEE AND THE DEPOSITOR,
TO THE EFFECT THAT SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES ACT, IN EACH
CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES OR “BLUE SKY” LAWS OF ANY
STATE OR JURISDICTION. ANY ATTEMPTED TRANSFER IN CONTRAVENTION OF THE
IMMEDIATELY PRECEDING RESTRICTIONS WILL BE VOID AB INITIO AND THE PURPORTED
TRANSFEROR WILL CONTINUE TO BE TREATED AS THE OWNER OF THE CERTIFICATE FOR ALL
PURPOSES.
NO CERTIFICATE OR INTEREST THEREIN MAY BE ACQUIRED BY OR FOR THE ACCOUNT OF (I)
AN “EMPLOYEE BENEFIT PLAN” AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), THAT IS SUBJECT TO THE
PROVISIONS OF TITLE I OF ERISA, (II) A “PLAN” DESCRIBED IN AND SUBJECT TO
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”),
(III) ANY OTHER EMPLOYEE BENEFIT PLAN OR ARRANGEMENT THAT IS SUBJECT TO A LAW
THAT IS SIMILAR TO THE FIDUCIARY RESPONSIBILITY OR PROHIBITED TRANSACTION
PROVISIONS OF ERISA OR SECTION 4975 OF THE CODE OR (IV) ANY ENTITY WHOSE
UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF AN EMPLOYEE BENEFIT PLAN’S OR
A PLAN’S INVESTMENT IN THE ENTITY (EACH, A “BENEFIT PLAN INVESTOR”). BY
ACCEPTING AND HOLDING A CERTIFICATE (OR INTEREST THEREIN), THE HOLDER THEREOF
SHALL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT IT IS NOT A BENEFIT PLAN
INVESTOR.
SECTION 3.10. Actions of Certificateholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver or
other action provided by this Agreement to be given or taken by the
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Owner Trustee and, when required, to the Depositor or the
11 (Nissan 2016-C Amended & Restated Trust Agreement)
Servicer. Proof of execution of any such instrument or of a writing appointing
any such agent shall be sufficient for any purpose of this Agreement and
conclusive in favor of the Owner Trustee, the Depositor and the Servicer, if
made in the manner provided in this Section 3.10.
(b) The fact and date of the execution by any Certificateholder of any such
instrument or writing may be proved in any reasonable manner which the Owner
Trustee deems sufficient. Any request, demand, authorization, direction, notice,
consent, waiver or other act by a Certificateholder shall bind every Holder of
every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, or omitted to
be done, by the Owner Trustee, the Depositor or the Servicer in reliance
thereon, regardless of whether notation of such action is made upon such
Certificate.
(c) The Owner Trustee may require such additional proof of any matter referred
to in this Section 3.10 as it shall deem necessary.
ARTICLE IV
SECTION 4.01. Prior Notice to Certificateholders with Respect to Certain
Matters. With respect to the following matters, the Owner Trustee shall not take
action on behalf of the Issuer or the Certificateholders unless at least 10 days
before the taking of such action (or such shorter period as shall be agreed to
in writing by all Certificateholders), the Owner Trustee shall have notified the
Certificateholders in writing of the proposed action and none of the
Certificateholders shall have notified the Owner Trustee in writing prior to the
10th day (or such agreed upon shorter period) after such notice is given that
such Certificateholders have withheld consent or provided alternative direction:
(a) the initiation of any claim or lawsuit by the Issuer (except claims or
lawsuits brought in connection with the collection of the Receivables) and the
compromise of any action, claim or lawsuit brought by or against the Issuer
(except with respect to the aforementioned claims or lawsuits for collection of
the Receivables);
(b) the election by the Issuer to file an amendment to the Certificate of Trust
(unless such amendment is required to be filed under the Statutory Trust Act);
(c) the amendment of the Indenture, whether or not by a Supplemental Indenture,
in circumstances where the consent of any Noteholder is required;
(d) the amendment of any Basic Document in circumstances where such amendment
materially adversely affects the interest of the Certificateholders; or
(e) the appointment (i) pursuant to the Indenture of a successor Note Registrar
or Paying Agent, (ii) pursuant to this Agreement of a successor Certificate
Registrar or (iii) any consent by the Note Registrar, Paying Agent or Indenture
Trustee or Certificate Registrar to the assignment of its respective obligations
under the Indenture or this Agreement, as applicable.
12 (Nissan 2016-C Amended & Restated Trust Agreement)
SECTION 4.02. Action by Certificateholders with Respect to Certain Matters. The
Owner Trustee shall not have the power, except upon the direction of the
Certificateholders, to (a) remove the Administrator pursuant to Section 8 of the
Administration Agreement, (b) appoint a successor Administrator pursuant to
Section 8 of the Administration Agreement, (c) remove the Servicer pursuant to
Section 8.01 of the Sale and Servicing Agreement or (d) except as expressly
provided in the Basic Documents, sell the Receivables after the termination of
the Indenture. The Owner Trustee shall take the actions referred to in the
preceding sentence only upon written instructions signed by the authorized
representative of a majority of the outstanding Certificate Balance of the
Certificateholders.
SECTION 4.03. Action with Respect to Bankruptcy. The Owner Trustee shall not
have the power to commence a voluntary proceeding in bankruptcy relating to the
Issuer without the unanimous prior approval of all Certificateholders
(including, if the Depositor is a Certificateholder, the Board of Directors
(including the Independent Directors, as such term is defined in the Depositor’s
Certificate of Incorporation) of the Depositor) and the delivery to the Owner
Trustee of a written certification by each Certificateholder that such
Certificateholder reasonably believes that the Issuer is insolvent.
SECTION 4.04. Restrictions on Certificateholders’ Power. The Certificateholders
shall not direct the Owner Trustee to take or refrain from taking any action if
such action or inaction would be contrary to any obligations of the Issuer or of
the Owner Trustee under any of the Basic Documents or would be contrary to
Section 2.03 nor shall the Owner Trustee be obligated to follow any such
direction, if given.
SECTION 4.05. Majority of the Certificates Control. Except as otherwise
expressly provided herein, any action that may be taken by the
Certificateholders under this Agreement may be taken by the Holders of the
Certificates evidencing not less than a majority of the Certificate
Balance. Except as expressly provided herein, any written notice of the
Certificateholders delivered pursuant to this Agreement shall be effective if
signed by Holders of the Certificates evidencing not less than a majority of the
Certificate Balance at the time of the delivery of such notice.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.01. Establishment of Accounts.
(a) On or prior to the Distribution Date on which any Certificates are then held
by anyone other than the Administrator or one of its Affiliates, the Paying
Agent, for the benefit of the Certificateholders, shall establish and maintain,
or shall cause to be established and maintained, in the name of the Issuer, the
certificate distribution account (the “Certificate Distribution Account”). The
Certificate Distribution Account shall be established and maintained as an
Eligible Account, and bearing a designation clearly indicating that the funds
deposited therein are held by the Issuer under the sole dominion and control of
the Paying Agent for the benefit of the Certificateholders. No checks shall be
issued, printed, or honored with respect to the Certificate Distribution
Account.
13 (Nissan 2016-C Amended & Restated Trust Agreement)
Subject to Section 5.01(b), the Paying Agent shall possess all right, title and
interest in all funds on deposit from time to time in the Certificate
Distribution Account and in all proceeds thereof. Except as otherwise expressly
provided herein, the Certificate Distribution Account shall be under the sole
dominion and control of the Paying Agent for the benefit of the
Certificateholders. If, at any time, the Certificate Distribution Account ceases
to be an Eligible Account or if the majority of Certificateholders, in their
sole discretion, notify the Paying Agent in writing that the Certificate
Distribution Account should be moved, then the Paying Agent (or the
Administrator on behalf of the Paying Agent, if the Certificate Distribution
Account is not then held by the Paying Agent or an Affiliate thereof) shall
within 10 Business Days establish a new equivalent Eligible Account at a
depository institution or trust company selected by a majority of the
Certificateholders and shall transfer any cash and/or any investments to such
new account.
(b) Concurrently with the execution and delivery of the Indenture, the Servicer
will establish and maintain, or shall cause to be established and maintained, at
the direction of the Depositor, the Collection Account in the name of and under
the control of the Indenture Trustee in accordance with Section 5.01 of the Sale
and Servicing Agreement. The Indenture Trustee will be obligated to transfer to
the Designated Account all funds or investments held in the Collection Account
on the Distribution Date on which the Notes have been paid in full or the
Indenture is otherwise terminated (excluding any amounts to be retained for
distribution in respect of Notes that are not promptly delivered for payment on
such Distribution Date), and to take all necessary or appropriate actions to
transfer all right, title and interest of the Indenture Trustee in such funds or
investments and all proceeds thereof to the Designated Account.
Amounts on deposit in the Certificate Distribution Account shall be held
uninvested, and the Paying Agent shall not be liable for any interest thereon.
SECTION 5.02. Application of Amounts in Trust Accounts.
(a) On each Distribution Date when the Administrator or one of its Affiliates is
not the sole Certificateholder, the Paying Agent shall distribute to the
Certificateholders amounts on deposit in the Certificate Distribution Account
that are distributable to the Certificateholders in accordance with the
instructions of the Servicer pursuant to Section 5.06 of the Sale and Servicing
Agreement or Section 5.04 of the Indenture, as applicable. Upon the release from
the Lien of the Indenture of amounts on deposit in the Collection Account or any
other portion of the Owner Trust Estate, the Paying Agent will cause such
property to be properly deposited into the Designated Account pursuant to
Section 5.01(a) or distributed to the Certificateholders in accordance with the
provisions of this Agreement, as the case may be.
(b) On each Distribution Date, the Paying Agent (or, if the Indenture Trustee is
the Paying Agent with respect to the Certificates, the Indenture Trustee) shall
send to each Certificateholder the statement provided to the Paying Agent (or
the Indenture Trustee, as applicable) by the Servicer pursuant to Section 5.08
of the Sale and Servicing Agreement with respect to such Distribution Date.
(c) In the event that any withholding tax is imposed on the Issuer’s payment (or
allocations of income) to a Certificateholder, such tax shall reduce the amount
otherwise
14 (Nissan 2016-C Amended & Restated Trust Agreement)
distributable to the Certificateholder in accordance with this Section. The
Paying Agent is hereby authorized and directed to retain from amounts otherwise
distributable to the Certificateholders sufficient funds for the payment of any
tax that is legally payable by the Issuer (but such authorization shall not
prevent the Paying Agent from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings). The amount of any withholding tax imposed with
respect to a Certificateholder shall be treated as cash distributed to such
Certificateholder at the time it is withheld by the Issuer and remitted to the
appropriate taxing authority. If there is a possibility that withholding tax is
payable with respect to any distribution (such as any distribution to a Non-U.S.
Person), the Paying Agent may in its sole discretion withhold such amounts in
accordance with this paragraph (c). In the event that a Certificateholder wishes
to apply for a refund of any such withholding tax, the Paying Agent shall
reasonably cooperate with such Certificateholder in making such claim so long as
such Certificateholder agrees to reimburse the Paying Agent for any
out-of-pocket expenses incurred.
SECTION 5.03. Method of Payment. Subject to Section 9.01(c), distributions
required to be made to Certificateholders on any Distribution Date shall be made
to each Certificateholder of record on the related Record Date either by check
mailed to such Certificateholder at the address of such holder appearing in the
Certificate Register or by wire transfer, in immediately available funds, to the
account of any Certificateholder at a bank or other entity having appropriate
facilities therefor, if such Certificateholder shall have provided to the
Certificate Registrar appropriate written instructions at least five Business
Days prior to such Distribution Date.
SECTION 5.04. Accounting and Reports to the Noteholders, the Certificateholders,
the Internal Revenue Service and Others. The Administrator on behalf of the
Issuer shall (a) maintain (or cause to be maintained) the books of the Issuer on
a fiscal year basis or a calendar basis on the accrual method of accounting, (b)
deliver to each Certificateholder, as may be required by the Code and applicable
Treasury Regulations, such information as may be required (excluding Schedule
K-1) to enable each Certificateholder to prepare its federal and state income
tax returns, (c) file any tax and information returns, and fulfill any other
reporting requirements, relating to the Issuer, as may be required by the Code
and applicable Treasury Regulations (including Treasury Regulation Section
1.6049-7), (d) for any period during which the beneficial ownership interests in
the Issuer are held by more than one Person (and all such owners are not treated
as the same Person for U.S. federal income tax purposes), make such elections as
may from time to time be required or appropriate under any applicable state or
federal statute or rule or regulation thereunder so as to maintain the Issuer’s
characterization as a partnership for U.S. federal income tax purposes, (e)
cause such tax returns to be signed in the manner required by law, and (f)
collect or cause to be collected any withholding tax as described in and in
accordance with Section 5.02(c) with respect to income or distributions to
Certificateholders. The Administrator on behalf of the Issuer shall elect under
Section 1278 of the Code to include in income currently any market discount that
accrues with respect to the Receivables. The Administrator on behalf of the
Issuer shall not make the election provided under Section 754 of the
Code. Notwithstanding anything to the contrary stated herein, the Owner Trustee
shall be exclusively responsible for the mailing of any Schedule K-1’s necessary
to enable each Certificateholder to prepare its federal and state income
returns.
15 (Nissan 2016-C Amended & Restated Trust Agreement)
SECTION 5.05. Signature on Returns; Tax Matters Partner; Partnership
Representative.
(a) The Administrator on behalf of the Issuer shall sign on behalf of the Issuer
the tax returns of the Issuer, unless applicable law requires a
Certificateholder to sign such documents, in which case such documents shall be
signed by the Administrator, pursuant to the power-of-attorney granted thereto
pursuant to Section 2.04.
(b) For any period during which the beneficial ownership interests of the Issuer
same Person for U.S. federal income tax purposes), if the Depositor (of an
Affiliate of Depositor) is a Certificateholder, the Depositor (or an affiliate
of Depositor) shall be designated the “tax matters partner” of the Issuer
pursuant to Section 6231(a)(7)(A) of the Code and applicable Treasury
Regulations to the extent allowed by the Code. If the Depositor (or an affiliate
of Depositor) cannot be so designated under law, the Certificateholder holding
Certificates evidencing the largest portion of the Original Certificate Balance
shall be designated the “tax matters partner” of the Issuer pursuant to
Section 6231(a)(7)(A) of the Code and applicable Treasury Regulations, but
hereby delegates its powers and duties as such to the Administrator pursuant to
the power-of-attorney granted thereto pursuant to Section 2.04.
(c) In the event that the Issuer is classified as a partnership for U.S. federal
income tax purposes, as of a taxable year beginning after December 31, 2017, or
if later, the date that the Amended Partnership Audit Rules apply to the Issuer,
the Depositor (or a U.S. affiliate of the Depositor if the Depositor is
ineligible) is hereby designated as the partnership representative under Section
6223(a) of the Amended Partnership Audit Rules to the extent allowed under the
law. The Issuer shall (or the Depositor shall cause the Issuer to, or the
Depositor shall instruct the Owner Trustee on behalf of the Issuer to), to the
extent eligible, make the election under Section 6221(b) of the Amended
Partnership Audit Rules with respect to determinations of adjustments at the
partnership level and take any other action such as disclosures and
notifications necessary to effectuate such election. If the election described
in the preceding sentence is not available, to the extent applicable, the Issuer
shall (or the Depositor shall cause the Issuer to, or the Depositor shall
instruct the Owner Trustee on behalf of the Issuer to) make the election under
Section 6226(a) of the Amended Partnership Audit Rules with respect to the
alternative to payment of imputed underpayment by partnership and take any other
action such as filings, disclosures and notifications necessary to effectuate
such election. Notwithstanding the foregoing, each of the Issuer, Depositor and
Owner Trustee is authorized, in its sole discretion, to make any available
election related to Sections 6221 through 6241 of the Amended Partnership Audit
Rules and take any action it deems necessary or appropriate to comply with the
requirements of the Code and conduct the Issuer’s affairs under Sections
6221through 6241 of the Amended Partnership Audit Rules. Each Certificateholder
and, if different, each Certificate Owner shall promptly provide the Issuer,
Depositor and Owner Trustee any requested information, documentation or material
to enable the Issuer to make any of the elections described in this clause (c)
and otherwise comply with Sections 6221 through 6241 of the Amended Partnership
Audit Rules. Each Certificate Owner shall hold the Issuer and its affiliates
harmless for any losses (i) resulting from a Certificate Owner not properly
taking into account or paying its allocated adjustment or liability under
Section 6226 of the Amended Partnership Audit Rules and (ii) it may suffer due
to actions it takes with respect to and to comply with the rules under Sections
6221 through 6241 of the Amended Partnership Audit Rules.
16 (Nissan 2016-C Amended & Restated Trust Agreement)
SECTION 5.06. Duties of Depositor on Behalf of Issuer. Except to the extent such
responsibilities are assumed by the Administrator in the Administration
Agreement or the Servicer in the Sale and Servicing Agreement, the Depositor
shall, on behalf of the Issuer, prepare and, after execution by the Issuer and
the Indenture Trustee, file with the Securities and Exchange Commission and any
applicable state agencies documents required to be filed on a periodic basis
with the Securities and Exchange Commission and any applicable state agencies
(including any summaries thereof required by rules and regulations prescribed
thereby), and transmit such summaries to the Noteholders pursuant to Section
7.03 of the Indenture.
ARTICLE VI
SECTION 6.01. General Authority. The Owner Trustee is authorized and directed to
execute and deliver the Basic Documents to which the Issuer is to be a party and
each certificate or other document attached as an exhibit to or contemplated by
the Basic Documents to which the Issuer is to be a party and any amendment
thereto, and, on behalf of the Issuer, to direct the Indenture Trustee to
authenticate and deliver the Class A-1 Notes in the aggregate principal amount
of $296,000,000, the Class A-2a Notes in the aggregate principal amount of
$330,000,000, the Class A-2b Notes in the aggregate principal amount of
$100,000,000, the Class A-3 Notes in the aggregate principal amount of
$428,000,000, the Class A-4 Notes in the aggregate principal amount of
$96,000,000. In addition to the foregoing, the Owner Trustee is authorized, but
shall not be obligated, to take all actions required of the Issuer, pursuant to
the Basic Documents.
SECTION 6.02. General Duties. It shall be the duty of the Owner Trustee to
discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and the Basic Documents to which the Issuer is a
party and to administer the Issuer in accordance with the provisions hereof and
of the Basic Documents and in the interest of the
Certificateholders. Notwithstanding the foregoing, the Owner Trustee shall be
deemed to have discharged its duties and responsibilities hereunder and under
the Basic Documents to the extent the Administrator has agreed in the
Administration Agreement to perform any act or to discharge any duty of the
Owner Trustee hereunder or under any Basic Document, and the Owner Trustee shall
not be held liable for the default or failure of the Administrator to carry out
such obligations or fulfill such duties under the Administration Agreement.
SECTION 6.03. Duties of the Owner Trustee.
(a) Subject to Article IV and in accordance with the terms of the Basic
Documents, the Certificateholders may by written instruction direct the Owner
Trustee in the management of the Issuer. Such direction may be exercised at any
time by written instruction of the Certificateholders pursuant to Article
IV. The Owner Trustee accepts the trusts hereby created and agrees to perform
its duties hereunder with respect to such trusts but only upon the terms of this
Agreement. The Owner Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Owner Trustee that shall be specifically required to be furnished
pursuant to any provision of this Agreement, shall examine them to determine
whether they conform on their face to the requirements of this Agreement.
17 (Nissan 2016-C Amended & Restated Trust Agreement)
(b) No provision of this Agreement shall be construed to relieve the Owner
Trustee from liability for its own negligent action, its own negligent failure
to act, its own bad faith or its own willful misfeasance; provided, however,
that:
(i) the duties and obligations of the Owner Trustee shall be determined solely
by the express provisions of this Agreement, the Owner Trustee shall not be
specifically set forth in this Agreement, no implied covenants or obligations
shall be read into this Agreement against the Owner Trustee, the permissive
right of the Owner Trustee to do things enumerated in this Agreement shall not
be construed as a duty and, in the absence of bad faith on the part of the Owner
Trustee, the Owner Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Owner Trustee and conforming on their
face to the requirements of this Agreement;
(ii) the Owner Trustee shall not be personally liable for an error of judgment
made in good faith by an Authorized Officer, unless it shall be proved that the
Owner Trustee was negligent in performing its duties in accordance with the
terms of this Agreement; and
(iii) the Owner Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken in good faith in accordance with
the direction of the Holders of the Certificates representing at least a
majority of the Certificate Balance (or such larger or smaller percentage of the
Certificate Balance as may be required by any other provision of this Agreement
or the other Basic Documents), the Servicer, the Administrator or the Indenture
Trustee.
(c) The Owner Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
under this Agreement, or in the exercise of any of its rights or powers, if
there shall be reasonable grounds for believing that the repayment of such funds
or adequate indemnity against such risk or liability is not reasonably assured
to it.
(d) All information obtained by the Owner Trustee regarding the Obligors and the
Receivables contained in the Issuer, whether upon the exercise of its rights
under this Agreement or otherwise, shall be maintained by the Owner Trustee in
confidence and shall not be disclosed to any other Person, unless such
disclosure is required by any applicable law or regulation or pursuant to
subpoena or is required to be made to regulators, auditors or other governmental
authorities.
(e) Pursuant to Section 3.02 of the Sale and Servicing Agreement, in the event
that the Owner Trustee discovers that a representation or warranty made by the
Seller pursuant to Section 3.01 or 6.01 of the Sale and Servicing Agreement with
respect to a Receivable was incorrect as of the time specified with respect to
such representation and warranty and such
18 (Nissan 2016-C Amended & Restated Trust Agreement)
incorrectness materially and adversely affects the interests of any
Securityholder in such Receivable, the Owner Trustee shall give prompt written
notice to the Servicer, the Depositor and the Indenture Trustee of such
incorrectness. Pursuant to Section 4.06 of the Sale and Servicing Agreement, if
the Owner Trustee discovers that any covenant of the Servicer set forth in
Sections 4.02, 4.04 or 4.05 of the Sale and Servicing Agreement has been
breached by the Servicer, the Owner Trustee shall give prompt written notice to
the Servicer, the Depositor and the Indenture Trustee of such breach. For the
avoidance of doubt, the Owner Trustee shall have no duty to monitor or
investigate the accuracy of any of the Seller’s or the Servicer’s
representations, warranties or covenants in the Sale and Servicing Agreement or
other Basic Documents or to determine whether any breach of the Seller’s or the
Servicer’s representation, warranties or covenants adversely affects any
Securityholder of the Receivables.
SECTION 6.04. No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any Basic Document to which the
Owner Trustee is a party or otherwise contemplated hereby, except as expressly
provided by the terms of this Agreement, any Basic Document to which the Issuer
is a party or in any document or written instruction received by the Owner
Trustee pursuant to Section 6.03. No implied duties or obligations shall be read
into this Agreement or any Basic Document against the Owner Trustee. The Owner
Trustee shall have no responsibility for filing any financing or continuation
statement in any public office at any time or otherwise to perfect or maintain
the perfection of any security interest or lien granted to it hereunder or to
prepare or file any Securities and Exchange Commission filing for the Issuer or
to record this Agreement or any Basic Document. Notwithstanding anything to the
contrary herein or in any Basic Document, the Owner Trustee shall not be
required to execute, deliver or certify on behalf of the Issuer or any other
Person any filings, certificates, affidavits or other instruments required under
the Sarbanes-Oxley Act of 2002, to the extent permitted by applicable law. The
Owner Trustee nevertheless agrees that it will, at its own cost and expense,
promptly take all action as may be necessary to discharge any liens on any part
of the Owner Trust Estate that result from actions by, or claims against, the
Owner Trustee that are not related to the ownership or the administration of the
Owner Trust Estate.
SECTION 6.05. No Action Except Under Specified Documents or Instructions. The
Owner Trustee shall not manage, control, use, sell, dispose of or otherwise deal
with any part of the Owner Trust Estate except (i) in accordance with the powers
granted to and the authority conferred upon the Owner Trustee pursuant to this
Agreement, (ii) in accordance with the Basic Documents and (iii) in accordance
with any document or instruction delivered to the Owner Trustee pursuant to
Section 6.03.
SECTION 6.06. Restrictions. The Owner Trustee shall not take any action (a) that
is inconsistent with the purposes of the Issuer set forth in Section 2.03 or (b)
that, to the actual knowledge of an Authorized Officer of the Owner Trustee, (x)
would result in the Issuer’s becoming taxable as a corporation (as a publicly
traded partnership or otherwise) for U.S. federal income tax purposes or (y)
affect the treatment of the Notes as indebtedness for U.S. federal or state
income tax purposes. The Certificateholders shall not have the authority to and,
by acceptance of an ownership interest in any Certificate shall thereby be
deemed to have covenanted not to, direct the Owner Trustee to take any action
that would violate the provisions of this Section.
19 (Nissan 2016-C Amended & Restated Trust Agreement)
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.01. Rights of the Owner Trustee. Except as otherwise provided in
Article VI:
(a) in accordance with Section 7.04, the Owner Trustee may rely and shall be
protected in acting or refraining from acting upon any resolution, Officer’s
Certificate, certificate of an authorized signatory, certificate of auditors or
any other certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties;
(b) the Owner Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in accordance with the instructions of the
Administrator, as provided in the Administration Agreement, the Servicer or the
Indenture Trustee, or the Certificateholders, as provided herein;
(c) other than in connection with an Asset Review, the Owner Trustee shall be
under no obligation to exercise any of the rights or powers vested in it by this
Agreement or the Sale and Servicing Agreement, or to institute, conduct or
defend any litigation under this Agreement, or in relation to this Agreement or
the Sale and Servicing Agreement, at the request, order or direction of any of
the Securityholders, pursuant to the provisions of this Agreement or the Sale
and Servicing Agreement, unless such Securityholders shall have offered to the
Owner Trustee reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby;
(d) under no circumstances shall the Owner Trustee be liable for indebtedness
evidenced by or arising under any of the Basic Documents, including the
principal of and interest on the Notes;
(e) the Owner Trustee shall not be bound to recalculate, re-verify, or make any
investigation into the facts of matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing to do so
by Holders of Certificates representing not less than 25% of the Certificate
Balance; provided, however, that if the payment within a reasonable time to the
Owner Trustee of the costs, expenses or liabilities likely to be incurred by it
in the making of such investigation is, in the opinion of the Owner Trustee, not
reasonably assured to the Owner Trustee by the security afforded to it by the
terms of this Agreement, the Owner Trustee may require reasonable indemnity
against such cost, expense or liability as a condition to so proceeding; the
Administrator shall pay or reimburse the Owner Trustee for the reasonable
expense of every such examination; and nothing in this clause shall derogate
from the obligation of the Administrator to observe any applicable law
prohibiting disclosure of information regarding the Obligors;
20 (Nissan 2016-C Amended & Restated Trust Agreement)
(f) the Owner Trustee shall not be liable for the default or misconduct of the
Administrator, the Servicer, the Depositor, the Indenture Trustee or any other
Person under any of the Basic Documents or otherwise, and the Owner Trustee
shall have no obligation or liability to monitor, supervise or perform the
obligations of the Issuer or any other Person (including the Owner Trustee)
under the Basic Documents that are required to be performed by any other Person
under the Basic Documents;
(g) the Owner Trustee shall not be liable or responsible for delays or failures
in the performance of its obligations hereunder arising out of or caused,
directly or indirectly, by circumstances beyond its control (such acts include
but are not limited to acts of God, strikes, lockouts, riots, acts of war and
interruptions, losses or malfunctions of utilities, computer (hardware or
software) or communication services);
(h) the Owner Trustee shall not be deemed to have notice or knowledge of any
matter unless a Responsible Officer has actual knowledge thereof or unless
written notice thereof is received by a Responsible Officer in accordance with
this Agreement; and
(i) the Owner Trustee shall not be personally liable for special, indirect,
consequential or punitive damages, however styled, including, without
limitation, lost profits.
SECTION 7.02. Furnishing of Documents. The Owner Trustee shall furnish to the
Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Basic Documents.
SECTION 7.03. Representations and Warranties. The Owner Trustee hereby
represents and warrants to the Depositor and for the benefit of the
Certificateholders, that:
(a) It is a national banking association with trust powers duly organized and
validly existing in good standing under the laws of United States of America. It
has full power, right and authority to execute, deliver and perform its
obligations under this Agreement and each other Basic Document.
(b) It has taken all corporate action necessary to authorize the execution and
delivery of this Agreement and each other Basic Document, and this Agreement and
each other Basic Document has been executed and delivered by one of its officers
duly authorized to execute and deliver this Agreement and each other Basic
Document on its behalf.
(c) This Agreement constitutes the legal, valid and binding obligation of the
Owner Trustee, enforceable against it in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting the enforcement of creditors’
rights generally and by general principles of equity.
(d) It is authorized to exercise trust powers in the State of Delaware as and to
the extent contemplated herein or has appointed a Delaware trustee that is so
authorized and it has a principal place of business in the State of Delaware or
has appointed a Delaware trustee that has such a principal place of business.
21 (Nissan 2016-C Amended & Restated Trust Agreement)
(e) Neither the execution nor the delivery by it of this Agreement nor the
consummation by the Owner Trustee of the transactions contemplated hereby or
thereby nor compliance by it with any of the terms or provisions hereof or
thereof will contravene any federal or Delaware law, governmental rule or
regulation governing the banking or trust powers of the Owner Trustee or any
judgment or order binding on it, or constitute any default under its charter
documents or by-laws or any indenture, mortgage, contract, agreement or
instrument to which it is a party or by which any of its properties may be
bound.
SECTION 7.04. Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no liability to anyone in acting upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond, or other document or paper believed by it to be genuine
and believed by it to be signed by the proper party or parties. The Owner
Trustee may accept a certified copy of a resolution of the board of directors or
other governing body of any corporate party as conclusive evidence that such
resolution has been duly adopted by such body and that the same is in full force
and effect. As to any fact or matter the method of the determination of which is
not specifically prescribed herein, the Owner Trustee may for all purposes
hereof rely on a certificate, signed by the president or any vice president or
by the treasurer or other authorized officers or agents of the relevant party,
as to such fact or matter and such certificate shall constitute full protection
to the Owner Trustee for any action taken or omitted to be taken by it in good
faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under the Basic Documents, the Owner
Trustee (i) may act directly or through its agents or attorneys pursuant to
agreements entered into with any of them, and the Owner Trustee shall not be
liable for the conduct or misconduct of such agents or attorneys if such agents
or attorneys shall have been selected by the Owner Trustee with reasonable care,
and (ii) may consult with counsel, accountants and other skilled persons to be
selected with reasonable care and employed by it. The Owner Trustee shall not be
liable for anything done, suffered or omitted in good faith by it in accordance
with the opinion or advice of any such counsel, accountants or other such
persons and not, to the actual knowledge of the Owner Trustee, contrary to this
Agreement or any Basic Document.
SECTION 7.05. Not Acting in Individual Capacity. In accepting the trusts hereby
created, Wilmington Trust, National Association acts solely as Owner Trustee
hereunder and not in its individual capacity. Except with respect to a claim
based on the Owner Trustee’s willful misconduct, bad faith or negligence, no
recourse shall be had for any claim based on any provision of this Agreement,
the Notes or Certificates, or based on rights obtained through the assignment of
any of the foregoing, against the institution serving as the Owner Trustee in
its individual capacity. The Owner Trustee shall not have any personal
obligation, liability or duty whatsoever to any Securityholder or any other
Person with respect to any such claim and any such claim shall be asserted
solely against the Issuer or any indemnitor who shall furnish indemnity as
provided in this Indenture.
SECTION 7.06. Owner Trustee Not Liable for Certificates or Receivables. The
Owner Trustee makes no representations as to the validity or sufficiency of this
Agreement or of the Certificates or of the Notes (other than the execution by
the Owner Trustee on behalf of the Issuer of, and the certificate of
authentication on, the Certificates). The Owner Trustee shall have no obligation
to perform any of the duties of the Servicer or Administrator.
22 (Nissan 2016-C Amended & Restated Trust Agreement)
The Owner Trustee shall at no time have any responsibility or liability for or
with respect to the legality, validity and enforceability of the Certificates,
the Notes or any Receivable, any ownership interest in any Financed Vehicle, or
the maintenance of any such ownership interest, or for or with respect to the
efficacy of the Issuer or its ability to generate the payments to be distributed
to Securityholders under this Agreement or the Indenture, as applicable,
including without limitation the validity of the assignment of the Receivables
to the Issuer or of any intervening assignment; the existence, condition,
location and ownership of any Receivable or Financed Vehicle; the existence and
enforceability of any physical damage or credit life or credit disability
insurance; the existence and contents of any retail installment sales contract
or any computer or other record thereof; the completeness of any retail
installment sales contract; the performance or enforcement of any retail
installment sales contract; the compliance by the Issuer with any covenant or
the breach by the Issuer of any warranty or representation made under this
Agreement or in any related document and the accuracy of any such warranty or
representation prior to the Owner Trustee’s receipt of notice or other discovery
of any noncompliance therewith or any breach thereof; the acts or omissions of
the Issuer or the Servicer; or any action by the Owner Trustee taken at the
shall not relieve the Owner Trustee of its obligation to perform its duties
under this Agreement.
The Owner Trustee shall not be accountable for the use or application by the
Issuer of any of the Certificates or of the proceeds of such Certificates, of
any of the Notes or of the proceeds of such Notes, or for the use or application
of any funds paid to the Servicer in respect of the Certificates.
SECTION 7.07. Owner Trustee May Own Certificates and Notes. The Owner Trustee in
its individual or any other capacity (but not in its fiduciary capacity) may
become the owner or pledgee of Certificates or Notes and may deal with the
Depositor, the Administrator, the Indenture Trustee and the Servicer in banking
or other transactions with the same rights as it would have if it were not Owner
Trustee.
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.01. Owner Trustee’s Fees and Expenses. The Administrator shall pay to
the Owner Trustee from time to time compensation (which shall not be limited by
any provision of law with respect to the compensation of a trustee of an express
trust) for its services as have been separately agreed upon before the date
hereof. The Administrator shall reimburse the Owner Trustee for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the Owner
Trustee’s agents, counsel, accountants and experts directly related to its
services hereunder (“Expenses”).
23 (Nissan 2016-C Amended & Restated Trust Agreement)
SECTION 8.02. Indemnification. Pursuant to Section 1(a)(ii) of the
Administration Agreement, the Administrator shall indemnify, defend and hold
harmless the Owner Trustee, the Certificate Registrar and any Paying Agent and
their respective successors, assigns, agents, servants, officers and employees
(each, an “Indemnified Party” and collectively, the “Indemnified Parties”)
against any and all loss, liability, claim, tort, penalty or Expense (including
reasonable fees and expenses of counsel and other experts) of any kind or nature
whatsoever incurred by or asserted against such Indemnified Party in connection
with or arising out of the Basic Documents, the Owner Trust Estate, the
administration of the Owner Trust Estate or the action or inaction of the Owner
Trustee hereunder, including, without limitation, any legal fees or expenses
incurred in connection with any action, suit, arbitration or mediation brought
by the Owner Trustee to enforce any indemnification or other obligation of the
Administrator or the Servicer or other Persons or in connection with
investigating, preparing or defending any legal action, commenced or threatened,
in connection with the exercise or performance of any of its powers or duties
under this Agreement. The Owner Trustee, the Certificate Registrar or the Paying
Agent, as applicable, shall notify the Administrator promptly of any claim for
which any Indemnified Party may seek indemnity. Failure by the Owner Trustee,
the Certificate Registrar or the Paying Agent, as applicable, to so notify the
Administrator shall not relieve the Administrator of its obligations hereunder,
except to the extent such failure shall materially adversely affect the
Administrator’s defenses in respect thereof. In case any such action is brought
against any Indemnified Party under this Section 8.02 and the Owner Trustee, the
Certificate Registrar or the Paying Agent, as applicable, notifies the
Administrator of the commencement thereof, the Administrator will assume the
defense thereof, with counsel reasonably satisfactory to such Indemnified Party
(who may, unless there is, as evidenced by an opinion of counsel to such
Indemnified Party stating that there is a conflict of interest, be counsel to
the Administrator), and the Administrator will not be liable to such Indemnified
Party under this Section for any legal or other expenses subsequently incurred
by such Indemnified Party in connection with the defense thereof, other than
reasonable costs of investigation. The Administrator need not reimburse any
expense or indemnify against any loss, liability or expense incurred by any
Indemnified Party through such Indemnified Party’s own willful misconduct,
negligence or bad faith, or with respect to the Owner Trustee only, in the case
of the inaccuracy of any representation or warranty of the Owner Trustee made in
Section 7.03. The Indemnified Parties’ rights under this Article VIII shall
survive the termination of this Agreement or the resignation or removal of the
Owner Trustee. The Administrator will not be entitled to make any claim upon the
Owner Trust Estate for the payment of any liabilities or indemnified expenses in
relation to the Administrator’s payment or indemnification of expenses incurred
by any Indemnified Party in the performance of its duties hereunder. To the
extent not paid by the Administrator and outstanding for at least 60 days, such
fees and indemnities shall be paid pursuant to Section 5.06 of the Sale and
Servicing Agreement or Section 5.04 of the Indenture, as applicable, provided,
that prior to such payment pursuant to the Sale and Servicing Agreement or
Indenture, the Owner Trustee, the Certificate Registrar or the Paying Agent, as
applicable, shall notify the Administrator in writing that such fees and
indemnities have been outstanding for at least 60 days. If such fees and
indemnities are paid pursuant to Section 5.06 of the Sale and Servicing
Agreement or Section 5.04 of the Indenture, as applicable, the Administrator
shall reimburse the Issuer in full for such payments.
24 (Nissan 2016-C Amended & Restated Trust Agreement)
SECTION 8.03. Payments to the Owner Trustee. Any amounts paid to any Indemnified
Party pursuant to this Article VIII from assets in the Owner Trust Estate shall
be deemed not to be a part of the Owner Trust Estate immediately after such
payment.
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.01. Termination of Trust Agreement.
(a) This Agreement (other than Article VIII) shall terminate and the Issuer
shall dissolve and be wound up in accordance with Section 3808 of the Statutory
Trust Act, upon the earlier of (i) the maturity or other liquidation of the last
Receivable (or other asset) in the Owner Trust Estate and the final distribution
of all moneys or other property or proceeds of the Owner Trust Estate in
accordance with the terms of this Agreement, the Indenture and the Sale and
Servicing Agreement (including, but not limited to, any property and proceeds to
be deposited in the Collection Account pursuant to the terms of the Sale and
Servicing Agreement or to be released by the Indenture Trustee from the Lien of
the Indenture pursuant to the terms of the Indenture), and (ii) the election by
the Servicer to purchase the Collateral (other than the Reserve Account)
pursuant to Section 9.01 of the Sale and Servicing Agreement and the payment or
distribution to all Securityholders of all amounts required to be paid to them
under the Indenture and this Agreement. The bankruptcy, liquidation,
dissolution, death or incapacity of any Certificateholder shall not (x) operate
to terminate this Agreement or the Issuer, nor (y) entitle such
Certificateholder’s legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of all
or any part of the Issuer or Owner Trust Estate, nor (z) otherwise affect the
rights, obligations and liabilities of the parties hereto.
(b) Except as provided in Section 9.01(a), neither the Depositor nor any
Certificateholder shall be entitled to revoke or terminate the Issuer.
(c) Notice of any termination of the Issuer, specifying the Distribution Date
upon which the Certificateholders shall surrender their Certificates to the
Paying Agent for payment of the final distributions and cancellation, shall, if
any Certificates are then held by anyone other than the Depositor or any of its
Affiliates, be given by the Owner Trustee to the Certificateholders mailed
within five Business Days of receipt of notice of such termination from the
Servicer given pursuant to Section 10.03 of the Sale and Servicing Agreement,
stating (i) the Distribution Date upon or with respect to which final payment of
the Certificates shall be made upon presentation and surrender of the
Certificates at the office of the Paying Agent therein designated, (ii) the
amount of any such final payment and (iii) that payment to be made on such
Distribution Date will be made only upon presentation and surrender of the
Certificates at the office of the Paying Agent therein specified. The Owner
Trustee shall give such notice to the Certificate Registrar (if other than the
Owner Trustee) and the Paying Agent (if other than the Owner Trustee) at the
time such notice is given to Certificateholders. Upon presentation and surrender
of the Certificates (or, in the case of any Certificates held by the Depositor
or any of its Affiliates, presentation of proof of cancellation of such
Certificates), the Paying Agent shall cause to be distributed to
Certificateholders amounts distributable on such Distribution Date pursuant to
Section 5.02.
25 (Nissan 2016-C Amended & Restated Trust Agreement)
In the event that one or more of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above-mentioned written notice, the Owner Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Owner Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to contact
the remaining Certificateholders concerning surrender of their Certificates, and
the cost thereof shall be paid out of the funds and other assets that shall
remain subject to this Agreement. Any funds remaining in the Issuer after
exhaustion of such remedies shall be distributed by the Owner Trustee to the
Depositor.
(d) Upon the winding up of the Issuer and its termination, the Owner Trustee
shall cause the Certificate of Trust to be cancelled by filing a certificate of
cancellation with the Secretary of State in accordance with the provisions of
Section 3810 of the Statutory Trust Act. Thereupon, the Issuer and this
Agreement (other than Article 8) shall terminate.
ARTICLE X
SECTION 10.01. Eligibility Requirements for Owner Trustee. The Owner Trustee or
its direct or indirect parent shall at all times be an entity having a combined
capital and surplus of at least $50,000,000, be subject to supervision or
examination by federal or state authorities and be authorized to exercise trust
powers in the State of Delaware. If such entity shall publish reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section 10.01, the combined capital and surplus of such entity shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Owner Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Owner Trustee
shall resign immediately in the manner and with the effect specified in Section
10.02.
SECTION 10.02. Resignation or Removal of Owner Trustee. The Owner Trustee may at
any time resign and be discharged from the trusts hereby created by giving
thirty (30) days prior written notice thereof to the Depositor, the Servicer and
the Indenture Trustee. If for any reason, Wilmington Trust, National Association
or any of its Affiliates should assume the duties of the Indenture Trustee, then
from that time forward Wilmington Trust, National Association, in its capacity
as Owner Trustee, shall resign as Owner Trustee hereunder if any Event of
Default under the Indenture occurs and is necessary to eliminate any conflict of
interest under the TIA with the Indenture Trustee or any other trustee under the
Indenture. Upon receiving such notice of resignation, the Servicer shall
promptly appoint a successor Owner Trustee by written instrument, in duplicate,
one copy of which shall be delivered to each of the resigning Owner Trustee and
the successor Owner Trustee. If no successor Owner Trustee shall have been so
appointed or shall not have accepted such appointment within 30 days after the
giving of such notice of resignation, the resigning Owner Trustee may petition
any court of competent jurisdiction for the appointment of a successor Owner
Trustee.
26 (Nissan 2016-C Amended & Restated Trust Agreement)
If at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of Section 10.01 and shall fail to resign promptly, or if at any
time the Owner Trustee shall be legally unable to act, or shall be adjudged
bankrupt or insolvent, or a receiver of the Owner Trustee or of its property
shall be appointed, or any public officer shall take charge or control of the
Owner Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Administrator may remove the Owner Trustee
by written instrument to such effect delivered to the Owner Trustee, the
Depositor and the Indenture Trustee. If the Administrator shall remove the Owner
Trustee under the authority of the immediately preceding sentence, the Servicer
shall promptly appoint a successor Owner Trustee by written instrument in
duplicate, one copy of which instrument shall be delivered to each of the
outgoing Owner Trustee so removed and the successor Owner Trustee, and the
Administrator shall pay all fees, expenses and other compensation owed to the
outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a successor
Owner Trustee pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor Owner Trustee
pursuant to Section 10.03 and payment of all fees and expenses owed to the
outgoing Owner Trustee.
SECTION 10.03. Successor Owner Trustee. Any successor Owner Trustee appointed
pursuant to Section 10.02 shall execute, acknowledge and deliver to the
Administrator and to its predecessor Owner Trustee an instrument accepting such
appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties, and obligations of its predecessor under
this Agreement, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall upon payment of its fees and expenses deliver to
the successor Owner Trustee all documents and statements and monies held by it
under this Agreement; and the Administrator and the predecessor Owner Trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for fully and certainly vesting and confirming in the
successor Owner Trustee all such rights, powers, duties, and obligations. The
successor Owner Trustee shall pay all reasonable costs and expenses incurred in
connection with transferring the predecessor Owner Trustee’s duties and
obligations to the successor Owner Trustee. To the extent not paid by the
successor Owner Trustee, the Administrator shall pay all reasonable costs and
expenses incurred in connection with transferring the predecessor Owner
Trustee’s duties and obligations to the successor Owner Trustee.
No successor Owner Trustee shall accept appointment as provided in this Section
unless at the time of such acceptance such successor Owner Trustee shall meet
the criteria for eligibility set forth in Section 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to this
Section, the Administrator shall mail or otherwise provide notice of the
successor of the Owner Trustee to all Certificateholders, the Indenture Trustee,
all Noteholders and the Rating Agencies. If the Administrator fails to mail or
otherwise provide such notice within 10 days after acceptance of appointment by
the successor Owner Trustee, the successor Owner Trustee shall cause such notice
to be mailed or otherwise provided at the expense of the Administrator.
27 (Nissan 2016-C Amended & Restated Trust Agreement)
SECTION 10.04. Merger or Consolidation of Owner Trustee. Any corporation into
which the Owner Trustee may be merged or converted or with which it may be
consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided
such corporation shall be eligible pursuant to Section 10.01, without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided,
further, that the Owner Trustee shall mail notice of such merger or
consolidation to the Administrator (and the Administrator will provide notice
thereof to each Rating Agency pursuant to Section 1(d) of the Administration
Agreement).
SECTION 10.05. Appointment of Co-Trustee or Separate Trustee. Notwithstanding
any other provisions of this Agreement, at any time, for the purpose of meeting
any legal requirements of any jurisdiction in which any part of the Owner Trust
Estate or any Financed Vehicle may at the time be located, the Administrator and
the Owner Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Owner
Trustee to act as co-trustee, jointly with the Owner Trustee, or separate
trustee or separate trustees, of all or any part of the Owner Trust Estate, and
to vest in such Person, in such capacity, such title to the Issuer, or any part
thereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Administrator and the Owner
Trustee may consider necessary or desirable. If the Administrator shall not have
joined in such appointment within 25 days after the receipt by it of a request
so to do, the Owner Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a trustee pursuant to Section 10.01
and no notice of the appointment of any co-trustee or separate trustee shall be
required pursuant to Section 10.03.
Each separate trustee and co-trustee shall, to the extent permitted by law, be
appointed and act subject to the following provision and conditions:
(i) all rights, powers, duties and obligations conferred or imposed upon the
Owner Trustee shall be conferred upon and exercised or performed by the Owner
Trustee and such separate trustee or co-trustee jointly (it being understood
that such separate trustee or co-trustee is not authorized to act separately
without the Owner Trustee joining in such act), except to the extent that under
any law of any jurisdiction in which any particular act or acts are to be
performed, the Owner Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties, and obligations
(including the holding of title to the Issuer or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate trustee
or co-trustee, but solely at the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable by reason of any
act or omission of any other trustee under this Agreement; and
28 (Nissan 2016-C Amended & Restated Trust Agreement)
(iii) the Administrator and the Owner Trustee acting jointly may at any time
accept the resignation of or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Owner Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as if
given to each of them. Each separate trustee and co-trustee, upon its acceptance
of the powers and duties conferred thereto under this Agreement, shall be vested
with the estates or property specified in its instrument of appointment, either
jointly with the Owner Trustee or separately, as may be provided therein,
subject to all the provisions of this Agreement, specifically including every
provision of this Agreement relating to the conduct of, affecting the liability
of, or affording protection to, the Owner Trustee. Each such instrument shall be
filed with the Owner Trustee and a copy thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner Trustee as
its agent or attorney-in-fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect, of this Agreement
on its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Supplements and Amendments.
(a) Any term or provision of this Agreement may be amended by the Depositor and
the Owner Trustee, without the consent of the Indenture Trustee, any Noteholder,
the Issuer or any other Person subject to the satisfaction of one of the
following conditions:
(i) the Depositor delivers an Officer’s Certificate or Opinion of Counsel to the
Indenture Trustee to the effect that such amendment will not materially and
adversely affect the interests of the Noteholders; or
(ii) the Rating Agency Condition is satisfied with respect to such amendment;
provided, that no amendment shall be effective which affects the rights,
protections or duties of the Indenture Trustee without the prior written consent
of such Person, (which consent shall not be unreasonably withheld or delayed);
provided, further, that the event that any Certificates are then held by anyone
other than the Administrator or any of its Affiliates, this Agreement may only
be amended by the Depositor and the Owner Trustee if, in addition, (i) the
Holders of the Certificates evidencing a majority of the Certificate Balance of
the Certificates consent to such amendment or (ii) such amendment shall not, as
evidenced by an Officer’s Certificate of the Administrator or an Opinion of
Counsel delivered to the Owner Trustee, materially and adversely affect the
interests of the Certificateholders.
(b) This Agreement may also be amended by the Depositor and the Owner Trustee
for the purpose of adding any provisions to or changing in any manner or
manner the rights of the Noteholders or the Certificateholders with the consent
of:
29 (Nissan 2016-C Amended & Restated Trust Agreement)
(i) the Holders of Notes evidencing not less than a majority of the Outstanding
Amount of the Notes; and
(ii) the Holders of the Certificates evidencing a majority of the Certificate
Balance.
It will not be necessary for the consent of Noteholders or Certificateholders to
approve the particular form of any proposed amendment or consent, but it will be
sufficient if such consent approves the substance thereof.
(c) Promptly after the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder, the Indenture Trustee and the
Administrator. The Administrator will thereafter deliver a copy of such notice
to each Rating Agency pursuant to Section 1(d) of the Administration Agreement.
(d) Prior to the execution of any amendment to this Agreement, the Owner Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this
Agreement. The Owner Trustee may, but shall not be obligated to, enter into any
such amendment which adversely affects the Owner Trustee’s own rights, duties or
immunities under this Agreement.
SECTION 11.02. No Legal Title to Owner Trust Estate in Certificateholders. The
Certificateholders shall not have legal title to any part of the Owner Trust
Estate. The Certificateholders shall be entitled to receive distributions with
respect to their undivided ownership interest therein only in accordance with
Articles V and IX. No transfer, by operation of law or otherwise, of any right,
title or interest of the Certificateholders to and in their ownership interest
in the Owner Trust Estate shall operate to terminate this Agreement or the
trusts hereunder or entitle any transferee to an accounting or to the transfer
to it of legal title to any part of the Owner Trust Estate.
SECTION 11.03. Limitations on Rights of Others. Except for Section 2.06, the
provisions of this Agreement are solely for the benefit of the Owner Trustee,
the Depositor, the Certificateholders, the Administrator and, to the extent
expressly provided herein the Indenture Trustee and the Noteholders, and nothing
in this Agreement (other than Section 2.06), whether express or implied, shall
be construed to give to any other Person any legal or equitable right, remedy or
claim in the Owner Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
SECTION 11.04. Notices.
(a) Unless otherwise expressly specified or permitted by the terms hereof, all
notices shall be in writing and shall be deemed given upon receipt by the
intended recipient or three Business Days after mailing if mailed by certified
mail, postage prepaid (except that notice to the Owner Trustee shall be deemed
given only upon actual receipt by the Owner Trustee), if to the
30 (Nissan 2016-C Amended & Restated Trust Agreement)
Owner Trustee, addressed to the Corporate Trust Office; if to the Depositor,
addressed to Nissan Auto Receivables Corporation II, One Nissan Way, Franklin,
Tennessee 37067, Attention: Treasurer; if to the Issuer, addressed to Nissan
Auto Receivables 2016-C Owner Trust, c/o Wilmington Trust, National Association,
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890,
Attention: Nissan Auto Receivables 2016-C Owner Trust, with a copy to Nissan
Motor Acceptance Corporation, One Nissan Way, Franklin, Tennessee 37067,
Attention: Treasurer; if to the Certificate Registrar or to the Paying Agent,
addressed to U.S. Bank National Association, 190 South LaSalle Street, 7th
Floor, Chicago, IL 60603, Attention: NAROT 2016-C; or, as to each party, at such
other address as shall be designated by such party in a written notice to each
other party. All notices, requests, reports, consents or other communications
deliverable to any Rating Agency hereunder or under any other Basic Document
shall be deemed to be delivered if a copy of such notice, request, report,
consent or other communication has been posted on any website maintained by or
on behalf of NMAC pursuant to a commitment to any Rating Agency relating to the
Notes in accordance with 17 C.F.R. 240 17g-5(a)(3).
(b) Any notice required or permitted to be given a Certificateholder shall be
given by first-class mail, postage prepaid, at the address of such Holder as
shown in the Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Certificateholder receives such notice.
SECTION 11.05. Severability. If any one or more of the covenants, agreements,
provisions or terms of this Agreement shall be for any reason whatsoever held
invalid or unenforceable in any jurisdiction, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect the
validity or enforceability of the other provisions of this Agreement or of the
Certificates or the rights of the Holders thereof.
SECTION 11.06. Counterparts. This Agreement may be executed simultaneously in
any number of counterparts, each of which shall be deemed to be an original, and
all of which shall constitute but one and the same instrument.
SECTION 11.07. Successors and Assigns. All covenants and agreements contained
herein shall be binding upon, and inure to the benefit of, the Depositor, the
Owner Trustee and its successors and each Certificateholder and its successors
and permitted assigns, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by a Certificateholder shall bind
the successors and assigns of such Certificateholder.
SECTION 11.08. No Petition. The Owner Trustee (not in its individual capacity
but solely as Owner Trustee), by entering into this Agreement, hereby covenants
and agrees, and each Certificateholder, by accepting a Certificate, and the
Indenture Trustee and any Noteholder by accepting the benefits of this
Agreement, are thereby deemed to covenant and agree that they will not at any
time institute against a Bankruptcy Remote Party, or join in any institution
against such Bankruptcy Remote Party, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any federal or state bankruptcy or similar law; provided, however, nothing in
this Section shall preclude, or be deemed to stop, the Owner
31 (Nissan 2016-C Amended & Restated Trust Agreement)
Trustee (i) from taking any action in (A) any case or proceeding voluntarily
filed or commenced by any Bankruptcy Remote Party or (B) any involuntary
insolvency proceeding filed or commenced by a Person other than the Owner
Trustee, or (ii) from commencing against any Bankruptcy Remote Party or any of
their respective property any legal action which is not a bankruptcy,
reorganization, arrangement, insolvency, moratorium or liquidation
proceeding. This Section 11.08 shall survive the termination of this Agreement.
SECTION 11.09. No Recourse. Each Certificateholder by accepting an interest in a
Certificate acknowledges that such Certificates represent beneficial interests
in the Issuer only and do not represent interests in or obligations of the
Depositor, NMAC (in any capacity), the Administrator, the Owner Trustee, the
Indenture Trustee or any Affiliate thereof and no recourse may be had against
such parties or their assets, except as may be expressly set forth or
contemplated in the Certificates or the Basic Documents.
(a) In furtherance of and not in derogation of the foregoing, to the extent the
Depositor enters into other securitization transactions, each Certificateholder,
by accepting a Certificate, acknowledges and agrees that it shall have no right,
title or interest in or to any assets or interests therein of the Depositor
conveyed or purported to be conveyed by the Depositor to another securitization
trust or other Person or Persons in connection therewith (whether by way of a
sale, capital contribution or by virtue of the granting of a lien). To the
extent that, notwithstanding the agreements and provisions contained herein, a
Certificateholder either (i) asserts an interest or claim to, or benefit from,
Other Assets, whether asserted against or through the Depositor or any other
Person owned by the Depositor, or (ii) is deemed to have any such interest,
claim or benefit in or from Other Assets, whether by operation of law, legal
process, pursuant to applicable provisions of insolvency laws or otherwise
(including by virtue of Section 1111(b) of the Federal Bankruptcy Code or any
successor provision having similar effect under the Bankruptcy Code), and
whether deemed asserted against or through the Depositor or any other Person
owned by the Depositor, then each Certificateholder, by accepting a Certificate,
further acknowledges and agrees that any such interest, claim or benefit in or
from Other Assets is and shall be expressly subordinated to the indefeasible
payment in full of all obligations and liabilities of the Depositor which, under
the terms of the relevant documents relating to the securitization of such Other
Assets, are entitled to be paid from, entitled to the benefits of, or otherwise
secured by such Other Assets (whether or not any such entitlement or security
interest is legally perfected or otherwise entitled to priority of distribution
or application under applicable law, including insolvency laws, and whether
asserted against Depositor or any other Person owned by the Depositor),
including the payment of post-petition interest on such other obligations and
liabilities. This subordination agreement shall be deemed a subordination
agreement within the meaning of Section 510(a) of the Bankruptcy Code. Each
Certificateholder, by acceptance of a Certificate, further acknowledges and
agrees that no adequate remedy at law exists for a breach of this paragraph and
the terms of this paragraph may be enforced by an action for specific
performance. The provisions of this paragraph shall be for the third party
benefit of those entitled to rely thereon and shall survive the termination of
this Agreement.
SECTION 11.10. Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
32 (Nissan 2016-C Amended & Restated Trust Agreement)
SECTION 11.11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
33 (Nissan 2016-C Amended & Restated Trust Agreement)
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be
duly executed by their respective officers hereunto duly authorized, as of the
NISSAN AUTO RECEIVABLES CORPORATION II, as Depositor By: Name: Title:
WILMINGTON TRUST, NATIONAL ASSOCIATION, as Owner Trustee By: Name:
Title:
S-1 (Nissan 2016-C Amended & Restated Trust Agreement)
U.S. BANK NATIONAL ASSOCIATION, as Certificate Registrar and Paying Agent
By:
Name:
Title:
S-2 (Nissan 2016-C Amended & Restated Trust Agreement)
EXHIBIT A
(FORM OF CERTIFICATE)
THIS CERTIFICATE IS NON-TRANSFERABLE OTHER THAN AS SET FORTH HEREIN AND IN THE
TRUST AGREEMENT (DEFINED BELOW).
THIS CERTIFICATE DOES NOT CONSTITUTE AN OBLIGATION OF OR AN INTEREST IN THE
DEPOSITOR, THE OWNER TRUSTEE, THE SERVICER, THE ADMINISTRATOR, NMAC, NARC II,
NISSAN NORTH AMERICA, INC. OR ANY OF THEIR RESPECTIVE AFFILIATES, AND WILL NOT
BE INSURED OR GUARANTEED BY ANY SUCH ENTITY OR BY ANY GOVERNMENTAL AGENCY.
COMPLIANCE WITH THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR ANY OTHER
APPLICABLE SECURITIES OR “BLUE SKY” LAWS, PURSUANT TO AN EXEMPTION THEREFROM OR
IN A TRANSACTION NOT SUBJECT THERETO. THE HOLDER HEREOF, BY PURCHASING THIS
STATEMENT UNDER THE SECURITIES ACT OR (II) IN A TRANSACTION EXEMPT FROM THE
PURPOSES.
(III) ANY OTHER EMPLOYEE
A-1 (Nissan 2016-C Amended & Restated Trust Agreement)
BENEFIT PLAN OR ARRANGEMENT THAT IS SUBJECT TO A LAW THAT IS SIMILAR TO THE
FIDUCIARY RESPONSIBILITY OR PROHIBITED TRANSACTION PROVISIONS OF ERISA OR
SECTION 4975 OF THE CODE OR (IV) ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN
ASSETS BY REASON OF AN EMPLOYEE BENEFIT PLAN’S OR A PLAN’S INVESTMENT IN THE
ENTITY (EACH, A “BENEFIT PLAN INVESTOR”). BY ACCEPTING AND HOLDING A CERTIFICATE
(OR INTEREST THEREIN), THE HOLDER THEREOF SHALL BE DEEMED TO HAVE REPRESENTED
AND WARRANTED THAT IT IS NOT A BENEFIT PLAN INVESTOR.
A-2 (Nissan 2016-C Amended & Restated Trust Agreement)
NUMBER $ R-
ASSET BACKED CERTIFICATE
Evidencing a fractional undivided ownership interest in the Issuer, as defined
below, the property of which includes a pool of retail installment sale
contracts secured by new, near-new and used automobiles and light-duty trucks
and sold to the Issuer by Nissan Auto Receivables Corporation II (“NARC II”).
(This Certificate does not represent an interest in or obligation of NARC II,
Nissan Motor Acceptance Corporation (“NMAC”), Nissan North America, Inc. or any
of their respective affiliates, except to the extent described below.)
THIS CERTIFIES THAT is the registered owner of
DOLLARS ($ ), nonassessable, fully-paid, fractional undivided
ownership interest in Nissan Auto Receivables 2016-C Owner Trust (the “Trust”)
formed by NARC II.
The Issuer was created by the Original Trust Agreement, as amended and restated
by the Amended and Restated Trust Agreement dated as of August 10, 2016, as
amended and supplemented from time to time, (the “Trust Agreement”), between
NARC II, as depositor (the “Depositor”), Wilmington Trust, National Association,
as owner trustee (the “Owner Trustee”), and U.S. Bank National Association, as
certificate registrar and paying agent, a summary of certain of the pertinent
provisions of which is set forth below. Capitalized terms used herein and not
otherwise defined have the meanings assigned to such terms in the Sale and
Servicing Agreement, dated as of August 10, 2016 (the “Sale and Servicing
Agreement”), among the Issuer, the Depositor, NMAC, as servicer (the
“Servicer”), and U.S. Bank National Association, as indenture trustee, as
applicable.
This Certificate is one of the duly authorized Certificates designated as “Asset
Backed Certificates” (the “Certificates”) issued pursuant to the Trust
Agreement. Certain debt instruments evidencing obligations of the Trust have
been issued under the Indenture, consisting of five classes of Notes designated
as “0.62000% Asset Backed Notes, Class A-1,” “1.07% Asset Backed Notes, Class
A-2a,” “LIBOR + 0.22% Asset Backed Notes, Class A-2b,” “1.18% Asset Backed
Notes, Class A-3” and “1.38% Asset Backed Notes, Class A-4” (collectively, the
“Notes”). This Certificate is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement to which the holder of this
Certificate by virtue of the acceptance hereof assents and by which such holder
is bound. The property of the Trust includes a pool of retail installment sale
(the “Receivables”), all monies received after the Cut-off Date, security
interests in the vehicles financed thereby, certain bank accounts and the
proceeds thereof, proceeds from claims on certain insurance policies and certain
other rights under the Trust Agreement and the Sale and Servicing Agreement and
all proceeds of the foregoing.
A-3 (Nissan 2016-C Amended & Restated Trust Agreement)
Under the Trust Agreement, there will be distributed on the 15th day of each
month or, if such 15th day is not a Business Day, the next Business Day, (each,
a “Distribution Date”), commencing on September 15, 2016 to the person in whose
name this Certificate is registered at the close of business on the related
Record Date, such Certificateholder’s pro rata portion of the amounts to be
distributed to Holders of the Certificates on such Distribution Date in respect
of amounts distributable to the Certificateholders of the Certificates pursuant
to Section 5.06 of the Sale and Servicing Agreement.
The holder of this Certificate acknowledges and agrees that its rights to
receive distributions in respect of this Certificate are subordinated to the
rights of the Noteholders as described in the Sale and Servicing Agreement and
the Indenture.
It is the intent of the Depositor, NMAC and the Certificateholders that, for
purposes of U.S. federal income tax, state and local income tax, any state
single business tax and any other income taxes, the Issuer will be treated as a
division or branch of the Person holding the beneficial ownership interests in
the Issuer for any period during which the beneficial ownership interests in the
Issuer are held by one person (or by multiple owners but each owner is treated
as the same Person for U.S. federal income tax purposes), and will be treated as
a partnership, and the Certificateholders will be treated as partners in that
partnership, for any period during which the beneficial ownership interests in
the Issuer are held by more than one person (and all such owners are not treated
as the same Person for U.S. federal income tax purposes). For any such period
during which the beneficial ownership interests in the Issuer are held by more
than one person, each Certificateholder, by acceptance of a Certificate or any
beneficial interest on a Certificate, agrees to treat, and to take no action
inconsistent with the treatment of, the Certificates as partnership interests in
the Issuer for such tax purposes.
Each Certificateholder, by its acceptance of a Certificate or any beneficial
interest in a Certificate, covenants and agrees that such Certificateholder will
not at any time institute against any Bankruptcy Remote Party, or join in any
institution against any Bankruptcy Remote Party of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States, federal or state bankruptcy or similar law.
Each Certificateholder by accepting a Certificate acknowledges that such
Certificateholder’s Certificates represent beneficial interests in the Issuer
only and do not represent interests in or obligations of Depositor, NMAC, the
Administrator, the Owner Trustee, the Indenture Trustee or any Affiliate thereof
and no recourse may be had against such parties or their assets, except as
expressly set forth or contemplated in the Trust Agreement, the Certificates or
the Basic Documents. In furtherance of and not in derogation of the foregoing,
each Certificateholder, by accepting a Certificate, acknowledges and agrees that
it shall have no right, title or interest in or to any assets or interests
therein of the Depositor conveyed or purported to be conveyed by the Depositor
to another securitization trust or other Person or Persons in connection
therewith (whether by way of a sale, capital contribution or by virtue of the
granting of a lien) (“Other Assets”). To the extent that, notwithstanding the
agreements and provisions contained herein, a Certificateholder either (i)
asserts an interest or claim to, or benefit from, Other Assets, whether asserted
against or through the Depositor or any other Person owned by the Depositor, or
(ii) is deemed to have any such interest, claim or benefit in or from Other
Assets, whether by operation of law, legal process, pursuant to applicable
provisions of
A-4 (Nissan 2016-C Amended & Restated Trust Agreement)
insolvency laws or otherwise (including by virtue of Section 1111(b) of the
Federal Bankruptcy Code or any successor provision having similar effect under
the Bankruptcy Code), and whether deemed asserted against or through the
Depositor or any other Person owned by the Depositor, then each
Certificateholder, by accepting a Certificate, further acknowledges and agrees
that any such interest, claim or benefit in or from Other Assets is and shall be
expressly subordinated to the indefeasible payment in full of all obligations
and liabilities of the Depositor which, under the terms of the relevant
documents relating to the securitization of such Other Assets, are entitled to
be paid from, entitled to the benefits of, or otherwise secured by such Other
Assets (whether or not any such entitlement or security interest is legally
perfected or otherwise entitled to priority of distribution or application under
applicable law, including insolvency laws, and whether asserted against
Depositor or any other Person owned by the Depositor), including the payment of
post-petition interest on such other obligations and liabilities. This
subordination agreement shall be deemed a subordination agreement within the
meaning of Section 510(a) of the Bankruptcy Code. Each Certificateholder, by
acceptance of a Certificate, further acknowledges and agrees that no adequate
remedy at law exists for a breach of this paragraph and the terms of this
paragraph may be enforced by an action for specific performance. The provisions
of this paragraph shall be for the third party benefit of those entitled to rely
thereon and shall survive the termination of the Trust Agreement.
Distributions on this Certificate will be made as provided in the Trust
Agreement by the Paying Agent by wire transfer or check mailed to each
Certificateholder of record without the presentation or surrender of this
Certificate or the making of any notation hereon. Except as otherwise provided
in the Trust Agreement and notwithstanding the above, the final distribution on
this Certificate will be made after due notice by the Owner Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency of the Paying Agent maintained for the
purpose by the Owner Trustee.
Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been executed by an
authorized officer of the Owner Trustee or an authenticating agent, by manual or
facsimile signature, this Certificate shall not entitle the holder hereof to any
benefit under the Trust Agreement or the Sale and Servicing Agreement or be
valid for any purpose.
THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
A-5 (Nissan 2016-C Amended & Restated Trust Agreement)
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Issuer and not in its
individual capacity, has caused this Certificate to be duly executed.
By:
WILMINGTON TRUST, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Owner Trustee
Dated:
By:
Authorized Signatory
A-6 (Nissan 2016-C Amended & Restated Trust Agreement)
OWNER TRUSTEE’S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
WILMINGTON TRUST NATIONAL
Or
U.S. BANK NATIONAL ASSOCIATION, not
in its individual capacity but solely as
Authenticating Agent
By: By: Authorized Signatory Authorized Signatory
Date:
A-7 (Nissan 2016-C Amended & Restated Trust Agreement)
(REVERSE OF CERTIFICATE)
The Certificates do not represent an obligation of, or an interest in, the Owner
Trustee, NMAC, NARC II, Nissan North America, Inc. or any of their Affiliates
and no recourse may be had against such parties or their assets, except as may
be expressly set forth or contemplated herein or in the Trust Agreement or the
Basic Documents. In addition, this Certificate is not guaranteed by any
governmental agency or instrumentality and is limited in right of payment to
certain collections with respect to the Receivables (and certain other amounts),
all as more specifically set forth in the Trust Agreement and in the Sale and
Servicing Agreement. A copy of each of the Sale and Servicing Agreement and the
Trust Agreement may be examined during normal business hours at the principal
office of the Depositor, and at such other places, if any, designated by the
Depositor, by any Certificateholder upon written request.
The Trust Agreement may be amended by the parties thereto, without the consent
of any other Person in the manner set forth in Section 11.01 of the Trust
Agreement.
As provided in the Trust Agreement, and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies of the Certificate Registrar, accompanied by a written
instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder’s
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same aggregate interest in the Issuer
will be issued to the designated transferee or transferees. The initial
Certificate Registrar appointed under the Trust Agreement is U.S. Bank National
Association, 111 Fillmore Avenue East, St. Paul, MN 55107, Attention: Bondholder
Services.
The Certificates are issuable only as registered Certificates without coupons in
thereof. As provided in the Trust Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same aggregate denomination as requested
by the holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge payable in connection therewith.
The Owner Trustee, the Certificate Registrar, the Paying Agent and any agent of
the Owner Trustee or the Certificate Registrar or the Paying Agent may treat the
person in whose name this Certificate is registered as the owner hereof for all
purposes and none of the Owner Trustee, the Certificate Registrar or any such
agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and the
Issuer created thereby shall terminate upon the earliest of (i) the maturity or
other liquidation of the last Receivable (or other asset) in the Owner Trust
Estate and the final distribution of all moneys or other property or proceeds of
the Owner Trust Estate in accordance with the terms of the Trust Agreement, the
Indenture and the Sale and Servicing Agreement (including, but not limited to,
A-8 (Nissan 2016-C Amended & Restated Trust Agreement)
any property and proceeds to be deposited in the Collection Account pursuant to
the terms of the Sale and Servicing Agreement or to be released by the Indenture
Trustee from the Lien of the Indenture pursuant to the terms of the Indenture,
and (ii) the election by NMAC, as servicer of the Receivables under the Sale and
Servicing Agreement, or any successor servicer, to purchase the Collateral
(other than the Reserve Account pursuant to Section 9.01 of the Sale and
Servicing Agreement and the payment or distribution to all Securityholders of
all amounts required to be paid to them under the Indenture and the Trust
Agreement; provided, however, such right of purchase by the servicer is
exercisable only after the last day of the Collection Period as of which the
Pool Balance is less than or equal to 5% of the Original Pool Balance.
In the event of any conflict or inconsistency between the terms of this
Certificate and the term of the Basic Documents, the terms of the Basic
Documents shall control.
A-9 (Nissan 2016-C Amended & Restated Trust Agreement)
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or type name and address, including postal zip code, of assignee)
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney
to transfer said Certificate on the books of the Certificate Registrar, with
full power of substitution in the premises.
Dated:
*/ Signature Guaranteed: */
*/ NOTICE: The signature to this assignment must correspond with the name as
it appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
A-10 (Nissan 2016-C Amended & Restated Trust Agreement)
EXHIBIT B
FORM OF TRANSFEREE CERTIFICATION LETTER
Nissan Auto Receivables 2016-C Owner Trust
not in its individual capacity but solely as Owner Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Nissan Auto Receivables 2016-C Owner Trust
as Certificate Registrar
111 Fillmore Avenue East
St. Paul, MN 55107
Attention: Bondholder Services
Attention: Corporate Trust Services — Nissan Auto Receivables 2016-C Owner
Trust
Re: Transfer of Nissan Auto Receivables 2016-C Owner Trust Certificates, (the
“Certificates”)
Ladies and Gentlemen:
This letter is delivered pursuant to Section 3.03 of the Amended and Restated
Trust Agreement, dated as of August 10, 2016 (the “Trust Agreement”), between
Nissan Auto Receivables Corporation II, as Depositor, Wilmington Trust, National
Association, as Owner Trustee (the “Owner Trustee”), and U.S Bank National
Association, as Certificate Registrar and Paying Agent, in connection with the
transfer by (the “Seller”) to the undersigned (the
“Purchaser”) of $ balance of the Certificates. Capitalized terms
used and not otherwise defined herein have the meanings assigned to such terms
in the Trust Agreement.
In connection with such transfer, the undersigned hereby represents and warrants
to you and the addressees hereof as follows:
¨ I acknowledge that the Certificates have not been and will not be
registered under the Securities Act or the securities law of any jurisdiction;
B-1 (Nissan 2016-C Amended & Restated Trust Agreement)
¨ I acknowledge that if in the future I decide to resell, assign, pledge or
otherwise transfer any Certificates, such Certificates may be resold, assigned,
pledged or transferred only (A) to a United States Person within the meaning of
registration statement under the Securities Act or (ii) in a transaction exempt
from the registration requirements of the Securities Act and other securities or
“Blue Sky” laws;
¨ I am not a Non-U.S. Person (as defined in the Trust Agreement);
¨ No Certificate (or any interest therein) may be acquired by or for the
account of (i) an employee benefit plan as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is
subject to the provisions of Title I of ERISA, (ii) a “plan” described in and
subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the
“Code”), (iii) any other employee benefit plan or arrangement that is subject to
a law that is similar to the fiduciary responsibility or prohibited transaction
provisions of ERISA or Section 4975 of the Code or (iv) any entity whose
underlying assets include plan assets by reason of an employee benefit plan’s or
a plan’s investment in the entity. Each Person who acquires any Certificate or
interest therein will certify that the foregoing conditions are satisfied;
¨ I acknowledge that after this transfer (or purported transfer), the Issuer
would not have more than 95 direct or indirect beneficial owners of any interest
in the Certificates;
¨ This transfer is not effected through an established securities market or
¨ The Certificates (or interests therein) are not acquired by or for the
account of a Special Pass-Through Entity (as defined in the Trust Agreement);
¨ If I am acquiring any Certificate (or interest therein) for the account of
one or more Persons, (A) I shall provide to the Owner Trustee and the Depositor
information as to the number of such Persons and any changes in the number of
such Persons and (B) any such change in the number of Persons for whose account
a Certificate is held shall require the written consent of the Owner Trustee,
which consent shall be granted unless the Owner Trustee determines that such
proposed change in number of Persons would create a risk that the Issuer would
be classified for federal or any applicable state tax purposes as an association
(or a publicly traded partnership) taxable as a corporation;
¨ I understand that the Certificates will bear legends substantially as set
forth in Section 3.09 of the Trust Agreement;
¨ Prior to December 31, 2017 or such later date that the Amended Partnership
Audit Rules shall apply to the Issuer, (A) I shall provide to the Owner Trustee
and the Depositor any further information required by the Issuer to comply with
Partnership Audit Rules and (B) if I am not the Certificate Owner, such
Certificate Owner shall provide to the Owner Trustee and the Depositor any
further information required by the Issuer to comply with the Amended
Partnership Audit
B-2 (Nissan 2016-C Amended & Restated Trust Agreement)
Rules, including Section 6226(a) of the Amended Partnership Audit Rules and, to
the extent necessary for the Issuer to make an election under Section 6226(a) of
the Amended Partnership Audit Rules, hereby appoints me as its agent for
¨ No transfer of the Certificates (or any interest therein) is a transfer of
¨ Any attempted transfer that would cause the number of direct or indirect
¨ I understand that if I am acquiring the Certificates as agent or nominee
for any other person(s), such person(s) confirm the representations in the above
paragraphs as such representations apply to such person(s).
[Signature appears on next page]
B-3 (Nissan 2016-C Amended & Restated Trust Agreement)
IN WITNESS WHEREOF, the Purchaser hereby executes this Transferee Representation
Letter on the day of .
Very truly yours,
, The
Purchaser By: Name: Title:
B-4 (Nissan 2016-C Amended & Restated Trust Agreement)
EXHIBIT C
FORM OF TRANSFEROR REPRESENTATION LETTER
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
as Certificate Registrar
111 Fillmore Avenue East
Attention: Bondholder Services
Trust
Re: Transfer of Nissan Auto Receivables 2016-C Owner Certificates, (the
“Certificates”)
Ladies and Gentlemen:
Association, as Owner Trustee (the “Owner Trustee”), and U.S. Bank National
Association as Certificate Registrar and Paying Agent, in connection with the
transfer by the undersigned (the “Seller”) to (the
used and not otherwise defined herein have the meanings ascribed thereto in the
Trust Agreement. The Seller hereby certifies, represents and warrants to you, as
Certificate Registrar, that:
1. The Seller is the lawful owner of the Transferred Certificates with the full
right to transfer such Certificates free from any and all claims and
encumbrances whatsoever.
2. Neither the Seller nor anyone acting on its behalf has (a) offered,
transferred, pledged, sold or otherwise disposed of any Transferred Certificate,
any interest in any Transferred Certificate or any other similar security to any
person in any manner, (b) solicited any offer to buy or accept a transfer,
pledge or other disposition of any Transferred Certificate, any interest in any
Transferred Certificate or any other similar security from any person in any
manner, (c) otherwise approached or negotiated with respect to any Transferred
Certificate, any interest in any Transferred Certificate or any other similar
security with any
C-1 (Nissan 2016-C Amended & Restated Trust Agreement)
person in any manner, (d) made any general solicitation by means of general
advertising or in any other manner, or (e) taken any other action, which (in the
case of any of the acts described in clauses (a) through (e) hereof) would
constitute a distribution of any Transferred Certificate under the Securities
Act of 1933, as amended (the “Securities Act”), or would render the disposition
of any Transferred Certificate a violation of Section 5 of the Securities Act or
any state securities laws, or would require registration or qualification of any
Transferred Certificate pursuant to the Securities Act or any state securities
laws.
Very truly yours, (Seller) By:
Name:
Title:
C-2 (Nissan 2016-C Amended & Restated Trust Agreement) |
Exhibit 10.3
[g45331ko01i001.gif]
815 Chestnut Street · North Andover, MA · 01845-6098 · Tel. (978) 688-1811
February 11, 2015
Mario Sanchez
7711 E Plymouth
Mesa, AZ 85207
Re: Amended Separation Agreement
Dear Mario:
This letter is to record the mutual agreements reached regarding the termination
of your employment due to your resignation.
This amended letter agreement replaces and supersedes the letter agreement
provided to you on February 9, 2016. Pursuant to Paragraph 5(b), the
negotiations and amendments to this letter agreement do not extend the
twenty-one (21) day review period. Accordingly, the deadline to submit a signed
agreement remains the same.
In connection with your resignation of your employment with Watts Water
Technologies, Inc. (“Watts” or the “Company”) on April 1, 2016, the Company is
offering to provide you a separation benefit if you satisfy the eligibility
requirements described in the “Description of Separation Benefit” attached to
this letter agreement as Attachment A. In order to receive the separation
benefits, you must sign and return this letter agreement and the Release of
Claims at Attachment B within the specified deadlines and you must not revoke
either the letter agreement or the Release of Claims at Attachment B. Please
return the signed agreement to Debra Ogston by hand at 815 Chestnut Street,
North Andover, MA 01845, by email at [email protected] by March 1,
2016 and sign and return the Release of Claims at Attachment B no earlier than
on April 1, 2016, but no later than on April 23, 2016. By signing and returning
this letter agreement, and not revoking your acceptance, you will be agreeing to
the terms and conditions set forth in the numbered paragraphs below, including
the release of claims set forth in Paragraph 3. Therefore, you are advised to
consult with an attorney before signing this letter agreement, and you have been
given twenty-one (21) days to do so. If you sign this letter agreement, you may
change your mind and revoke your agreement during the fourteen (14) day period
after you have signed it. If you do not so revoke, this letter agreement will
become a binding agreement between you and the Company upon the expiration of
the fourteen (14) day revocation period.
If you choose not to sign and return this letter agreement by March 1, 2016 or
the Release of Claims at Attachment B, or if you timely revoke your acceptance
in writing, of either document, you will not receive any separation benefits
from the Company. You will, however, receive payment on your Resignation Date
for any wages and unused vacation time accrued through the Resignation Date.
Also, regardless of signing this letter
agreement, you may elect to continue receiving group sponsored health insurance
pursuant to the federal “COBRA” law, 29 U.S.C. § 1161 et seq. All premium costs
for “COBRA” shall be paid by you on a monthly basis for as long as, and to the
extent that, you remain eligible for COBRA continuation. You should consult the
COBRA materials to be provided by the Company, and mailed to you from ADP, for
details regarding these benefits. All other benefits, including life insurance
and long-term disability insurance, will cease upon your Resignation Date.
As set out in the Company’s Second Amended and Restated 2004 Stock Incentive
Plan, the unvested portion of all stock option grants will be cancelled and all
unvested shares of restricted stock will be forfeited to the Company on the
Resignation Date (as defined below). Under the Second Amended and Restated 2004
Stock Incentive Plan, you have six (6) months from your Resignation Date to
exercise any vested portion of your option grants. Any portion of the vested
option grants that are not exercised by this deadline will be forfeited.
Pursuant to the terms of the Management Stock Purchase Plan, your non-vested
restricted stock units (RSUs) will be cancelled on the Resignation Date and you
will receive a cash payment equal to the number of such non-vested RSUs
multiplied by the lesser of (a) 67% of the fair market value of the Company’s
Class A Common Stock on the date the RSUs were purchased plus simple interest
per annum on such amount at the one-year U.S. Treasury Bill rate (as published
in the Wall Street Journal) in effect on the purchase date and each anniversary
thereof, or (b) the fair market value of the Class A Common Stock on the
Resignation Date. Your vested RSUs will be converted to shares of the Company’s
Class A Common Stock and issued to you. As a result of the American Jobs
Creation Act of 2004, the distribution of this cash payment for any unvested
RSUs and the issuance of the shares underlying your vested RSUs cannot be made
until at least six months after the Resignation Date.
No additional options or stock grants will be issued prior to your Resignation
Date.
The following numbered paragraphs set forth the terms and conditions that will
apply if you timely sign and return this letter agreement and do not revoke it
within the fourteen (14) day period:
1. Resignation Date: Your effective date of termination due to
resignation from the Company will be April 1, 2016 (the “Resignation Date”). As
of the Resignation Date, your salary will stop, and any entitlement you have or
might have under a Company-provided benefit plan, program, contract or practice
will terminate, except as required by federal or state law, or as otherwise
described in Attachment A.
(a) Transition Period: The Company provided you
with the option of choosing between immediate resignation with a separation
payment or a transition period and a subsequent separation payment. The
transition period would take
2
place between the date of this letter agreement and April 1, 2016 (the
“Transition Period”) during which you would remain on the payroll and remain
eligible to participate in the group benefit plans in which you are currently
enrolled. You have chosen the option of a Transition Period.
(i) It is agreed that during this Transition
Period you will complete the assignments outlined in Exhibit “A” attached to
this Agreement. If the Company determines that you are not cooperating with the
completion of the tasks listed on Exhibit “A,” or that you are not conducting
yourself during the Transition Period in a professional manner, the Company will
immediately terminate your employment without further obligation to pay for your
salary or benefits for the balance of the Transition Period, and the Resignation
Date shall become the date of this earlier termination. Subject to the terms of
Section 19 below, notwithstanding your early termination, you will remain
eligible for the separation payments set forth in Section 2 below.
(ii) The Company will be flexible during the
Transition Period with respect to allowing you time to seek a new job. You will
be expected to coordinate your schedule with your supervisor, Robert J. Pagano.
If the Company determines in its sole discretion that you have transitioned your
responsibilities prior to your Resignation Date, you may be requested to not
attend the workplace during the remaining period of time up to your Resignation
Date. If this occurs, you agree that your access to Company systems and
facilities will be terminated, you will not attend the workplace, and you will
be available for consultation as needed up to your Resignation Date.
2. Description of Separation Benefit: The separation benefit paid
to you if you timely sign and return this letter agreement and the Release of
Claims in Attachment B, and you do not revoke your acceptance of either
document, is described in the “Description of Separation Benefit” attached as
Attachment A (the “separation benefit”). In connection with the separation
benefit provided to you pursuant to this letter agreement and the Release of
Claims in Attachment B, the Company shall withhold and remit to the relevant tax
authorities the amounts required under applicable law, and you shall be
responsible for all applicable taxes with respect to such separation benefit
under applicable law. You acknowledge that you are not relying upon advice or
representation of the Company with respect to the tax treatment of any of the
separation benefit set forth in Attachment A.
3. Release: This section of the letter agreement is a release of
legal claims. In this section, you are agreeing to release all legal claims
against the Company and the other releasees defined below that arise up to the
date you sign the letter agreement. Please carefully review this section with
your attorney, or
3
other trusted advisor, and do not sign this document unless you understand what
this section says.
(a) In exchange for the option to extend your employment with the
Transition Period and the amounts and benefits described in Attachment A, which
are in addition to anything of value to which you are entitled to receive and
which includes any and all termination payments or indemnities you might be
entitled to by law or contract, you and your representatives, agents, estate,
heirs, successors and assigns, absolutely and unconditionally release, remiss,
discharge, indemnify and hold harmless the Company Releasees , from any and all
legally waivable claims that you have against the Company Releasees. Other than
as permitted in Paragraph 3(d) below, this means that by signing this letter
agreement, you are agreeing not to bring a legal action against the Company
Releasees in any court, legal forum or agency anywhere in the world for any type
of waivable claim arising from conduct that occurred any time in the past and up
to and through the date you sign this document. Company Releasees is defined to
include the Company, and/or any of its respective parents, subsidiaries or
affiliates, predecessors, successors or assigns, as well as their respective
current and/or former directors, shareholders/stockholders, officers, employees,
attorneys and/or agents, all both individually and in their official capacities.
(b) This release includes, but is not limited to, any waivable claims
you have against the Company Releasees based on conduct that occurred any time
in the past and up to and through the date you sign this letter agreement that
arises from any federal, national, state or local law, regulation or
constitution dealing with either employment, employment benefits or employment
discrimination. By way of example, this release includes 1) the laws or
regulations concerning discrimination on the basis of race, color, creed,
religion, age, sex, sex harassment, sexual orientation, gender identity,
national origin, ancestry, genetic carrier status, handicap or disability,
veteran status, any military service or application for military service,
retaliation, or any other category protected under applicable law; 2) the laws
or regulations regarding unlawful, abusive or unfair dismissal, including the
Dutch Work and Security Act (Wet Werk en Zekerheid) of 2014; 3) the laws or
regulations prescribing notice periods or the manner in which notice must be
given; and 4) the laws or regulations regarding mandatory severance, transition
allowances, and termination indemnities or payments, including payment pursuant
to the Cantonal Court Formula (Kantonrechtersformule). This release also
includes any claim you may have against the Company Releasees for breach of
contract, whether oral or written, express or implied (including your employment
offer letter dated November 21, 2011 and Secondment Agreement of December 5,
2011); any claims alleging constructive discharge; any tort claims; (such as
claims for wrongful discharge, tortious interference with contractual relations,
emotional distress, and defamation); any claims for
4
equity or employee benefits of any other kind; or any other legally waivable
statutory and/or common law claims.
(c) For avoidance of doubt, by signing this letter agreement you are
agreeing not to bring any waivable claims against the Company Releasees (other
than as permitted in Paragraph 3(d) below) under the following nonexclusive list
of discrimination and employment statutes: Title VII of the Civil Rights Act of
1964, The Age Discrimination In Employment Act of 1967, The Americans With
Disabilities Act, The ADA Amendments Act, The Equal Pay Act, The Lilly Ledbetter
Fair Pay Act, the Family and Medical Leave Act, The Worker Adjustment and
Retraining Notification Act (“WARN”), The Rehabilitation Act of 1973, The
Genetic Information Nondiscrimination Act of 2008, The Fair Credit Reporting
Act, The Employee Retirement Income Security Act (“ERISA”), Executive Order
11246, and Executive Order 11141, Section 806 of the Corporate and Criminal
Fraud Accountability Act of 2002, The Massachusetts Fair Employment Practices
Law (M.G.L. ch. 151B), The Massachusetts Equal Rights Act, The Massachusetts
Equal Pay Act, The Massachusetts Privacy Statute, the Massachusetts Parental
Leave Act, The Massachusetts Small Necessities Leave Act, The Massachusetts
Labor and Industries Act, The Massachusetts Civil Rights Act, and all other
federal, state and local laws, all as amended and any claims under the laws of
The Netherlands including the Dutch Civil Code and Work and Security Act. You
are also agreeing to release the Company Releasees from any and all wage and
hour related claims to the maximum extent permitted by federal and state law.
This release of legal claims includes any wage and hour related claims arising
out of or in any way connected with your employment with the Company, including
but not limited to claims under the Fair Labor Standards Act, the Massachusetts
Payment of Wages Act (Massachusetts General Laws Chapter 149 section 148 and
150), Massachusetts Overtime regulations (Massachusetts General Laws Chapter 151
section 1A and 1B) and Meal Break regulations (Massachusetts General Laws
Chapter 149 sections 100 and 101) and any other claims under any applicable law
for unpaid or delayed payment of wages, overtime, bonuses, commissions,
incentive payments or severance, missed or interrupted meal periods, interest,
attorneys’ fees, costs, expenses, liquidated damages, treble damages or damages
of any kind to the maximum extent permitted by law.
(d) This release does not include any claim under the workers
compensation or unemployment compensation statutes or any other claim, which, as
a matter of law, cannot be released by private agreement. Also, this letter
agreement is not intended to affect the rights and responsibilities of
government agencies such as the Equal Employment Opportunity Commission (the
“EEOC”), the National Labor Relations Board (the “NLRB”) or any federal, state
or local agency, to enforce the laws within their jurisdiction. This means that
by signing this letter agreement, you may still exercise your protected right to
file
5
a charge with, or participate in an investigation or proceeding conducted by,
the EEOC, the NLRB, or any other federal, state, or local government entity.,
Notwithstanding the foregoing, you agree that if the EEOC, the NLRB, or any
other federal, state or local government entity commences an investigation or
other legal action on your behalf, you specifically waive and release your right
to recover, if any, monetary damages or other benefits or recovery arising from
the governmental action.
(e) You agree that, by virtue of the Company’s promises and agreements
as set forth in this letter agreement, including without limitation, the
opportunity to extend your employment through the Transition Period, you have
received fair economic value for any and all potential claims or causes of
action you may have against the Company Releasees, and that you are not entitled
to any other damages or relief. Accordingly, you covenant and agree that you
will not file suit seeking to recover any further damages or relief personal to
you against any Company Releasee, or seek or accept any further economic
recovery or relief personal to you against any Company Releasee, based upon any
matter or event existing as of the date of this letter agreement. While nothing
in this letter agreement precludes you from filing any claim or charge which, as
a matter of law, cannot be waived or released by private agreement, you
nonetheless acknowledge that you have obtained maximum economic benefit by
virtue of the opportunity to extend your employment through the Transition
Period and the consideration in Section 2 for any claims, waivable or not, and
you will not seek further economic recovery in the future.
(f) As a material term of this letter agreement, you attest that you
have given the Company written notice of any and all concerns you may have
regarding suspected ethical or compliance issues or violations on the part of
the Company or any of the Company Releasees.
4. Waiver of Rights and Claims Under the Age Discrimination in
Employment Act of 1967: Since you are 40 years of age or older, you are being
informed that you have or may have specific rights and/or claims under the Age
Discrimination in Employment Act of 1967 (ADEA) and you agree that:
(a) in consideration for the opportunity to extend your employment
through the Transition Period and the amounts described in Attachment A to this
letter agreement, which you are not otherwise entitled to receive, you
specifically and voluntarily waive such rights and/or claims under the ADEA you
might have against the Company Releasees to the extent such rights and/or claims
arose prior to the date this letter agreement was executed;
(b) you understand that rights or claims under the ADEA that may arise
after the date this letter agreement is executed are not waived by you;
6
(c) you are advised to consider the terms of this letter agreement
carefully and consult with or seek advice from an attorney of your choice or any
other person of your choosing prior to executing this letter agreement;
(d) you have carefully read and fully understand all of the provisions
of this letter agreement, and you knowingly and voluntarily agree to all of the
terms set forth in this letter agreement; and
(e) in entering into this letter agreement you are not relying on any
representation, promise or inducement made by the Company or its attorneys with
the exception of those promises described in this document.
5. Period for Review and Consideration of Agreement:
(a) You acknowledge that you were informed and understand that you have
twenty-one (21) days to review this letter agreement and consider its terms
before signing it.
(b) The 21-day review period will not be affected or extended by any
revisions, whether material or immaterial, that might be made to this letter
agreement.
6. Non-Disclosure and Confidential Information: Unless compelled by
law, you agree that you will keep confidential all non-public information
concerning the Company or any of the Company Releasees that you acquired during
the course of your employment with the Company and all developments and
inventions. You further agree to comply with any obligations regarding
confidential information, non-solicitation, non-competition and inventions set
forth in any agreements previously entered into by you with the Company or its
predecessors. Such provisions and obligations shall remain in effect
notwithstanding this letter agreement and the ending of your employment. You
acknowledge that during the course of your employment with the Company you have
acquired knowledge of, and/or had access to, trade secrets, as well as
confidential and proprietary information of the Company and of third parties
which is subject to confidentiality and other agreements by and between the
Company and those third parties (such trade secrets of the Company and such
confidential and proprietary information of third parties is herein collectively
referred to as “(“Confidential Information”). Such Confidential Information
includes, but is not limited to: financial and pricing information; business,
research, and new product plans and strategies; patent applications and
invention disclosures; yields, designs, efficiencies, and capacities of
production methods, processes, facilities and systems at the Company and its
contractors; customer and vendor lists, key
7
contacts, habits, and product and purchasing plans of customers; marketing
information, plans and strategies; existing and anticipated agreements with
customers, vendors, and other third parties; product design and related
information; information regarding Company employees, their projects, and their
salaries, benefits and other personnel information. You agree that you will not
use or disclose to others any Confidential Information. If you are personally
served with a lawfully issued subpoena or other compulsory legal process that
requires you to provide testimony or produce documents about Confidential
Information, you must promptly notify the Company’s General Counsel at least 10
days prior to the return date (or as soon as practicable in the event ten days
notice is not practicable) so that the Company may decide whether to seek relief
from a Court or issuing forum. If the Court or issuing forum orders you to
testify or produce documents, you are permitted to do so but may only reveal
Confidential Information in a manner that will preserve the confidential nature
of the information. Nothing herein is intended to or shall preclude you from
cooperating with the Securities and Exchange Commission, the Department of
Labor, the EEOC, the NLRB or any federal, state, or local government agency.
7. Non-Competition and Non-Solicitation: For purposes of this
section, “Company” shall include the Company and any of its parents,
subsidiaries or affiliates. In your employment with the Company, you have
developed or helped develop, had access to and learned significant secret,
confidential, and proprietary information relating to the business of the
Company. In addition, you have been provided with intimate knowledge regarding
the Company’s technology, products, services, systems, methods, and operations.
You also acknowledge that the Company has invested substantial resources and
time to developing the technology, products, services, systems, methods, and
operations, all of which are highly valuable assets to the Company. You agree
that the Company has spent and will continue to spend substantial effort, time,
and resources in developing and protecting its technology, products, services,
systems, methods, and operations, and relationships with its customers and
vendors. You also agree that the Company’s competitors would obtain an unfair
advantage if you were to disclose the Company’s Confidential Information (as
defined above) to a competitor, used it on a competitor’s behalf, or if you were
able to exploit the relationships you developed in your role with the Company to
solicit business on behalf of a competitor.
Accordingly, you agree that:
(a) You shall not, either alone or in association with others, for a
period of twelve (12) months after the termination of your employment, directly
or indirectly, on your own behalf, or as an employee, representative or agent of
a third party, by ownership or any type of interest in any business enterprise,
or by
8
any other means whatsoever, become associated with or render services to a
Competitor’s Business. A Competitor’s Business is defined as those entities
listed on Attachment C, including, but not limited to its parents, subsidiaries,
or affiliates, and any entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with a
business enterprise listed on Attachment C.
(b) You shall not, either alone or in association with others, for a
period of twelve (12) months after termination of your employment, directly or
indirectly, call upon or solicit any Company customer, or those of its parents,
subsidiaries, or affiliates, for business that is competitive with the Company’s
business, nor shall you permit a Competitor’s Business controlled directly or
indirectly by you to do so.
(c) You shall not, either alone or in association with others, for a
period of twenty-four (24) months after termination of your employment, directly
or indirectly solicit, induce or attempt to induce, any employee or independent
contractor of the Company, or those of its parents, subsidiaries, or affiliates,
to terminate his or her employment or other engagement, or hire or attempt to
hire as an employee, or engage or attempt to engage as an independent
contractor, any person who is employed or otherwise engaged by the Company, or
any of its parents, subsidiaries, or affiliates, at any time while you were
employed by the Company; provided, that this provision shall not apply to the
solicitation, hiring or other engagement of any individual whose employment or
other engagement with the Company has been terminated for a period of six
(6) months or longer nor general advertising not directed specifically at any of
the prohibited individuals.
You may serve on the Board of any public or private company or as a manager of
any limited partnership provided that the company or partnership is not a
Competitor’s Business.
You agree that these restrictions are reasonable, no greater than what is
required to protect the Company’s legitimate interests with respect to trade
secrets, confidential information and customers, and customer relationships, and
do not impair or prevent you from earning a living.
It is the intention of the parties to restrict your activities only to the
extent necessary for the protection of the Company’s legitimate business
interests. To the extent that this Paragraph of this letter agreement is
determined by a court of competent jurisdiction to be invalid or unenforceable
in any respect or to any extent, the Paragraph shall not be rendered invalid,
but instead shall be automatically amended for such lesser term or to such
lesser extent, or in such other degree, as may grant the Company the maximum
protection and restrictions on your activities permitted by applicable law in
such
9
circumstances. The non-competition and non-solicitation obligations contained
in this letter agreement shall be extended by the length of time during which
you shall have been in breach of any of said provisions.
If you violate the provisions of any of the preceding sections of this
Paragraph, you shall continue to be bound by the restrictions set forth in such
section until the period equal to the period of restriction has expired without
any violation.
8. Cooperation: You agree to make yourself available upon
reasonable notice from the Company or its attorneys to provide truthful
testimony as a witness through declarations, affidavits, depositions or at a
hearing or trial, and to work with the Company in preparation for such event,
and to cooperate with any other reasonable request by the Company in connection
with the investigation, defense or prosecution of any mediation, arbitration,
administrative hearing, lawsuit, or other legal proceeding to which the Company
is or may be a party, either currently pending or filed after the Resignation
Date. If the Company so requests your cooperation in connection with any legal
matter, then the Company agrees to pay for any reasonable out-of-pocket
expenses, such as economy class airfare or lodging, that you incur in connection
with assisting the Company, provided you notify the Company in advance of what
your reasonable expenses are expected to be and receive prior written approval
from the Company for such expenses.
9. Non-Disparagement: Other than as permitted in Paragraph 3(d),
you understand and agree that as a condition for payment to you of the
separation benefit, you shall not make any false, disparaging or derogatory
statements in public or private to any person, entity or media outlet regarding
the Company or the Company Releasees, or about the Company’s or the Company
Releasees’ business affairs, practices, products, services, and financial
condition. The provisions in this Section do not prohibit you from
communicating with the Securities and Exchange Commission, the Department of
Labor, the EEOC, the NLRB, or any government agency.
10. Amendment: This letter agreement shall be binding upon the parties and
may not be abandoned, supplemented, changed or modified in any manner, orally or
otherwise, except by an instrument in writing of concurrent or subsequent date
signed by a duly authorized representative of the parties hereto. You may not
assign any of your rights or delegate any of your duties under this letter
agreement. The rights and obligations of the Company will inure to the benefit
of the Company’s successors and assigns.
11. Waiver of Rights: No delay or omission by the Company in exercising
any right under this letter agreement shall operate as a waiver of that or any
other right. A waiver or consent given by the Company on any one occasion shall
be effective
10
only in that instance and shall not be construed as a bar to or waiver of any
right on any other occasion.
12. Validity: Should any provision of this letter agreement be declared or
be determined by any court of competent jurisdiction to be illegal or invalid,
the validity of the remaining parts, terms or provisions shall not be affected
thereby and said illegal or invalid part, term or provision shall be deemed not
to be a part of this letter agreement.
13. Confidentiality: Other than as permitted in Paragraph 3(d) above, you
understand and agree that the terms and contents of this letter agreement, and
the contents of the negotiations and discussions resulting in this letter
agreement, shall be maintained as confidential by you, your agents and your
representatives and none of the above shall be disclosed except to the extent
required by federal or state law or as otherwise agreed to in writing by an
authorized agent of the Company. The provisions in this Section do not prohibit
you from communicating with the Securities and Exchange Commission, the
Department of Labor, the EEOC, the NLRB, or any government agency.
14. Nature of Agreement: You understand and agree that this letter
agreement is a separation agreement and does not constitute an admission of
liability or wrongdoing on the part of the Company.
15. Voluntary Assent: You affirm that no other promises or agreements of
any kind have been made to or with you by any person or entity whatsoever to
cause you to sign this letter agreement, and that you fully understand the
meaning and intent of this letter agreement. You state and represent that you
have had an opportunity to discuss fully and review the terms of this letter
agreement, including Attachments A, B, and C, with an attorney. You further
state and represent that you have carefully read this letter agreement,
including Attachments A, B, and C, understand the contents herein, freely and
voluntarily assent to all of the terms and conditions hereof, and sign your name
of your own free act.
16. Applicable Law and Consent to Jurisdiction: This letter agreement
shall be interpreted and construed by the laws of the Commonwealth of
Massachusetts, without regard to conflict of laws provisions. You hereby
irrevocably submit to and acknowledge and recognize the jurisdiction of the
courts of the Commonwealth of Massachusetts, or if appropriate, a federal court
located in the Commonwealth of Massachusetts (which courts, for purposes of this
letter agreement, are the only courts of competent jurisdiction), over any suit,
action or other proceeding arising out of, under or in connection with this
letter agreement or the subject matter hereof.
17. Relief: You acknowledge that any violation of the confidentiality,
non-compete, or non-solicitation provisions of this letter agreement at
Paragraphs 6 and 9 above
11
would result in irreparable injury to the Company. Accordingly, in addition to,
and not in lieu of, all other rights and remedies available to the Company, it
shall be automatically entitled to a temporary restraining order and a temporary
or preliminary injunction and to obtain all other available equitable remedies
including a permanent injunction in order to restrain and enjoin any breach of
the confidentiality or non-solicitation provisions in this letter agreement.
The exercise of the Company’s right to obtain injunctive relief for any actual
or threatened damage or injury caused by you shall not prejudice its right to
seek and obtain damages, as further referenced in Paragraph 18, herein.
18. Enforcement and Consequences of Breach Other than as permitted in
Paragraph 3(d) above, you agree that if you assert any claim against the Company
or any of the other Company Releasees in violation of the release and waiver in
Paragraph 3, or if the Company incurs and/or seeks redress for any violation by
you of the letter agreement, you promise and agree to pay all costs, court
costs, fees and expenses, including actual attorney’s fees, incurred by the
Company, and/or any Company Releasees, to enforce this letter agreement and/or
recover and collect damages for any violation, whether or not litigation is
commenced. However, nothing in this letter agreement will interfere with your
right to challenge the enforceability of this letter agreement’s release of
claims under the ADEA, and you shall not be required to tender back payments
made to you nor will you be liable for the costs and attorneys’ fees that the
Company and other Company Releasees incur in connection with a challenge by you
of the foregoing release of claims under the ADEA.
19. Cessation and Repayment of Separation Benefit: By signing below, you
are acknowledging and agreeing that if you breach any of the provisions of this
letter agreement, including if you fail to comply with the confidentiality,
non-competition, and/or non-solicitation obligations owed to the Company as
referenced in Paragraphs 6 and 7 above, and/or if it is subsequently determined
that you violated the law in your former role as an employee of the Company
and/or the Company is sued or incurs the cost of resolving and/or settling a
matter as a result, the Company has the option to cease paying the balance of
any unpaid separation benefit to you. In addition, under the foregoing
circumstances and upon demand from the Company, you will be obligated to repay
any amounts already paid to you by the Company under this letter agreement. You
acknowledge and agree that the Company’s actions in ceasing payment will not
constitute a breach of this letter agreement, that you will remain bound by the
release and waiver provisions set out in Paragraphs 3 and 4 above and that the
Company may pursue all other available legal and equitable remedies against you,
including, but not limited to, enforcement of your confidentiality and/or
non-solicitation obligations.
12
20. Resignation From Subsidiaries: You agree to resign as a director and
officer of Watts Water Technologies, Inc.’s direct and indirect subsidiaries as
of April 1, 2016 and to sign a letter confirming the same with a list of those
specific entities.
21. Entire Agreement: This letter agreement, including Attachments A, B,
and C, contains and constitutes the entire understanding and agreement between
the parties hereto with respect to your separation benefit and the settlement of
claims against the Company, except as provided in Paragraph 6 above, and cancels
all previous oral and written negotiations, agreements, commitments and writings
in connection therewith.
22. Effective Date: You may revoke this letter agreement for a period of
fourteen (14) days after signing it. In order to revoke the letter agreement,
you must submit a written notice of revocation to Debra Ogston by hand at 815
Chestnut Street, North Andover, MA 01845, by email at
[email protected]. This written notice may be sent by email or
hand-delivery. The written notice must be received by Debra Ogston no later
than the close of business on the seventh day from the date you signed this
letter agreement. The letter agreement will not become effective or enforceable,
and no payments will be made, until this revocation period has expired
(“Effective Date”) without being exercised.
If you have any questions about the matters covered in this letter agreement,
please call Debra Ogston at 978-689-6133.
Very truly yours,
Watts Water Technologies
By:
/s/ Robert J. Pagano, Jr.
Name:
Robert J. Pagano, Jr.
Title:
I hereby unequivocally agree to the terms and conditions set forth above and in
Attachment A, B, and C. I have been given at least twenty-one (21) days to
consider this letter agreement (including A, B, and C), and I have chosen to
execute this on the date below. I have been advised to consult an attorney
before signing this letter agreement. I acknowledge that I have not relied on
any representation or statement other than those contained in this letter
agreement. I intend that this letter agreement will become a binding agreement
between the Company and me if I do not revoke my acceptance in fourteen (14)
days.
/s/ Mario Sanchez
14/2/2016
Mario Sanchez
Date
To be returned by April 1, 2016.
13
IF YOU DO NOT WISH TO USE THE 21-DAY PERIOD,
PLEASE CAREFULLY REVIEW AND SIGN THIS DOCUMENT
I, Mario Sanchez, acknowledge that I was informed and understand that I have
21-days within which to consider the attached letter agreement, have been
advised of my right to consult with an attorney regarding this letter agreement
and have considered carefully every provision of this letter agreement, and that
after having engaged in those actions, I prefer to and have requested that I
enter into this letter agreement prior to the expiration of the 21-day period.
Dated:
2/14/16
Mario Sanchez
14
ATTACHMENT A
DESCRIPTION OF SEPARATION BENEFIT
Separation Benefit Eligibility Requirements: You will be eligible for the
separation benefit described below, provided that: (i) you timely sign, and do
not revoke, this letter agreement; (ii) you have not terminated your employment
prior to your Resignation Date and you have not been terminated for Cause;
(iii) in the sole discretion of your management it is determined that you have
effectively transitioned your responsibilities and duties (which may include
customer meetings), cooperated with and executed the transition messaging, and
performed your duties in a professional and timely manner; and (iv) you timely
sign, and do not revoke, the Release of Claims at Attachment B. For purposes of
this letter agreement, Cause shall mean: (a) an act by you constituting a felony
or a misdemeanor involving moral turpitude; (b) fraud or dishonesty on your part
that results in or is likely to result in economic damage to the Company;
(c) gross negligence or misconduct in the performance of your duties; or
(d) refusal to attempt in good faith to implement a reasonable directive of the
Company or failure to perform your assigned duties.
1. The Company will pay you $364,000, less all
applicable taxes and withholdings. This total is the equivalent of 12 months of
your base salary. In addition, to complete the transition of your
responsibilities, the company will provide you $107,000, less all applicable
taxes and withholdings, equivalent to one-third of the value of your equity that
would have vested in August of 2016. (Collectively the “Separation Pay”). You
understand and agree that this Separation Pay includes any mandatory severance,
transition allowances, and termination indemnities or payments, including
payments pursuant to the Dutch Cantonal Court Formula (Kantonrechtersformule),
you might have been entitled to, if any. In addition, the Company will pay you
$17,365.56, less all applicable taxes and withholdings (the “COBRA Pay”). This
total is equivalent to the monthly premium you would have to pay for COBRA (29
U.S.C. § 1161 et seq.) medical coverage (based on your coverage in effect as of
your Resignation Date) times 12. Please note that if the Company, in its sole
discretion, subsequently determines that all or some of its payment of the COBRA
premiums are discriminatory under Section 105(h) of the Internal Revenue Code,
any remaining COBRA payments shall instead be paid to you as additional
separation pay over the same period that the subsidy would have been provided.
Provided you sign, timely return and do not revoke the letter agreement, the
Separation Pay and COBRA Pay will be paid in one lump sum in accordance with the
Company’s normal payroll practices, but in no event earlier than the fifteenth
(15th) day after your execution of this letter agreement and Attachment B.
2. The Company will provide you with Career
Transition Services through Lee Hecht Harrison’s (LHH) six month “Professional
Services Program” should you choose to participate in these outplacement
assistance services. The use of the outplacement services will be available to
you immediately. The cost of these outplacement services
15
will be paid by the Company directly to LHH in accordance with the terms of the
Company’s agreement with LHH.
3. No additional options or stock grants will be
issued prior to your Resignation Date and you will not be eligible for any bonus
payment under the Executive Incentive Bonus Plan, or otherwise, for the 2016
fiscal year.
4. The Company will pay or reimburse reasonable
travel expenses and expenses incurred with respect to your relocation to the
United States, as well as the return of your household goods, subject to the
Company’s relocation benefits policy, provided you move within the twelve (12)
month period after the date of your execution and non-revocation of this letter
agreement.
5. As set forth in your offer letter dated
November 21, 2011, the Company will provide you with Tax Equalization through
the 2018 tax year, including paying the costs incurred by you for Tax Assistance
services through the Company’s tax advisors.
16
ATTACHMENT B
RELEASE OF CLAIMS
1. Acknowledgments of Consideration: You acknowledge that the
promises you are providing in the Release of Claims are a material inducement
and consideration for the Company entering into the letter agreement, to which
this Release of Claims is an attachment (the “letter agreement”). You
acknowledge that, in connection with the letter agreement to which this Release
of Claims is attached, you are receiving substantial payments and benefits from
the Company, which benefits constitute substantial and adequate consideration
for this Release of Claims.
2. Release: This section of the letter agreement is a release of
against the Company and the other releasees defined below arise up to the date
you sign this letter agreement. Please carefully review this section with your
attorney, or other trusted advisor, and do not sign this document unless you
understand what this section says.
(a) In exchange for the amounts and benefits described in Attachment A,
which are in addition to anything of value to which you are entitled to receive,
you and your representatives, agents, estate, heirs, successors and assigns,
absolutely and unconditionally release, remiss, discharge, indemnify and hold
harmless the Company Releasees, from any and all legally waivable claims that
you have against the Company Releasees. Other than as permitted in Paragraph
2(d) below, this means that by signing this letter agreement, you are agreeing
not to bring a legal action in any court, legal forum or agency anywhere in the
world against the Company Releasees for any type of waivable claim arising from
conduct that occurred any time in the past and up to and through the date you
sign this document. Company Releasees is defined to include the Company, Watts
Water Technologies, Inc. and/or any of their respective parents, subsidiaries or
17
retaliation, or any other category protected under applicable law; ; 2) the
laws or regulations regarding unlawful, abusive or unfair dismissal, including
includes any claim you may have for breach of contract, whether oral or written,
express or implied (including your employment offer letter dated November 21,
2011 and Secondment Agreement of December 5, 2011); any claims alleging
constructive discharge; any tort claims (such as claims for wrongful discharge,
tortious interference with contractual relations, emotional distress and
defamation); any claims for equity or employee benefits of any other kind; or
any other legally waivable statutory and/or common law claims.
than as permitted in Paragraph 2(d) below) under the following nonexclusive list
applicable laws, all as amended and any claims under the laws of The Netherlands
including the Dutch Civil Code and Work and Security Act. You are also agreeing
to release the Company Releasees from any and all wage and hour related
claims to the maximum extent permitted by federal and state law. This release
of legal claims includes any wage and hour related claims arising out of or in
any way connected with your employment with the Company, including but not
limited to claims under the Fair Labor Standards Act, the Massachusetts Payment
of Wages Act (Massachusetts General Laws Chapter 149 section 148 and 150),
Massachusetts Overtime regulations (Massachusetts
18
General Laws Chapter 151 section 1A and 1B) and Meal Break regulations
(Massachusetts General Laws Chapter 149 sections 100 and 101) and any other
claims under any federal, state or local law for unpaid or delayed payment of
wages, overtime, bonuses, commissions, incentive payments or severance, missed
or interrupted meal periods, interest, attorneys’ fees, costs, expenses,
liquidated damages, treble damages or damages of any kind to the maximum extent
permitted by law.
“EEOC”), the National Labor Relations Board (the “NLRB”), or any federal, state
file a charge with, or participate in an investigation or proceeding conducted
by, the EEOC, the NLRB, or any other federal, state, or local government
entity. Notwithstanding the foregoing, you agree that if the EEOC, the NLRB, or
any other federal, state, or local government entity commences an investigation
or other legal action on your behalf, you specifically waive and release your
right to recover, if any, monetary damages or other benefits or recovery arising
from the governmental action.
(a) You agree that, by virtue of the Company’s promises and agreements
as set forth in this letter agreement, you have received fair economic value for
any and all potential claims or causes of action you may have against the
Company Releasees, and that you are not entitled to any other damages or
relief. Accordingly, you covenant and agree that you will not file suit seeking
to recover any further damages or relief personal to you against any Company
Releasee, or seek or accept any further economic recovery or relief personal to
you against any Company Releasee, based upon any matter or event existing as of
the date of this letter agreement. While nothing in this letter agreement
precludes you from filing any claim or charge which, as a matter of law, cannot
be waived or released by private agreement, you nonetheless acknowledge that you
have obtained maximum economic benefit by virtue of the consideration in
Section 2 for any claims, waivable or not, and you will not seek further
economic recovery in the future.
(b) As a material term of this letter agreement, you attest that you
19
3. Waiver of Rights and Claims Under the Age Discrimination in
(a) in consideration for the amounts described in Attachment A to the
arose prior to the date this Release of Claims was executed;
after the date this Release of Claims is executed are not waived by you;
(c) you are advised to consider the terms of this Release of Claims
other person of your choosing prior to executing this Release of Claims;
of this Release of Claims, and you knowingly and voluntarily agree to all of the
terms set forth in this Release of Claims; and
(e) in entering into this Release of Claims you are not relying on any
4. Period for Review and Consideration of Release of Claims:
twenty-one (21) days to review this Release of Claims and consider its terms
before signing it.
(b) The 21day review period will not be affected or extended by any
revisions, whether material or immaterial, that might be made to this Release of
Claims.
5. Return of Company Property: You confirm that you have returned
to the Company in good working order (including all copies thereof) all keys,
files, records, equipment (including, but not limited to, computer hardware,
software and printers, wireless handheld devices, cellular phones and pagers),
Company identification, Company proprietary and confidential information and any
other Company-owned property in your possession or control and have left intact
all electronic Company documents, including, but not limited to, those that you
developed or helped to develop during your employment. You further confirm
20
that you have cancelled all accounts for your benefit, if any, in the Company’s
name, including, but not limited to, credit cards, telephone charge cards,
cellular phone and/or pager accounts and computer accounts.
6. Payment of Business Expenses and All Other Compensation: You
acknowledge that you have been reimbursed by the Company for all business
expenses incurred in conjunction with the performance of your employment and
that no other reimbursements are owed to you. You further acknowledge that you
have received payment in full for all services rendered in conjunction with your
employment by the Company and that no other compensation is owed to you, other
than as provided in this letter agreement.
7. Entire Release: This Release of Claims and the letter agreement
to which it is attached constitute the entire agreement between you and the
Company with respect to the subject matter hereof and supersedes all prior
negotiations and agreements, whether written or oral, relating to the subject
matter.
I acknowledge that the execution of this Release of Claims is in further
consideration of the separation benefit set forth in the letter agreement, to
which I acknowledge I would not be entitled if I did not sign this Release of
Claims. I hereby unequivocally agree to the terms and conditions set forth
above. I have been given at least twenty-one (21) days to consider this Release
of Claims and I have chosen to execute this on the date below. I have been
advised to consult an attorney before signing this Release of Claims. I
acknowledge that I have not relied on any representation or statement other than
those contained in this Release of Claims. I intend that this Release of Claims
will become a binding agreement between the Company and me if I do not revoke my
acceptance in seven (7) days.
Employee:
By:
Mario Sanchez
Date
DO NOT SIGN BEFORE RESIGNATION DATE — TO BE RETURNED TO Debra Ogston NO EARLIER
THAN April 1, 2016 BUT NO LATER THAN April 23, 2016.
21
ATTACHMENT C
Rexnord/ Zurn
Aalberts
IMI
AO Smith
Reliance
Uponor
ACO, Germany (Drains)
Armstrong
Cla-val
Georg Fischer
Rehau
Giacomini
Caleffi
22
|
Exhibit 10.1
Noble Corporation
Summary of Directors’ Compensation
Annual Retainer. Each director of Noble Corporation (the “Company”) who is not
an employee of the Company or one of its subsidiaries (a “Non-Employee
Director”) receives an annual retainer as follows:
• $50,000. • 20% is paid in Ordinary Shares of the Company pursuant to
the Noble Corporation Equity Compensation Plan for Non-Employee Directors (the
“Equity Compensation Plan”). • Non-Employee Directors may elect to receive
up to all of the balance in Ordinary Shares or cash. Non-Employee Directors make
elections on a quarterly basis. • The number of Ordinary Shares to be
issued under the Equity Compensation Plan in any particular quarter is generally
determined using the average of the daily closing prices of the Ordinary Shares
for the last 15 consecutive trading days of the previous quarter.
Board Meeting Fees. In addition to the annual retainer received by Non-Employee
Directors described above, all directors receive fees for each meeting of the
Board of Directors attended as follows:
• Non-Employee Directors — $2,000 per meeting attended • Employee
Directors — $100 per meeting attended
Committee Fees. In addition to the annual retainer and meeting fees described
above, each Non-Employee Director receives compensation in respect of his or her
service on committees of the Board of Directors as follows:
• Annual Committee retainers
• Audit Committee Chair — $15,000 per year • Compensation Committee
Chair — $12,500 per year • All other Committee Chairs — $10,000 per year
1
• Committee meeting fees
• Audit Committee — $2,500 per meeting attended • All other Committees
— $2,000 per meeting attended
Equity Compensation. In addition to the compensation described above, each
Non-Employee Director receives equity compensation under the Noble Corporation
1992 Nonqualified Stock Option and Restricted Share Plan for Non-Employee
Directors (the “1992 Plan”) as follows:
• Each Non-Employee Director is granted an option to purchase 2,000 Ordinary
Shares and awarded 4,000 restricted Ordinary Shares on the next business day
after each annual general meeting of members of the Company. • Options are
granted at fair market value on the grant date, which is generally determined
using the average of the daily closing prices of the Ordinary Shares for the 10
business days immediately preceding the grant date, and are exercisable from
time to time over a period commencing one year from the grant date and ending on
the expiration of 10 years from the grant date. • The restricted Ordinary
Shares vest one-third per year over three years commencing one year from the
award date. • Each new Non-Employee Director receives a one-time grant of
an option to purchase 10,000 Ordinary Shares on the first grant date after such
director begins serving on the Board of Directors (instead of the annual grant
of an option to purchase 2,000 Ordinary Shares and award of 4,000 restricted
Ordinary Shares that would otherwise be applicable). This one-time option is
granted on the same terms and conditions as are described above for the annual
grant of an option to purchase 2,000 Ordinary Shares.
Employee Directors do not receive any equity compensation in consideration of
their service on the Board of Directors.
Other. All directors are reimbursed for travel, lodging and related expenses
they may incur in attending meetings of the Board of Directors and Committees.
2 |
EXHIBIT 10-M b
ASSUMPTION AGREEMENT
Dated: August 13, 2008
Colgate-Palmolive Company
300 Park Avenue
Attention: Treasurer
Citibank, N.A., as Administrative Agent
Two Penns Way
New Castle, Delaware 19720
Attention: Bank Loan Syndications
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated as of November 3, 2005 among
Colgate-Palmolive Company (the “Borrower”), the Lenders parties thereto,
Citibank, N.A., as Administrative Agent, Bank of America, N.A., BNP Paribas,
HSBC Bank USA, National Association and JPMorgan Chase Bank, N.A., as
co-syndication agents, and Citigroup Global Markets Inc., as Arranger (as
“Credit Agreement”; terms defined therein being used herein as therein defined),
for such Lenders.
The undersigned (the “Assuming Lender”) proposes to become an Assuming Lender
pursuant to Section 2.15(d) of the Credit Agreement and, in that connection,
hereby agrees that it shall become a Lender for purposes of the Credit Agreement
on August 13, 2008 and that its Commitment shall as of such date be $50,000,000.
The undersigned (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 4.01(e) thereof, the most recent financial statements referred to in
Section 5.01(e) thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assumption Agreement; (ii) agrees that it will, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
Agreement; (iii) appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (iv) agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be performed by it as a
Lender; (v) specifies as its Lending Office (and address for notices) the
offices set forth beneath its name on the signature pages hereof;
and (vi) attaches the forms prescribed by the Internal Revenue Service of the
United States required under Section 2.13 of the Credit Agreement.
The effective date for this Assumption Agreement shall be August 13, 2008. Upon
delivery of this Assumption Agreement to the Borrower and the Administrative
Agent, and satisfaction of all conditions imposed under Section 2.15 as of
August 13, 2008, the undersigned shall be a party to the Credit Agreement and
have the rights and obligations of a Lender thereunder. As of August 13, 2008,
the Administrative Agent shall make all payments under the Credit Agreement in
respect of the interest assumed hereby (including, without limitation, all
payments of principal, interest and commitment fees) to the Assuming Lender.
This Assumption Agreement may be executed in counterparts and by different
and the same agreement. Delivery of an executed counterpart by telecopier shall
be effective as delivery of a manually executed counterpart of this Assumption
Agreement.
This Assumption Agreement shall be governed by, and construed in accordance
[remainder of the page intentionally left blank]
Very truly yours,
BANCO BILBAO VIZCAYA
ARGENTARIA, S.A.
By: /s/ Miguel Lara
Name: Miguel Lara
Title: Managing Director
By: /s/ Cristian Aguirre
Name: Cristian Aguirre
Title: Assistant Vice President,
International Corporate Banking
Address for Notices:
Banco Bilbao Vizcaya Argentaria, S.A.
1345 Avenue of the Americas, 45th Floor
Above Acknowledged and Agreed to:
CITIBANK, N.A., as Administrative Agent
By: /s/ Shannon A. Sweeney
Name: Shannon A. Sweeney
Title: Vice President
COLGATE-PALMOLIVE COMPANY By: /s/ Edward J. Filusch
Name: Edward J. Filusch
Title: Vice President and Corporate Treasurer |
Exhibit 10.48
Redacted Version
Confidential Treatment Marked
Cooperation Agreement
between
1. The Free State of Saxony, represented by the Saxon State Ministry of Finance
and the Saxon State Ministry for Economic Affairs and Labor, represented by the
Minister Dr. Horst Metz and Undersecretary Mrs. Andrea Fischer
- hereinafter referred to as “Saxony” -
and
2. Advanced Micro Devices, Inc., One AMD Place, Sunnyvale, CA 94088, USA
- hereinafter referred to as “AMD” -
and
3. M+W Zander Fünfte Verwaltungsgesellschaft mbH, Lotterbergstr. 30, 70499
Stuttgart, entered under HRB 23351 in the Commercial Register of the Stuttgart
Local Court (Amtsgericht)
- hereinafter referred to “M+W” -
Saxony, AMD and M+W will each be hereinafter referred to as a “Party” and
together as the “Parties”.
Confidential treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as [***]. A complete version of the exhibit has been
Contents
Preamble 3 § 1 Objectives 4 § 2 Formation of a Joint
Undertaking 5 § 3 Evaluation of the Joint Undertaking 5 § 4 Capital
Contribution; Holding Company 6 § 5 Financing 10 § 6 Grants and
Allowances 12 § 7 Counter Guarantees 12 § 8 Accession of an
Additional Industrial Partner 12 § 9 Research and Development 13 § 10
Agreement on Acceptance / Cost Plus Agreement 13 § 11 Service
Agreements 14 § 12 Arbitrator 14 § 13 Non-Discrimination 15 § 14
Warranty by AMD 15 § 15 Liability 15 § 16 Interest 16 § 17
EU Reservation 16 § 18 Conditions Precedent 16 § 19 Duration and
Termination 17 § 20 Confidentiality 18 § 21 Responsibility for Costs
and Expenses 20 § 22 Press Release 20 § 23 Arbitration Agreement
20 § 24 Final Provisions 21
2
PREAMBLE
The maintenance and development of Saxony as a center for microelectronics, in
particular, of Dresden as a high-technology location, is a top priority
political and structural goal of Saxony, in order to maintain existing and
secure new qualified jobs. AMD intends to build a new facility in Dresden for
the production of 300mm silicon wafers on which integrated circuits,
particularly for microprocessors, will be manufactured (the “Wafers”). In
addition to production, own research and development on a considerable scale to
develop up to suitability for industrial production semiconductor manufacturing
technology will be carried out at the new facility.
In December 2002, AMD entered into an extensive agreement with IBM for joint
development (the Joint Development Agreement, hereinafter referred to as the
“JDA”) of a technological basis for the production of chips for high-performance
products of the future. The JDA encompasses cooperation on the 65- and 45 nm
technology generations with the possibility of even smaller sized structures.
This groundwork will be carried out on the basis of the 300 mm Wafers. AMD
intends to use the results of this groundwork under the JDA in a new wafer
production facility in particular for micro processors to be built in Dresden
(hereinafter referred to as “Fab X”) with the support and participation of
Saxony, to develop them to the industrial production stage and to manufacture
them. The manufacturing technology is intended to be adjusted, by continuous and
rapid improvement, to the requirements of mass production and further developed
in accordance with market requirements. The management consultancy Arthur D.
Little GmbH has on the instructions of Saxony examined and confirmed the
technical and economic feasibility of Fab X in a report (hereinafter referred to
as the “ADL Report”).
Fab X is intended to be built beside the existing Fab 30. The commencement of
industrial production is planned for 2006. The full capacity for the exclusive
requirements of AMD is intended to be 13,000 Wafer outs per month. Buildings and
clean room are designed for a capacity of 20,000 Wafer outs per month, which is
to be used [***]*. Up to approx. 1,035, and [***]* up to 1,400 -qualified new
jobs are intended to be created in Fab X. Additional jobs at suppliers will also
result. Saxony attaches particular importance on the fact that the technological
and financial basis of Fab X is secured as much as possible and will be further
developed in Fab X and furthermore that its capital bears
* Confidential treatment has been requested for portions of this exhibit.
3
reasonable interest (“stand alone”). A declaration of intent was entered into
between Saxony and AMD on June 4, 2003, concerning the cooperation. The said
declaration of intent is attached as Appendix A to this Agreement, the purpose
of which is to implement the declaration of intent.
Fab X is intended to be built and operated by a special purpose entity in the
form of a German limited partnership. The Parties intend to hold capital
interests in such entity, and it is up to them whether they hold such interests
directly or through separate holding companies, however, the contribution of
Saxony and of M+W will partly be made in the form of a limited partner
participation, and partly in the form of a typical silent partner participation.
In addition, M+W simultaneously enters into a general contractor’s agreement for
the construction of the necessary building modules and infrastructure. The
general contractor’s agreement is attached as Appendix B hereto.
§ 1 Objectives
1.1 The Parties intend to cooperate as direct or indirect partners for the
purpose of the construction and operation of Fab X as further set out in the
draft limited partnership agreement attached hereto as Appendix 1.1(a) (the
“Limited Partnership Agreement”), and to create the financial bases for this.
Besides, in accordance with the draft agreement attached hereto as Appendix
1.1(b) on the formation of a silent partnership (the “Silent Partnership
Agreement”), Saxony and M+W will participate as typical silent partners in the
joint undertaking (both agreements hereinafter together referred to as the
“Partnership Agreements”). With respect to the limited partner participations
and the silent partner participations of Saxony and M+W, the purchase agreements
which are attached in their draft versions as Appendix 1.1(c) and Appendix
1.1(d) will be executed.
1.2 The joint undertaking is to be provided within the framework of this
Agreement with the tangible and intangible resources and personnel so that a
stand-alone operation of Fab X is ensured to the extent possible and financially
reasonable. This also includes the License Agreement attached as Appendix 1.2.
1.3 The details of the project including the expected investment costs shall be
in accordance with the project description attached hereto as Appendix 1.3.
4
§ 2 Formation of a Joint Undertaking
2.1 AMD has formed a limited liability partnership Limited Liability Company &
Co. KG for the realization of the project.
2.2 The joint undertaking will be conducted in the name of AMD Fab X Limited
Liability Company & Co. KG (hereinafter referred to as “AMD Fab X”).
2.3 Immediately upon taking effect of this Cooperation Agreement (see § 18),
Saxony and M+W shall, in accordance with the Limited Partnership Agreement
attached hereto as Appendix 1.1(a), join AMD Fab X as limited partners with
legal and economic effect as of the day on which they are both entered in the
Commercial Register. The Parties agree to execute the Limited Partnership
Agreement of Fab X and to effect the registration in the Commercial Register
immediately upon taking effect of this Cooperation Agreement. The Parties agree
to sign the Silent Partnership Agreement attached hereto as Appendix 1.1(b)
immediately upon taking effect of this Cooperation Agreement.
2.4 The capital contributions of the Parties will amount to a total of € 905
million, as specified in more detail in Section 4.
2.5 AMD Fab X LLC will conduct the business of AMD Fab X as the general partner
with sole power of management and representation. In addition to those mentioned
in Section 2.3 above, AMD Fab X Holding GmbH and AMD Fab X Admin GmbH shall be
limited partners of AMD Fab X. The conduct of the operative business shall be
the sole responsibility of the general partner AMD Fab X LLC, subject to the
Limited Partnership Agreement. The other general partner will be a German
limited liability company [GmbH] whose shares will be held by Saxony or the
Saxony Holding Company (“Second General Partner”); the Second General Partner
shall have no power of management and no power of representation and will
participate neither in the assets nor in the results of AMD Fab X.
§ 3 ADL Report
On the instructions of Saxony and on the basis of information and intended plans
provided by AMD and AMD’s subsidiaries – in particular the business plan
provided, ADL has prepared the ADL Report on the economic and technological
feasibility. For reasons of strict confidentiality, the ADL Report is not
5
attached to this Agreement, but one copy each will be provided to Saxony as
principal, AMD and M+W. Saxony will grant to AMD Fab X a right of co-use in the
ADL Report. The ADL Report is to be treated with the strictest confidentiality
within the recipients’ organizations. AMD warrants that the information provided
to ADL by AMD and AMD subsidiaries for the purpose of ADL preparing the expert
opinion was given to the best of their knowledge and belief and that the
business plan was drawn up according to recognized commercial principles. If the
forecasts do not come to pass and/or the plans are not achieved, even though the
information provided to ADL for the purpose of their preparing the report was
correct and complete to AMD’s best knowledge and belief and even though the
business plan was drawn up according to recognized commercial principles, this
shall not affect the reciprocal rights of the Parties.
§ 4 Capital Contributions, Holding Company
4.1.1 The parties undertake within the framework of their limited partner
participation, to make the following capital contributions to AMD Fab X:
4.1.2 Limited Partners’ Capital Contributions I
AMD subsidiaries
Capital Contribution € 3,232,000
Saxony or Holding Company
Capital Contribution € 1,105,000
M+W
Capital Contribution € 663,000
Total
Limited Partners’ Capital Contributions I € 5,000,000
Of the Limited Partners’ Capital Contribution I initially a total of €
500,000, i.e. € 323,200 for the AMD subsidiaries and € 110,500 for Saxony, and €
66,300 for M+W, will be entered in the Commercial Register as the liability
capital sums of those partners after taking effect of this Cooperation
Agreement. The entry of the liability capital, which has been increased by €
4,500,000 up to € 5,000,000, will be caused simultaneously for all partners upon
achievement of Saxony’s first milestone (LM I) according to the milestone
regulation attached as Appendix 4.1.1.
6
The AMD subsidiaries have the right to increase prematurely the liability
contribution to be made by them. The Limited Partners’ Capital Contribution I
will become due at the dates set out in Appendix 4.1.1. The second sentence of
Section 4.1.3 shall also apply to the Limited Partners’ Capital Contributions I.
4.1.3 Limited Partners’ Capital Contributions II
AMD subsidiaries Capital Contribution € 581,768,000 Saxony or Holding
Company Capital Contribution € 118,895,000 M+W Capital Contribution
€ 59,337,000 Total Limited Partners’ Capital Contributions II €
760,000,000
The Capital Contributions II shall become due at the dates set out in
Appendix 4.1.1 and will be paid in the installments as specified therein in more
detail. t However, the Capital Contribution I and the first installment of
Capital Contribution II by Saxony and by M+W will become due no earlier than at
such date when transfer of title to the real estate as described in Appendix
4.2.2 of AMD Saxony Limited Liability Company & Co. KG (“AMD Saxony”) to AMD Fab
X has been effected or instead the title re-registration has been applied for
and the entry of such re-registration merely only requires issuance of the
official record of changes by the municipal surveying authority and conveyance
on the basis of such official record of changes.
4.2 Saxony and M+W agree to make the following typical silent partner capital
contributions.
Saxony or Holding Company Capital Contribution € 80,000,000 M+W Capital
Contribution € 60,000,000 Total Typical silent partner capital
contributions € 140,000,000
7
The silent partner capital contributions shall become due at the dates set
out in Appendix 4.1.1 and will be paid in the installments as specified therein
in more detail. However, the first installment of each silent partner capital
contribution will become due no earlier than at such date when transfer of title
to the real estate as described in Appendix 4.2.2 of AMD Saxony Limited
Liability Company & Co. KG (“AMD Saxony”) to AMD Fab X has been effected or
instead the title re-registration has been applied for and the entry of such
re-registration merely only requires issuance of the official record of changes
by the municipal surveying authority and conveyance on the basis of such
official record of changes.
All limited partners and silent partners shall have the right to waive the
requirement that one or all of the specified requirements are satisfied before
the Limited Partners’ Capital Contributions I or II or, insofar as applicable,
their silent partner capital contributions become due by written notice to the
respective other Parties / AMD Fab X.
4.3 The Parties may hold their limited partner and silent participations in AMD
Fab X directly or indirectly through one or more companies (“Holding
Companies”). Other than the respective Party and M+W Zander Facility Engineering
GmbH, no entities may hold an interest in the Holding Companies whose objects
cover the development, manufacture, marketing or sale of semiconductor products
(“Competing Entities”). Entities of the AMD Group are not considered Competing
Entities. Other than M+W Zander Facility Engineering GmbH no Competing Entities
may hold a direct or indirect interest in M+W. In deviation from the preceding
sentences 2 and 4, finance investors who are not themselves engaged in the
design, development, manufacture, marketing or sale of semiconductors may hold
direct or indirect interests in AMD Fab X (above all, through Holding Companies
and M+W). In case of a indirect participation, the respective Party must warrant
that the Holding Company holding the limited partner share in AMD Fab X fulfils
the obligations of the respective Party and/or Holding Company under this
Agreement and under the attached Partnership
8
Agreements. Conversely, the other Parties hereto will grant to such Holding
Company such rights which would be due to the concerned Party in case of a
direct participation. In addition, concurrently with the execution of this
Cooperation Agreement, AMD will issue the guarantees according to Appendix 4.3.
4.4 Insofar as any Party holds a direct or indirect share in a Competing Entity,
such Party agrees to impose the same duties of confidentiality on the persons
assigned by it to the organs of the Competing Entity as provided in section 20.
In case of an indirect participation, the above provision shall be applied
correspondingly insofar as a Holding Company holds a direct or indirect share in
a Competing Entity. Insofar as any Party or Holding Company holds a direct or
indirect majority share in a Competing Entity, the other Parties shall have the
right to require from such Party or Holding Company the transfer of its
shareholding in AMD Fab X, including any silent partner participation, to them
or to a third party (Call Option) in accordance with Article 10.8 of the Limited
Partnership Agreement. In addition, Parties and Holding Companies with a direct
or indirect interests in a Competing Entity are strictly prohibited from
disclosing to the Competing Entity technical information, including information
regarding the technology to manufacture Wafers. M+W Zander Facility Engineering
GmbH will assume an obligation which corresponds to the above provisions, in
accordance with Appendix 4.4.
4.5 The other Parties are aware that Saxony holds an indirect non-majority
interest in Infineon Technologies SC 300 GmbH & Co. KG and that Saxony holds a
non-majority interest in the semi-conductor manufacturer ZMD AG.
4.6 The participation rights of the Holding Company used by Saxony for AMD Fab X
will in each case be exercised in accordance with the decisions of Saxony.
4.7 Saxony guarantees to AMD that the Second General Partner exercises and has
exercised no activity other than the assumption of the general partner position
in AMD Fab X according to the Limited Partnership Agreement. Saxony further
guarantees to AMD that the Second General Partner will at all times be
financially funded such that it is able to perform its liabilities; this does
not include any liabilities incurred by the Second General Partner by virtue of
his position as personally liable partner of AMD Fab X. The aforesaid shall
apply until any replacement of the Second General Partner as provided in Article
10a of the Limited Partnership Agreement.
9
If the Second General Partner is replaced in accordance with Article 10 a
of the Limited Partnership Agreement, AMD guarantees to Saxony that the Second
General Partner exercises and will exercise no activity other than the
assumption of the general partner position in AMD Fab X according to the Limited
Partnership Agreement as long as Saxony and M+W hold a - direct or indirect -
interest in the Partnership. AMD further guarantees to Saxony – from replacement
of the Second General Partner according to Article 10a of the Limited
Partnership Agreement onward and as long as Saxony and M+W hold a direct or
indirect interest in the Partnership – that the Second General Partner will at
all times be financially funded such that it is able to perform its liabilities;
this does not include any liabilities incurred by the Second General Partner by
virtue of his position as personally liable partner of AMD Fab X
§ 5 Financing
§ 5.1 The investment volume is EUR 2,407 million. The total financing for the
years 2003 to 2007 is EUR [***]* million and shall consist of:
5.1.1 the Capital Contributions mentioned at Sections 4.1.1 and 4.2
Capital Contribution AMD Subsidiaries
EUR 585 million
Saxony Capital Contribution
EUR 120 million + EUR 80 m
M+W Capital Contribution
EUR 60 million + EUR 60 m
Total Capital Contribution
EUR 905 million
10
5.1.2 own resources and working capital
Revolving credit facility of AMD
EUR [***]* million
Grants and allowances according to Section 6
EUR 497 million1
Working capital
Total own resources and working capi*tal
Since the investment allowances were calculated on the basis of the
currently applicable legal situation and since it is unclear in what amount
investment allowances can be paid under the future regulation, AMD agrees that
in the event this sum turns out to be lower than calculated they will fill the
financing gap arising. The working capital will by supplemented in accordance
with the AMD Fab X Cost Plus Reimbursement Agreement mentioned in Section 10.2.
5.1.3 third party finance
Bank loans less redemption (EUR 42 million)
EUR 658 million
Total third party finance
EUR 658 million
5.2 The Parties are aware that the requirements of EU law may not be satisfied
in time to cover the financing requirements of AMD Fab X. Because of this, it is
possible that delays in obtaining third party financing for the Fab X could
arise. In this event, AMD undertakes to bridge any financial shortfalls
occurring until March 31, 2004. If the decision of the EU should not be
available by April 1, 2004, the Parties will consult with each other regarding
the continuation of the project. AMD shall then have the right to end the
project. In such case, AMD agrees to pay back the capital contributions made by
Saxony and M+W, if any.
1 Another investment allowance of EUR 46 million is expected to be paid in 2008.
11
5.3 Apart from payment of their capital contributions and without affecting the
provisions of Section 6, Saxony and M+W are not obliged to provide additional
finance, even if the capital of AMD Fab X is not sufficient for its
requirements.
5.4 If the project is terminated by AMD prior to full payment of all
contributions, AMD warrants to M+W that M+W’s liability shall be limited to
[***]* of its paid-in contribution. Any difference amount shall be reimbursed by
AMD to M+W.
§ 6 Grants and Allowances
Saxony supports investment grants in the maximum amount legally permissible
out of the funds of the joint tasks project “Improvement of the Regional
Economic Structure” (GA) – “GA Means”. If the total amount of the investment
grants from GA Means which have been promised in a legally binding way and the
investment allowances granted in a legally binding way exceeds the total grant
admissible pursuant to the EU ruling, the investment allowances granted in a
legally binding way are to be used first.
§ 7 Counter-Guarantees
In the event that AMD is not already liable to the lenders for the loans
guaranteed by the federal government and Saxony, AMD will grant Saxony free of
charge directly enforceable counter-guarantees on first demand for all
guaranteed bank credits provided by Saxony together with the federal government
for AMD Fab X (with an aggregate credit amount of € 700 million).
§ 8 Accession of an Additional Industrial Partner
8.1 The Parties aim to admit an additional [***]* partner who will [***]* of AMD
Fab X, if possible will enter into obligations to [***]* and further, who is
intended to become a partner in AMD Fab X and to contribute capital, perhaps by
way of a capital increase. Saxony and M+W will agree to the acceptance of an
12
[***]* partner proposed by AMD on the basis of the Limited Partnership
Agreement of AMD Fab X, their respective approval not to be withheld or delayed
without good cause.
8.2 Such partner shall be accepted on appropriate conditions. If amendments or
adjustments to this Agreement or the Partnership Agreements of AMD Fab X or
other contractual agreement become necessary, the Parties will endeavor to agree
on a mutually acceptable provision. Saxony and M+W will refuse their agreement
thereto only if their interests are materially adversely affected.
§ 9 Research and Development
9.1 AMD aims to develop in the Fab X the 65 nm technology generation up to
industrial production stage. The milestones for Saxony stated in Appendix 4.1.1
set forth the aimed-at time schedule up to production stage.
9.2 AMD Fab X also is to further develop the 65 nm technology generation and to
prepare for implementation of the following technology generations also through
its own development.
9.3 Research in Fab X is to take place in the areas indicated in Appendix 9.3.
§ 10 Agreement on Acceptance/AMD Fab X Cost Plus Reimbursement Agreement
10.1 AMD undertakes to take the entire production of AMD Fab X (in warmed-up
operation up to 13,000 Wafer outs per month).
10.2 The details of the acceptance obligation and the terms thereof arise from
the AMD Fab X Cost Plus Reimbursement Agreement attached in the draft version as
Appendix 10.2.
13
§ 11 Service Agreements
11.1 AMD shall ensure that AMD Saxony shall make available to AMD Fab X general
administrative services (for example IT, personnel administration,
administrative services of a commercial nature) if required at competitive terms
(at arms’ length). In other respects AMD Fab X shall set up the required
resources itself or obtain them from third parties.
11.2 In relation to the services required by AMD Fab X from today’s perspective,
AMD Fab X, AMD, AMD Fab X Holding GmbH and AMD Saxony will enter into the Fab X
Management Services Agreement which is attached hereto as Appendix 11.2. AMD
will be jointly and severally liable for the obligations of AMD Saxony under the
agreement.
§ 12 Arbitrator
If and insofar as the Parties are unable to agree on the achievement of the
milestones (see Appendix 4.1.1) and on the requirements stated in Section 14.1,
the Parties will make efforts to immediately agree on an arbitrator and will
instruct such arbitrator in the name of all the Parties for him to determine the
disputed issues with final and binding effect on the Parties within the
framework of the positions taken by the Parties. The Parties shall be given
reasonable opportunity to expound their positions in writing and at one or more
hearings before the arbitrator. The arbitrator shall state grounds for his
decision. In his decision the arbitrator shall also decide on the division of
the costs of the arbitration procedure based on who won and who lost the dispute
(§§ 91 et seqq. ZPO – German Code of Civil Procedure), provided that each Party
shall itself be responsible for the costs of its own advisors. The facts
determined by the arbitrator shall have final and binding effect on the Parties.
If the Parties are unable to agree on an arbitrator within 10 bank working days,
then at the request of any Party the President of the Higher Regional Court of
Dresden will appoint an expert or a consulting firm as arbitrator, such
appointment having binding effect on the Parties. Such person or consulting firm
shall not have, and within the past five (5) years shall not have had, business
relations with any of the Parties.
14
§ 13 Non-Discrimination
13.1 AMD undertakes not to discriminate unreasonably against Fab X in favour of
comparable factories.
13.2 Strategic decisions in relation to Fab X, and which concern the Dresden
location, will not be taken against the wishes of Saxony, in accordance with the
provisions concerning voting rights in the Limited Partnership Agreement of AMD
Fab X.
§ 14 Warranty by AMD
14.1 AMD warrants irrespective of fault, by way of an independent guarantee, in
accordance with § 311 ss. 1 Civil Code,
that the provision for Fab X, in the event that this is technologically
feasible, will be supplemented up to the point at which suitability for
industrial production (= “Technical Completion” as defined in the Summary of
Terms and Conditions regarding the grant of the bank loan to Fab X in the amount
of € 700 million) has been achieved.
14.2 In the event of the breach of warranty, the other Parties are initially
each entitled and obliged to demand that AMD provide proper performance within a
reasonable period. These rights cannot be enforced if the other Party has
committed a material breach of contract.
14.3 The availability of the results of the JDA to Fab X for the production of
AMD products will be regulated by way of conclusion of the license agreement
according to Appendix 1.2.
§ 15 Liability
15.1 Unless otherwise provided in this Agreement, the Parties are liable only in
the case of intent and gross negligence.
15.2 There shall be no liability on the part of Saxony on the basis of the draft
agreements submitted according to Section 20.5 or under § 839 Civil Code and
Art. 34 of the Constitution, due to a breach of the confidentiality in
connection with the political decision-making. Damage claims of any kind
whatsoever, including, but not limited to, claims under § 839 Civil Code and
Art. 34 of the Constitution,
15
shall not exist in this respect. The waiver of claims for damages, in
particular in relation to § 839 Civil Code, shall be deemed to be a contractual
obligation for the benefit of third parties. Technical data and technical
details shall be protected comprehensively. In this respect, there shall be no
restriction on liability according to sentence 1 above.
§ 16 Interest
All interest under this Agreement and the attached Partnership Agreements,
shall be calculated pursuant to the 365/360 method.
§ 17 EU Reservation
The grant of the allowances envisioned in this Agreement (investment
grants, investment allowances and guarantee) require the approval of the
Commission of the European Union.
§ 18 Conditions Precedent
18.1 With the exception of the provisions of Sections 5.2, 18, 20, 21, 22, 23,
and 24 which become effective upon the signature of this Agreement, this
Agreement is subject to the following conditions precedent:
18.1.1 announcement of exemption or clearance by the Federal Cartel Office, or
expiry of the relevant waiting periods,
18.1.2 evidence of the granting of the EU approval of the subsidies according to
Section 5;
18.1.3 consent of the competent bodies of the federal government to the
federal/state guarantee securing the bank loans for Fab X;
18.1.4 consent and/or noting with approval, by the Budget and Finance Committee
of Saxony,
18.1.5 provision of the overall financing, in which connection the Syndicated
Loan Agreement with Dresdner Bank/Dresdner Kleinwort Wasserstein or another
replacement arranger/underwriter may include customary conditions to
disbursement
16
including, but not limited to the grant of the federal/state guarantee and
Section 5;
18.1.6 legal opinion of the law office O’Melveny & Myers LLP confirming that AMD
Fab X is a “wholly-owned subsidiary” in the sense of the JDA.
18.1.7 signing of the General Contractor Contract with M+W Zander Facility
Engineering GmbH; and
18.1.8 the approval of the supervisory boards of Jenoptik AG and of M+W Zander
Holding AG by December 15, 2003.
18.2 If the conditions set out in Sections 18.1.2 and 18.1.5 are not satisfied
in whole or in part, AMD is entitled, but not obligated, to take over such
portion of the financing which is missing as a result thereof. In this event,
the relevant condition shall be deemed to be satisfied. If the conditions stated
in Section 18.1 have not been satisfied by December 31, 2004, even in
consideration of Section 18.2, any later occurrence of the conditions shall be
excluded.
§ 19 Duration and Termination
19.1 This Agreement is effected for an indefinite period of time, but at least
until December 31, 2015.
19.2 If the project is ended in accordance with Section 5.2, AMD shall have the
right to terminate this Cooperation Agreement.
19.3 If any Party is behind schedule with the performance of a material
obligation under this Agreement, performance of the relevant obligation may be
demanded by one of the other Parties in writing provided such Party has
substantially performed its respective obligations and undertakings under this
Agreement and the Appendices. If the obligation is not performed within 30
calendar days thereafter, the said other Party may terminate this Agreement by
notice in writing. If the principal obligation in respect of which the
contracting party is in default is also an obligation pursuant to the Limited
Partnership Agreement, only the provisions of the Limited Partnership Agreement
shall apply.
17
19.4 The right of termination of this Agreement for good cause shall remain
unaffected.
19.5 A termination notice is effective only if, with effect as of the same time,
the Limited Partnership Agreement and the Silent Partnership Agreement of AMD
Fab X is effectively terminated.
19.6 The rights and duties of any Party under this Agreement, except for
Sections 20 and 23, shall end once such Party or its holding entity has validly
withdrawn as partner (i.e. both as limited and as silent partner) of AMD Fab X.
19.7 This Agreement shall terminate, except for Sections 20 and 23, without a
notice of termination being required, upon the full withdrawal of Saxony and of
M+W as direct or indirect partners (i.e. both as limited and as silent partners)
of AMD Fab X.
§ 20 Confidentiality
20.1 Each Party is obliged, in relation to all confidential information, of
which it becomes aware in the preliminary stages of the negotiations and
presentations involved in the execution of this Agreement and/or in its capacity
as a Party to this Agreement and/or to the agreements which are attached hereto
as appendices, to maintain confidentiality vis-à-vis third parties. Each Party
is obliged to use such information only for the purpose for which it has
received same. The Parties undertake to subject their employees,
representatives, shareholders and lenders to confidentiality to the usual
extent. Each Party shall permit access to such information by its employees,
agents, lenders and advisors only if and to the extent that they require such
information for the performance of this Agreement and are subject to
corresponding confidentiality obligations. Each Party may communicate
confidential information to members of the legal, accountancy or taxation
professions which are subject to professional confidentiality obligations, if
and to the extent this is necessary in their own legitimate interests. The
communication of confidential information to the Banks financing AMD Fab X/the
capital contributions of the AMD Fab X partners, to the guarantors guarantying
for the bank loans or to the European Union is permissible and must be subject
to the corresponding confidentiality obligations (in the case of the EU: insofar
as legally required). Further exceptions to the confidentiality obligation may
be permitted in individual cases by separate agreements.
18
Notwithstanding any of the above or below provisions in this Agreement or
in any other written or oral agreement made between the Parties or by which the
Parties are bound, each Party shall be entitled to disclose the U.S. income tax
treatment and the U.S. income tax structure of this Agreement and of the
agreements related herewith. This right to disclose includes the right of each
Party to involve without any limitation tax consultants regarding the U.S.
income tax treatment and the U.S. income tax structure of this transaction and
of the agreements related therewith. This right does not include the disclosure
of any other information, including but not limited to, (i) any part of
documents not relating to the U.S. income tax treatment and the U.S. income tax
structure of the transactions as set out in this Agreement or the agreements
related herewith; (ii) the identity of participants or potential participants in
the transaction, except to the extent that such information relates to the U.S.
income tax treatment and the U.S. income tax structure of the transaction as set
out in this Agreement or in the agreements related herewith; (iii) the existence
or status of negotiations; (iv) any financial information other than the
financial information relating to the U.S. income tax treatment and the U.S.
income tax structure of the transactions as set out in this Agreement or in the
agreements related herewith; or (v) any other condition or detail which is of no
importance with respect to the U.S. income tax treatment or the U.S. income tax
structure of the transactions as set out in this Agreement or in the agreements
related herewith. The partners acknowledge that this confirmed right shall not
be deemed to be a waiver by any Party of any of their particular rights under
the attorney-client privilege or the non-disclosure privilege under Section
7525(a) of the United States Internal Revenue Code 1986, as amended.
20.2 This obligation shall extend beyond the ending of this Agreement, provided
that the obligations of confidentiality as agreed in any Appendix remain
unaffected.
20.3 This obligation does not apply to information which is generally known, or
information demonstrably independently worked out by the receiving Party, or
information demonstrably obtained legally from third parties without any breach
of the confidentiality obligation.
19
20.4 This obligation shall also not apply insofar as the Parties are obliged to
disclose the received information under statutory provisions or official orders.
In such event the affected Party is obligated immediately to inform the other
Parties of the official order or the application of a statutory provision, as
applicable, if possible in advance.
20.5 The Parties note that Saxony must present the draft agreements in Saxon
ministries, the cabinet of Saxony and the parliament of Saxony, in the course of
the political decision-making process. Technical data and technical details are
to be comprehensively protected.
§ 21 Responsibility for costs and expenses
AMD shall bear its costs and the reasonable cost of the involvement of
external advisors of Saxony and the Saxony Holding Company. These include, in
particular, the costs and expenses associated with the report of ADL and the
legal advice of Saxony and the Saxony Holding Company by Rechtsanwälte Clifford
Chance Pünder, in connection with this Cooperation Agreement for the period from
June 4, 2003 until signing of this Cooperation Agreement. In addition, from the
date of signing of this Cooperation Agreement until December 31, 2003 the amount
of [***]* will be borne for expenses and costs of Saxony and/or the Saxony
Holding Company.
§ 22 Press Release
The Parties will publish a joint press release, which is reached in mutual
agreement between them, concerning this project at a date also to be agreed upon
between them. In addition, the parties undertake not to publish any further
notice concerning the project unless required by law or by applicable stock
exchange regulations, such as, for example, ad-hoc publication or the notice is
agreed between the parties.
§ 23 Arbitration Agreement
23.1 All disputes arising out of or in connection with this Agreement or
regarding its validity shall be conclusively decided in accordance with the
Rules of Arbitration
20
of the Deutsche Institution für Schiedsgerichtsbarkeit e.V. (DIS) ousting
the jurisdiction of the courts of law.
23.2 The place of the arbitration proceeding shall be Dresden.
23.3 The number of arbitrators shall be three.
23.4 German substantive law shall apply.
23.5 The arbitration proceeding shall be conducted in German.
§ 24 Final Provisions
24.1 This Agreement (including its appendices) contains all agreements between
the Parties and replaces all agreements previously reached between the Parties
concerning its subject matter. There are no oral side agreements. In the event
of any conflict or inconsistency between this Cooperation Agreement and an
agreement which is attached hereto, the provision in such latter agreement shall
fully supersede the corresponding previous provisions of this Cooperation
Agreement.
24.2 Unless notarized form is prescribed, all amendments, additions and
rescission of this Agreement require written form in order to be effective. This
applies also to waiver of written form.
24.3 No Party may transfer rights under this Agreement to a third party without
the prior written consent of the other Parties. This does not apply to cases
expressly provided for in this Agreement.
24.4 If any provision of this Agreement is or becomes partially or wholly
invalid or unenforceable or if this Agreement does not contain a per se
necessary provision, the validity of the remaining provisions of this Agreement
shall not thereby be affected. The same applies if an omission in this Agreement
is ascertained. In the place of the invalid or unenforceable provision or for
filling in the omission of a provision, such a legally admissible provision
shall be deemed to have been agreed as corresponds to what the Parties would
have intended or which would have been agreed by the Parties according to the
meaning and purpose of this Agreement, if they had been aware of the invalidity
or unenforceability of the relevant provision or of the omission.
21
Place, Date: Dresden, November 20, 2003
/s/ Robert J. Rivet
/s/ Horst Metz /s/ Andrea Fischer
(Advanced Micro Devices, Inc.) (Saxony)
/s/ Juergen Giessmann /s/ Helmut Laub
(M+W Zander Fünfte Verwaltungsgesellschaft mbH)
22 |
Exhibit 5.1 [Citi Logo] Citigroup Inc. 425 Park Avenue New York, New York10022 October 17, 2007 Citibank (South Dakota), National Association 701 East 60th Street, North Sioux Falls, South Dakota 57117 Ladies and Gentlemen: I am the General Counsel, Finance and Capital Markets of Citigroup Inc. and, in such capacity, I have acted as counsel to Citibank (South Dakota), National Association in connection with the issuance and sale of $500,000,000 aggregate principal amount of Citiseries Floating Rate Class 2007-A9 Notes of October 2017 (Legal Maturity Date October 2019) (the "Notes") by Citibank Credit Card Issuance Trust (the "Issuance Trust").The Notes will be issued pursuant to an Indenture dated as of September 26, 2000 between the Issuance Trust and Deutsche Bank Trust Company Americas (formerly Bankers Trust Company), as Trustee, as amended by Amendment No. 1 thereto dated as of November 14, 2001 and an Issuer Certificate, dated as of October 17, 2007, relating to the Notes (the "Terms Document" and together, the "Indenture"). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in or pursuant to the Indenture. I, or attorneys under my supervision, have examined and relied upon the following: signed copies of the Indenture and the Registration Statement on Form S-3 (Registration No. 333-131355), as amended (the "Registration Statement"), for the registration of the Collateral Certificate and the Notes under the Securities Act of 1933, as amended (the "Act"); the prospectus dated February 5, 2007 and prospectus supplement dated October 10, 2007 relating to the Notes (together, the "Prospectus"); a specimen of the Notes, and originals, or copies certified or otherwise identified to my satisfaction, of such corporate records, certificates or documents as I have deemed appropriate as a basis for the opinion expressed below.In such examination, I (or such persons) have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to me (or such persons) as originals, the conformity to original documents of all documents submitted to me (or such persons) as certified or photostatic copies and the authenticity of the originals of such copies. Based upon and subject to the foregoing, I am of the opinion that when the Notes have been duly executed, authenticated and delivered in accordance with the Indenture, and sold in the manner described in the Prospectus, the Notes will be legally issued, fully paid, non-assessable and binding obligations of the Issuance Trust, and the holders of the Notes will be entitled to the benefits of the Indenture. Citibank (South Dakota), National Association Citiseries Class 2007-A9 October 17, 2007 Page 2 The foregoing opinion is subject to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws affecting creditors' rights generally from time to time in effect and subject to general principles of equity, regardless of whether such is considered in a proceeding in equity or at law. I am admitted to the practice of law only in the State of New York and my opinion is limited to matters governed by the laws of the State of New York and Federal laws of the United States of America. I consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to a Current Report on Form 8-K for incorporation into the Registration Statement and to the reference to my name in the Prospectus constituting a part of such Registration Statement under the heading "Legal Matters". In giving such consent, I do not thereby admit that I come within the category of persons whose consent is required under Section 7 of the Act, or the rules and regulations of the Securities and Exchange Commission thereunder. Very truly yours, /s/ Michael S. Zuckert Michael S. Zuckert
|
Exhibit 10.84
3/1/05
TEGG® LICENSE AGREEMENT
THIS AGREEMENT,executed as of this _____day of _____, 200___ by and between TEGG
Corporation, a Delaware corporation, with its principal place of business at
2801 Liberty Avenue, Pittsburgh, Pennsylvania 15222 [hereinafter "TEGG"], and
____________________________________________________________________________________________
(Company Name)
a ___________________________________ organized under the laws of
__________________, with its principal
(Corporation, Partnership,
Proprietorship) (State)
place of business at
____________________________________________________________________________________________
["LICENSEE"].
WHEREAS,TEGG has developed a distinctive and proprietary system for the
development of additional business for electrical contractors that involves
engaging in the repair, replacement diagnostics, enhancements and maintenance of
electrical systems, telecommunication systems, data communication systems,
indoor and outdoor lighting, electrical motors, motor starters, capacitors
(power factor correction systems), uninterruptible power supplies, electrical
power conditioning systems, surge protection devices, harmonic filters,
electrical power monitoring systems, emergency lighting systems, security
systems, fire alarm systems, emergency generation systems, power substations,
oil analysis of transformers and oil circuit breakers, battery single and multi
strap intercell resistance measurements, development of single line diagrams,
panel schedules and circuit identification, energy conservation systems,
building automation systems, and related activities, including quality control
standards for these activities under the Proprietary Marks as defined below; and
WHEREAS, the additional business contemplated by providing TEGG services shall
consist of providing services in connection with the design, installation,
start-up, warranty, testing (such as harmonics, infrared, power factor, ground
resistance, ultrasonic, RMS voltage, RMS current, megger, and voltage
disturbances), inspecting, cleaning, maintaining records, alignment, tightening,
balancing loads, circuit breakers (testing, calibration and upgrading),
reviewing code compliance, lubrication, maintaining liquid levels, scheduling,
insulating, shutdown, securing, preventive maintenance, corrective maintenance,
predictive maintenance, service, calibration, relocating, adjustment, repair,
operation, modifications, additions, replacement and sale of parts and supplies
of electrical distribution systems, telecommunication systems, indoor and
outdoor lighting, electrical power conditioning systems, surge protection
systems, harmonic filters, electrical power quality monitoring systems, electric
motors, motor starters, capacitors (power factor correction systems),
uninterruptible power supplies, emergency lighting systems, security systems,
fire alarm systems, electric generation systems, power substations, oil analysis
of transformers and oil circuit breakers, battery single and multi strap
intercell resistance measurements, development of single line diagrams, panel
schedules and circuit identification, energy conservation systems, related
activities and such other activities and services as TEGG approves in writing
for providing TEGG services and for using the Proprietary Marks [the “TEGG
Service”]; and,
WHEREAS,TEGG is the owner of the entire right, title and interest in the trade
name, trademark and service mark "TEGG," and such other trade names, service
marks and trademarks as are now designated, or may hereafter be designated by
TEGG, for use in association with or to identify TEGG and TEGG Service [the
"Proprietary Marks"], and TEGG continues to develop, use and control such
Proprietary Marks; and
WHEREAS,LICENSEE desires to expand its existing electrical contracting business
to include providing TEGG Service and have the right to use TEGG’S Proprietary
Marks, and wishes to obtain certain exclusive rights and other benefits from
TEGG for that purpose as defined in this Agreement, including without
limitation, to receive the training and assistance provided by TEGG to be able
to provide TEGG Service to customers, to obtain sales leads, national accounts
and assigned accounts in an exclusive territory; proprietary sales techniques
and computer systems, and staffing assistance and initial and ongoing
management, sales, technical, computer systems, and accounting training and
support from TEGG, and,
WHEREAS, LICENSEE acknowledges and understands that TEGG has granted and
continues to grant other persons and entities certain exclusive rights to
provide TEGG Services in certain areas and that TEGG or its affiliates may also
provide TEGG Services in certain areas. These persons and entities who have such
rights during the term of this Agreement are referred to in this Agreement as
“Authorized TEGG Licensee”; and,
WHEREAS, LICENSEE also wishes to become an Authorized TEGG LICENSEE under the
terms and conditions of this Agreement; and,
WHEREAS,LICENSEE understands and acknowledges the importance of TEGG'S
reputation for excellence and uniform quality standards in the repair,
replacement, diagnostics, enhancements and maintenance of electrical systems and
the necessity of providing TEGG Services in strict conformity with all aspects
of TEGG'S standards and requirements.
1
NOW, THEREFORE, the parties, in consideration of the mutual promises contained
herein and intending to be legally bound, agree as follows:
I. APPOINTMENT
1. Grant
In accordance with the terms and conditions of this Agreement, TEGG grants to
LICENSEE during the term of this Agreement the right, and LICENSEE undertakes
the obligation, to provide TEGG Services and use the Proprietary Marks in strict
conformity with all aspects of TEGG'S quality standards, as they may be
reasonably updated and modified from time to time by TEGG.
2. Location
LICENSEE is authorized by this Agreement to provide TEGG Services only from the
following office site which LICENSEE represents is located within the Primary
Marketing Area as defined in Section 4 of this Agreement:
[the "Location"]. LICENSEE shall not relocate the office from which the TEGG
Services are provided except (i)to another location within its defined Primary
Marketing Area, and (ii) with the prior written approval of TEGG, which approval
shall not be unreasonably withheld or delayed. LICENSEEshall not provide TEGG
Services at, or from, any other Location unless a separate TEGG License
Agreement, TEGG Satellite Location Agreement, or other agreement is executed
between the parties.
3. Term
The term of this Agreement shall be six (6) years commencing on the Effective
Date as defined in Section 43 of this Agreement (the “Initial Term”).
4. Territory
(a)
LICENSEE'S primary marketing area encompasses the following geographical
territory:
(the “Primary Marketing Area.”)
Provided LICENSEE is not in default of this Agreement or any related agreements,
TEGG shall not itself provide TEGG Services in, nor grant the right to another
person or entity to provide TEGG Services to any other person or entity to be
located in, the Primary Marketing Area, and shall not itself provide TEGG
Services at, nor authorize any other person or entity to provide TEGG Services
at, any facility located within the Primary Marketing Area except as follows:
(i)
with the prior written consent of LICENSEE;
or
2
(ii)
by TEGG or an affiliate of TEGG or another Authorized TEGG Licensee for any
reason set forth in subparagraphs 4(b)(i) through 4(b)(viii) and Section 11 of
this Agreement (Account Referrals, Purchasing Programs and Subcontracting).
(b)
LICENSEE'S Territorial Limitations:
LICENSEE shall not solicit or provide TEGG Services outside LICENSEE'S Primary
Marketing Area, except as follows:
(i)
if the facility is located within the primary marketing area of another
Authorized TEGG Licensee and LICENSEE shall have obtained the prior written
consent of such Authorized TEGG Licensee; or
(ii)
if the facility is not located within the primary marketing area of another
Authorized TEGG Licensee, LICENSEE shall have obtained the prior written consent
of TEGG; or
(iii)
if LICENSEE has been providing electrical service at a facility outside the
Primary Marketing Area within the one (1) year period prior to the Effective
Date of the Initial Term of this Agreement and continues to provide electrical
service at suchfacility within each subsequent year of the Initial Term of this
Agreement; or
(iv)
if a facility is being installed or has been installed outside the Primary
Marketing Area by LICENSEE within one (1) year prior to the Effective Date of
the Initial Term of this Agreement; or
(v)
if LICENSEE is responding to a customer's written request for open competitive
bids and the scope of work is specified in writing by the customer; or
(vi)
ifTEGG or LICENSEE has given another Authorized TEGG Licensee a referral of a
customer interested in TEGG Service at a facility located within the primary
marketing area of such other Authorized TEGG Licensee on terms acceptable to the
customer and such other Authorized TEGG Licensee either: (a) declines to engage
in such service; or (b) fails to accept the project on the proposed terms within
a reasonable time period after being notified of the opportunity; or
(vii)
if TEGG has subcontracted, or attempted to subcontract with, another Authorized
TEGG Licensee to provide TEGG Services pursuant to a national or regional
contract within such other Authorized TEGG Licensee’s primary marketing area,
and such other Authorized TEGG Licensee either: (a) declines to perform TEGG
Services or (b) fails to accept the subcontract on the proposed terms within
five (5) days after being offered the subcontract, or
(viii)
if LICENSEE is responding to a customer's written request to perform a clearly
defined scope of work at a specific facility or on a specific component or
system within that facility.
(c)
Resolution of Territorial Disputes:
LICENSEE shall notify TEGG in writing if it believes in good faith that another
Authorized TEGG Licensee has violated any of the territorial rights granted
under this Agreement. Upon receipt of such written notice, TEGG shall, within a
reasonable period of time, appoint a three (3) member Review Committee
consisting of two (2) representatives from other Authorized TEGG Licensees, and
one (1) executive of TEGG to investigate the alleged violation(s) and make
recommendations to the President of TEGG as to whether those territorial rights
have been violated, and the remedy to be awarded, if any. No representative from
another Authorized TEGG Licensee may serve on a Review Committee if the primary
marketing area under the representative’s agreement with TEGG is in dispute or
is contiguous to a primary marketing area that is in dispute.
All disputes before the Review Committee shall be governed by the Commercial
Arbitration Rules of the American Arbitration Association. All costs of the
investigation and resolution of the dispute shall be paid by the Licensees
involved in the dispute as allocated by the Review Committee. No member of the
Review Committee shall be held liable for any statements made in connection with
the proceedings, including statements made in any recommendations to TEGG'S
President, and any right of action against any member(s) of the Review Committee
and/or TEGG for any wrongful conduct while acting in the course of the dispute
resolution function is hereby waived. LICENSEE agrees that the remedy set forth
in this paragraph shall be LICENSEE’S exclusive remedy for territorial
disputes. All communication in connection with the Review Committee proceedings
shall be confidential and non-discoverable in any litigation, arbitration or any
other proceeding.
3
(d)
Reservation of Rights:
Except as otherwise expressly provided in this Agreement, TEGG shallretain all
of its rights and discretion with respect to its Proprietary Marks and itself
providing, or granting rights to others to provide, TEGG Services anywhere in
the world, including the right to: (a) use the Proprietary Marks and grant to
others the right to use the Proprietary Marks and provide, and grant others the
rights to provide, TEGG Services at any location outside the Primary Marketing
Area and on such terms and conditions as TEGG deems appropriate; and (b) sell
any products or services under the Proprietary Marks or under any other
trademarks, service marks or trade dress, through other channels of distribution
other than those specified in this Agreement. In no event will TEGG or any
affiliated company of TEGG be precluded from owning, operating, associating, or
being affiliated with any person or entity that owns or operates business(es)
using trademarks different from the Proprietary Marks, even if such business(es)
operate within the LICENSEE'S Primary Marketing Area, provided, however, that,
except as provided in this Agreement, in no event shall TEGG authorize others to
provide TEGG Services within the LICENSEE'S Primary Marketing Area.
II. OBLIGATIONS OF TEGG
5. Initial Training
TEGG shall make available and require all of LICENSEE'S personnel, whether
incumbent or newly hired, without a separate charge, to attend initial training
in providing TEGG Services at times and places as determined by TEGG for
individuals performing the following functions: Principal, TEGG Monitoring and
Executive Oversight; General Management; Service Management; Business Systems
Management; Sales, Sales Management, Construction Management, Electrical
Testing, Electronic Testing, Preventive Maintenance, Predictive Maintenance,
Safety, Inspection, Repair, Replacement, Estimating, Pricing, Proposal Writing
and Proposal Presentations. LICENSEE shall pay all wages, travel, living and
other expenses of its employees during all initial training.
6. Other Training
TEGG shall periodically make available at LICENSEE'S Location or at a location
chosen by TEGG, or on-line training, continuing education, training, refresher
training, and such other mandatory training as LICENSEE may need or as TEGG may
determine to provide, without a tuition fee. TEGG may make available optional
specialized training from time to time and the only tuition or other fees will
be charged on a cost reimbursable basis only. LICENSEE shall pay all wages,
travel, living and other expenses of its employees in connection with all such
training.
If TEGG provides training or assistance beyond that normally provided to other
Licensees, which is not an obligation of TEGG under the License Agreement, TEGG
will provide such additional training or assistance for a mutually agreed upon
fee and at a mutually agreeable date(s), and location(s). LICENSEE shall pay
all wages, travel, living and other expenses of its employees during such
training or assistance.
7. Monitoring and Recommendations
TEGG shall periodically provide appraisals and remedial recommendations for
LICENSEE’s TEGG Service Business, including its performance in sales, technical
performance, operations administration, accounting, personnel administration,
training, cost control and staffing. Individual counseling and coaching of
employees of LICENSEE who manage others who provide, or who themselves provide,
TEGG Services will also be provided periodically for the purpose of optimizing
the growth and profitability of business derived from being an Authorized TEGG
Licensee.
8. Confidential Manual
TEGG shall lend to LICENSEE, for its use during the term of this Agreement, the
TEGG Service Confidential Manual [hereinafter the "COM"]. LICENSEE'S right to
use the COM as provided in this Agreement shall be non-exclusive and
non-transferable. The COM, which may be in one or more volumes, or provided via
the Internet (TEGGNet), sets forth requisite quality standards for providing
TEGG Services. TEGG may, from time to time and at its sole discretion, revise,
add to or delete from the COM and shall furnish all revised materials to
LICENSEE without additional cost to LICENSEE. LICENSEE will designate a Trustee
to maintain the COM current at all times. All COM materials shall be considered
confidential and proprietary by TEGG, and LICENSEE shall be bound by the
provisions thereof.
In order to protect the reputation and goodwill of TEGG and the Proprietary
Marks and to maintain uniform quality standards of operation for providing TEGG
Service, LICENSEE agrees to provide the TEGG Services in accordance with the
COM. The term COM includes all tangible means of communicating information
concerning TEGG'S standards and specifications for providing TEGG Services to
LICENSEE, including without limitation, written materials, video tapes, audio
tapes, computer diskettes or compact discs and Internet (TEGGNet). The COM
shall at all times remain the sole property of TEGG. TEGG may from time to time
make reasonable revisions to the contents of the COM or provide written
materials, video tapes, audio tapes, computer diskettes, compact discs and use
the Internet (TEGGNet) to modify, add to or delete from the applicable
standards. LICENSEE expressly agrees to comply promptly with each such new or
revised quality standard. LICENSEE shall at all times ensure that its copies of
the COM and other operational standards are kept current. In the event of any
4
disputes as to the contents thereof, the terms of the master copy maintained by
TEGG at TEGG'S home office shall be controlling.
9. Computer Programs
TEGG shall make available to LICENSEE one or more computer programs and/or
licenses to operate the programs on computers at LICENSEE'S Location. LICENSEE
shall, at its cost, obtain and maintain at its Location computers and programs
that conform to technical specifications set forth in the COM. The computer
programs provide LICENSEE with required maintenance pricing and tasking;
electrical component problem reporting and record keeping; and sales tracking
and management reporting.
All computer programs provided by TEGG shall at all times be the sole property
of TEGG, who may make reasonable revisions to such programs in its sole
discretion from time to time. TEGG shall provide LICENSEE with a non-exclusive,
non-transferable license to use such computer programs at the Location
identified in Section 2 of this Agreement. LICENSEE shall not modify, copy nor
allow others to modify or copy the computer programs, and shall not allow others
to obtain or utilize them.
TEGG warrants to LICENSEE that it has full right, power and authority to grant
to LICENSEE the license TO THE COMPUTER PROGRAMS provided for IN THIS
AGREEMENT. TEGG MAKES AND LICENSEE RECEIVES NO OTHER WARRANTY WHATSOEVER
REGARDING THE COMPUTER PROGRAMS, WHETHER EXPRESSED OR IMPLIED. WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, TEGG HEREBY EXPRESSLY DISCLAIMS ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. TEGG HAS
NOT MADE ANY ORAL REPRESENTATIONS OR WARRANTIES ABOUT THE COMPUTER PROGRAMS.
TEGG DOES NOT WARRANT THAT THE COMPUTER PROGRAMS ARE ERROR FREE, BUT WILL, ON A
PRIORITY BASIS, WITHIN A REASONABLE TIME PERIOD, REPLACE, DEBUG AND/OR REPAIR
ANY PROGRAM (S) ON WHICH THERE ARE ERRORS.
10. Confidential Use of LICENSEE Information
TEGG shall, during the term of this Agreement and after its termination, hold in
confidence financial information relating to LICENSEE, although it may use such
information, without identification of LICENSEE, in statistical analyses of the
performance of Authorized TEGG Licensees generally. Such analyses may be
disclosed to third parties. TEGG may, in addition, disclose any information
required by law or Court Order. In the event of a subpoena or other court,
administrative, or legal order seeking financial information relating to
LICENSEE, TEGG shall immediately notify LICENSEE in writing of the existence of
such subpoena or order and LICENSEE shall be permitted to appear, object to,
defend, or otherwise attempt to prevent the release of the information relating
to LICENSEE at LICENSEE'S expense. TEGG shall not be liable for any damages to
LICENSEE which result from the disclosure of such information unless such
disclosure occurs as the result of gross negligence on the part of TEGG. Nor
shall any disclosure by TEGG constitute cause for termination of this Agreement
by LICENSEE.
11. Account Referrals, Purchasing Programs and Subcontracting
TEGG may provide to LICENSEE referrals of potential customers which may or may
not be located within the LICENSEE'S Primary Marketing Area.
TEGG reserves the right, in its sole discretion, to negotiate and make available
for the benefit of all Authorized TEGG Licensees, manufacturers' service
programs, insurance carrier TEGG Service programs, TEGG Service account
referrals, TEGG Service customers’ multi-location programs, and TEGG'S national
or regional purchasing programs. LICENSEE shall not be obligated, but is
encouraged, to participate in any and all of these programs if or as they become
available.
Due to the size, diversity, and complexity, of a single customer or project,
LICENSEE may at times request additional and/or centralized project management
and control from TEGG. On a customer-by-customer or project-by-project basis,
TEGG may fulfill such a request, at a mutually agreed upon fee, as a result of
extraordinary performance of duties on behalf of LICENSEE.
TEGG may contract independently with third parties to provide TEGG Services for
their benefit and/or engage in other business with such third parties that do
not involve providing TEGG Services. In such situations, TEGG shall not itself
provide TEGG Services but shall subcontract the portions of the project that
involve TEGG Services to the Authorized TEGG Licensee that has the primary
marketing area where the work is to be performed at a mutually determined
price. If the Authorized TEGG Licensee for that primary market area is unable
to or unwilling to perform such work, then TEGG, in its sole discretion, shall
subcontract the work to another Authorized TEGG Licensee or others of its
choosing.
5
III. OBLIGATIONS OF LICENSEE
12. Initial License Fee
In consideration of the execution of this Agreement by TEGG and rights granted
to LICENSEE in this Agreement, LICENSEE shall pay to TEGG an initial license fee
of EIGTHY FOUR THOUSAND DOLLARS ($84,000), which fee shall be deemed fully
earned, nonrefundable, and payable upon execution of this Agreement. LICENSEE
may, at its option, (a) pay $7,000 upon execution of this Agreement and the
remaining $77,000 of the initial license fee in eleven consecutive monthly
installments of $7,000 each beginning on the 5th day of the firstmonth
following the Effective Date and continuing on the 5th day of each month
thereafter until paid in full _____; (b) pay a discounted lump sum initial
license fee of SEVENTY FOUR THOUSAND DOLLARS ($74,000) upon execution of this
Agreement _____; or (c) pay a discounted split payment structure of SEVENTY SIX
THOUSAND DOLLARS ($76,000), which is to be paid in two payments of THIRTY EIGHT
THOUSAND DOLLARS ( $38,000); the first payment is to be paid upon execution of
this Agreement, and the second payment of THIRTHY EIGHT THOUSAND ($38,000) is to
be paid after completion of TEGG’S initial sales training by LICENSEE’S first
employee with TEGG Business sales responsibility ______.
LICENSEE elects the option initialed above.
13. Royalty Fee
In consideration of the grant of exclusive rights to provide TEGG Services in
the Primary Marketing Area as set forth in this Agreement, LICENSEE shall pay a
monthly royalty fee set forth in the following schedule:
Monthly Royalty Fee Schedule
12-Month Period
Per Month
First
$2,700
Second
$3,200 Plus Inflation Adjustment
Third
$3,700 Plus Inflation Adjustment
Fourth
$4,300 Plus Inflation Adjustment
Fifth
$4,800 Plus Inflation Adjustment
Sixth
$5,300 Plus Inflation Adjustment
and each Subsequent 12 Month Period
When LICENSEE renews this Agreement in accordance with Section 30 of this
Agreement, LICENSEE shall pay a monthly royalty fee of $5,300 plus cumulative
annual inflation adjustments during the Renewal Term(s).
LICENSEE shall begin paying the monthly royalty fee due under this Agreement on
the 5th day of the 1st month following completion of TEGG’S initial sales
training by LICENSEE’S first employee with TEGG Business sales responsibility.
Such royalty fee payments shall continue throughout the Initial Term of this
Agreement and all Renewal Term(s). Each monthly royalty fee payment shall be
made based upon the foregoing Monthly Royalty Fee Schedule, and be due no later
than the 5th day of each consecutive month.
The Monthly Royalty Fee Schedule shall be adjusted on the 1st day of January
each year to reflect inflation. The inflation adjustment shall apply to this
Agreement during each twelve (12) month period following the next anniversary of
the Effective Date. The basis for this inflation adjustment shall be the
"Consumer Price Index-United States City Average, All Items, for Urban Wage
Earners" for the immediately preceding calendar year ending September 30 as
presently published in the "Monthly Labor Review" of the United States
Department of Labor, Bureau of Labor Statistics. In the event the Bureau of
Labor ceases publishing the Consumer Price Index or materially changes the
methods of its computation or other features thereof, LICENSEE agrees to accept
comparable statistics published by another recognized authority to be chosen by
TEGG in the exercise of its reasonable discretion.
Past due payments are subject to an interest charge for late payment which shall
be the highest rate permitted by applicable law.
LICENSEE’S obligation to pay the monthly royalty fees specified in this
Agreement for any Renewal Term(s) shall arise at the end of the Initial Term or
at the end of any immediately preceding Renewal Term.
14. Local Advertising and Promotion of Proprietary Marks
LICENSEE, in its discretion and, at its expense, may, pursuant to this
Agreement, subject to TEGG’S prior approval, promote TEGG Services and use
TEGG'S Proprietary Marks in the Primary Marketing Area through any means,
including without limitation placing telephone advertisements in the local
Yellow Pages and inserting e-commerce messages on their own web page that refer
or relate to their grant of a license to provide TEGG Services. All local
advertising and promotion that refer to or use the TEGG Services or the
Proprietary Marks, including without limitation use of the Proprietary Marks on
vehicles, all printed materials, uniforms and other identification in any media
(except as to prices to be advertised) shall be subject to the prior approval of
TEGG in the manner set forth in the COM.
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15. Internet Advertising
LICENSEE may, in its discretion and at its expense, maintain a World Wide Web
page or otherwise maintain a presence or advertise on the Internet or any other
public computer network. Subject to the prior approval of TEGG in the manner
set forth in the COM and this Section 15, LICENSEE agrees to use the Proprietary
Marks on its web site exclusively as TEGG expressly permits. LICENSEE shall
submit to TEGG for its prior approval any domain name, web site links and web
site content that uses or is associated with the Proprietary Marks. LICENSEE
agrees not to post any of TEGG'S proprietary, confidential or copyrighted
material or information on its web site. LICENSEE agrees to list on its web
site, any web site maintained by TEGG, and any other information TEGG requires
in the manner TEGG requires.
16. Pursuit of Business
LICENSEE shall engage in and actively use its best efforts to develop customers
for TEGG Services and shall devote its best efforts to the management,
operation, sales, and promotion of such business. LICENSEE shall make available
continuous emergency service on a 24-hour basis during the entire term of this
Agreement. LICENSEE shall establish a separate TEGG Division as a segregated
profit center, including separate accounting (at least as to its gross margins)
which shall actively pursue customers for TEGG Services [the "TEGG
Division"]. LICENSEE shall take all reasonable steps as TEGG may from time to
time deem necessary to ensure the separation of the TEGG Division or other
activities devoted to promoting, advertising, offering and providing TEGG
Services from other business(es) carried out by LICENSEE.
LICENSEE shall at all times proactively promote the sale of TEGG Services.
LICENSEE acknowledges that full development of the business potential of
offering TEGG Services throughout the Primary Marketing Area may include hiring
a sufficient number of qualified sales professionals and assigning minimum sales
quotas to them in order to fully develop the commercial potential of the TEGG
Services available, which number of sales professionals and sales quotas shall
be commercially reasonable for the size, demographics and business potential of
LICENSEE’S Primary Marketing Area. LICENSEE may use its discretion in such
personnel decisions; provided, however, that LICENSEE acknowledges that TEGG
considers the inclusion of a sufficient number of qualified sales professionals
to promote the TEGG Services to be an essential part of developing additional
business from the rights granted by this Agreement.
17. Use of Name and Mark
LICENSEE may use and promote the Proprietary Marks at LICENSEE'S sole cost and
expense, utilizing such Proprietary Marks on business cards, stationery,
uniforms, service vehicles and other identity media of LICENSEE or its TEGG
Division. Whenever LICENSEE uses the TEGG trademark or other Proprietary Marks
designated by TEGG, LICENSEE shall note that it is a LICENSEE of TEGG. All uses
of the Proprietary Marks by LICENSEE shall be subject to TEGG'S written
approval. LICENSEE may continue to utilize its existing vehicle identification
program provided LICENSEE integrates TEGG'S Proprietary Marks with such existing
identification program in a manner approved by TEGG. TEGG reserves the right to
change or alter any Proprietary Marks at any time and at its sole discretion
without incurring any liability to TEGG.
In the event that TEGG changes or alters any Proprietary Marks, LICENSEE shall
have at least six (6) months at LICENSEE'S sole cost and expense, to modify its
use of any of the Proprietary Marks on LICENSEE'S business cards, stationary,
uniforms, service vehicles and any other identity media of LICENSEE of its TEGG
Division.
LICENSEE shall not use TEGG'S Proprietary Marks for any purpose other than in or
in connection with the advertising, marketing, promotion, selling and providing
TEGG Services or in any manner not approved in writing by TEGG. Without TEGG’S
prior approval, LICENSEE shall not use or include any of TEGG'S Proprietary
Marks in or as part of its corporate or other formal business name. LICENSEE
shall not use the word “TEGG” as all or part of any Internet domain name
registered to the LICENSEE, its subsidiaries, affiliates, parent organizations,
or any other individual or organization. LICENSEE shall file and maintain any
required assumed name or fictitious name registrations and shall execute any
documents deemed necessary by TEGG to obtain protection for TEGG'S Proprietary
Marks or to maintain their continued validity and enforceability.
LICENSEE agrees and acknowledges that TEGG is the owner of all rights, title and
interest in and to the Proprietary Marks and the goodwill associated with and
symbolized by them and that LICENSEE'S use of such Proprietary Marks pursuant to
this Agreement does not give LICENSEE any ownership or other interest in or to
the Proprietary Marks, other than as provided in this Agreement. LICENSEE
further agrees and acknowledges that its right to use the Proprietary Marks is
limited to such uses as are authorized under this Agreement and that any
unauthorized uses thereof shall constitute an infringement of TEGG'S rights.
Any and all goodwill arising from LICENSEE'S use of the Proprietary Marks by
virtue of, and pursuant to, this Agreement shall inure solely and exclusively to
TEGG'S benefit and, upon expiration or termination of this Agreement, no
monetary amount shall be assigned as attributable to any goodwill associated
with LICENSEE'S use of the Proprietary Marks. LICENSEE agrees and acknowledges
that TEGG may itself use and grant rights to others to provide TEGG Services and
to use the Proprietary Marks and that TEGG may establish, develop and grant
rights to use other proprietary marks and provide other proprietary services
different from the rights granted in this Agreement, without offering or
providing LICENSEE with any such rights. LICENSEE agrees and acknowledges that
the Proprietary Marks are valid and serve to identify TEGG, TEGG Services and
other Authorized TEGG Licensees and LICENSEE shall not, during the term of this
Agreement or after its expiration or termination, directly or indirectly contest
the validity or ownership of the Proprietary Marks. In the event that
litigation involving the Proprietary Marks is instituted or threatened against
LICENSEE, LICENSEE shall promptly notify
7
TEGG and shall cooperate fully with TEGG in defending such litigation. TEGG
shall be responsible for the defense thereof and shall indemnify and hold
harmless Licensee against any and all liability, costs or expenses (including
attorney's fees) arising out of infringement of the Proprietary Marks.
18. Staff and Personnel Development
During the term of this Agreement, the provision of TEGG Services by LICENSEE
shall be under the direction of, and managed by, a General Manager (to be
mutually agreed upon by TEGG and LICENSEE), who shall be subject to the approval
of TEGG, which approval shall not be unreasonably withheld or delayed. The
General Manager shall devote sufficient time to such management. The General
Manager shall complete the initial training courses provided by TEGG to the
reasonable satisfaction of TEGG.
In the event the designated General Manager shall no longer serve in this
management function for any reason, or in the event the designated General
Manager shall be unable to perform his/her functions for a period of ninety (90)
days or more as a result of illness, disability or other incapacity, LICENSEE
shall appoint a successor, with the approval of TEGG. The successor General
Manager shall complete the initial training courses to the reasonable
satisfaction of TEGG.
In addition to the designated General Manager, LICENSEE’S TEGG Division, shall
be staffed by personnel responsible and accountable for the promotion, sales and
service provided by TEGG Services, including without limitation persons
performing the following functions: Sales Management; Operations/Operations
Management; Accounting, Job Costing, Service Report Auditing, Material Costing
and Invoicing, Purchasing, Financial Reporting, Payables, Clerical Task and
Management; TEGG Certified Electricians and Electronic Technicians [the "TEGG
Technical Professionals"], Administrative, and at least one fully dedicated TEGG
Sales Professional. This personnel shall be chosen by LICENSEE and subject to
the approval of TEGG, which approval shall not be unreasonably withheld or
delayed and shall complete the initial training courses to the reasonable
satisfaction of TEGG.
TEGG and LICENSEE acknowledge the value of trained and competent employees and
the necessity of having career paths in order to attract such personnel and to
provide incumbent employees of LICENSEE opportunities to advance. Therefore,
TEGG and LICENSEE agree that TEGG will at the request of LICENSEE, provide
consultation and certain assistance to LICENSEE in personnel planning,
assessing, recruiting, personnel development, training, performance appraisals
and compensation administration in order to develop and maintain a pool of
qualified and upwardly mobile employees to meet the expanding personnel
requirements of LICENSEE. TEGG will assist LICENSEE in assessment and
motivation of incumbent employees and in recruiting personnel from outside the
LICENSEE'S organization in accordance with the conditions and charges set forth
in the COM. LICENSEE agrees that the consultations, and any other assistance
and services provided by TEGG shall not be considered an interference with the
business or contractual relations of LICENSEE or to be the exercise of
sufficient control over LICENSEE’S employees to subject TEGG to any liability
for any acts, errors or omissions by LICENSEE’S employees.
19. Confidential Information
LICENSEE acknowledges that all information contained in the COM and other
written communications regarding TEGG and TEGG Services issued by TEGG and in
other materials concerning TEGG and TEGG Services and its operation, is
confidential and proprietary and agrees to treat and maintain such confidential
and proprietary information as TEGG'S property, to use such information only in
connection with advertising, promoting, marketing, offering, selling and
providing TEGG Services in accordance with this Agreement, and to refrain from
copying or reproducing any portion of such information without TEGG'S prior
written consent. LICENSEE agrees not to disclose such confidential and
proprietary information to others (including its shareholders) during the term
of this Agreement or after its expiration or termination, except to LICENSEE'S
employees or agents whose job duties require knowledge thereof and LICENSEE'S
attorneys, accountants, and other professionals, financing sources and others
required to know such information in order for LICENSEE to conduct its business
operations in an appropriate fashion, or to the extent reasonably necessary to
evaluate the information set forth therein provided LICENSEE remains fully
responsible for any disclosure by such individuals. LICENSEE shall require each
of its employees to execute at the time of commencing employment with LICENSEE
or at the time of executing this Agreement, whichever is sooner, a
Confidentiality Agreement in the form prescribed in the COM as currently
revised, requiring them to hold such information in strictest confidence.
TEGG shall not be liable to LICENSEE for any current or former LICENSEE'S
employee's breach of the Confidentiality Agreement. TEGG shall provide
reasonable assistance and cooperation to LICENSEE in LICENSEE'S attempt to
enforce a current or former employee's Confidentiality Agreement or to pursue a
remedy for breach of the Confidentiality Agreement.
Information shall not be deemed to be confidential and/or proprietary pursuant
to this Agreement if: (a) such information comes into the public domain without
breach of this Agreement; or, (b) such information can be shown by the LICENSEE
to have been received from a third party without a breach of this Agreement; or,
(c) such information can be demonstrated by documentary evidence by the LICENSEE
to have been known to it before the execution by the LICENSEE of this Agreement;
or (d) disclosure is required by law.
LICENSEE shall not be in violation of this Agreement by communicating, divulging
or using information or knowledge which is general or common to the industry,
whether or not said information is learned in connection with the rights granted
by this Agreement. TEGG acknowledges and agrees that during the course of the
Agreement between LICENSEE and TEGG,
8
TEGG may obtain from the LICENSEE confidential and proprietary information of
LICENSEE. TEGG acknowledges and agrees that during the term of this Agreement
and after the expiration of the Initial Term or any Renewal Term(s), that except
as to TEGG’S employees or agents whose job or duties require knowledge thereof,
that TEGG shall not disclose such confidential and proprietary information.
20. Management Information and Accounting System
LICENSEE shall keep books and records reflecting or relating to its promotion
and sales of its TEGG Division, in such manner as to provide the minimum
reporting and internal control requirements for management control and
accounting of its TEGG Division as mutually agreed by LICENSEE and TEGG.
21. Quality of Performance
In order to protect the reputation and goodwill of TEGG, the "TEGG" name and
logo, other Proprietary Marks and the TEGG Services, Licensee shall provide the
highest quality of performance, professionalism and service to its customers for
TEGG Services, shall fulfill all of its contractual obligations to its
customers, staff with a sufficient number of TEGG Technical Professionals to
perform the service and maintenance work, perform all work in accordance with
all TEGG Tasking maintenance schedule requirements, perform all work in
compliance with the current National Electrical Code and appropriate safety
standards, assure the professional appearance of all of its employees and
uniformed TEGG Technical Professionals and shall promote, offer, sell and
provide TEGG Services in conformity with such reasonable uniform quality
standards of performance, techniques and procedures as TEGG may from time to
time set forth in the COM or otherwise in writing. To ensuresuch quality, TEGG
shall have the right to review the appearance and qualifications of LICENSEE'S
personnel, regulate the types and quality of the test instruments, safety items,
parts and equipment used in performing TEGG Service, examine the schedule of
LICENSEE'S work, audit the quality of LICENSEE'S work without intention to
interfere with its customers' premises, and contact LICENSEE'S customers in
connection with the quality of the work performed. If any work performed by
LICENSEE does not meet TEGG'S quality standards, LICENSEE shall take immediate
steps to correct such situation. Failure by LICENSEE to conform to any of the
requirements of this Section may be deemed by TEGG to be a default under this
Agreement.
22. Maintenance and Auditing of Records
LICENSEE shall maintain its books and records in accordance with generally
accepted accounting principles and state and federal regulations consistently
applied. Books and records of the TEGG Division shall be further maintained in
the form and manner set forth in the COM. All books and records of LICENSEE
shall be preserved for at least three (3) years from the date of their
preparation. LICENSEE shall submit to TEGG, in a timely manner, reports,
records, information and data relating to its TEGG Division as TEGG may
designate in the COM.
23. Involvement in Other Business
LICENSEE, its principal representative, employees, directors, officers,
partners, proprietor, or any owner owning five percent (5%) or more of the
outstanding voting shares of the LICENSEE shall not, during the term of this
Agreement, engage directly or indirectly in any other business performing
activities included within the definition of the TEGG Services contained in this
Agreement without the prior written consent of TEGG. In addition, none of the
foregoing shall divert or attempt to divert any business or customer for TEGG
Services to any other business which is not TEGG, TEGG’s affiliates or Another
Authorized TEGG Licensee, or to any competitor, by direct or indirect inducement
or otherwise, or do or perform, directly or indirectly, any other act injurious
or prejudicial to the goodwill associated with the Proprietary Marks and TEGG
Services. LICENSEE shall require its employees performing managerial or
supervisory functions and its employees receiving any training from TEGG to
execute similar covenants in the form set forth in the COM.
24. Information Exchange
All ideas, concepts, methods, techniques and materials growing out of or germane
to providing TEGG Services and related activities, whether or not constituting
protectable intellectual property, created or acquired by the LICENSEE during
the continuance of this Agreement shall be disclosed promptly to TEGG and shall,
TEGG, subject to the right of LICENSEE to use such ideas, concepts, methods,
techniques and materials during this Agreement without further cost to
LICENSEE. LICENSEE agrees to execute such assignments or other documents as
requested by TEGG for securing intellectual property rights in such ideas,
concepts, methods, techniques or materials.
The parties agree that the intent of section 24 of the License Agreement is to
provide all Licenses in the TEGG system with the benefit of innovations and
improvements developed by Licensees that are related to TEGG Service. Nothing
in Section 24 of this License Agreement shall be construed to in any way limit
or constrain RS Services, Inc’s intellectual property rights to innovations or
improvements that are unrelated to providing TEGG Service, including the
development of the LightMasterPlus, MotorMasterPlus, and other energy
management/conservation products the company has under development now and in
the future.
9
25. Insurance
LICENSEE shall continue to maintain during the entire term of this Agreement,
from an insurance carrier acceptable to TEGG, (a) workmen's compensation
insurance, employer's liability insurance and such other insurance as may be
reasonably required by TEGG in the statutory amounts required by each state in
which it conducts business, and (b) comprehensive general liability insurance,
including contractual liability coverage and automobile liability insurance, in
a minimum amount of $2,000,000. LICENSEE shall name TEGG, its officers,
directors, employees, affiliates and parents as additional insureds under such
policy. In addition, LICENSEE shall maintain such other insurance as is
applicable to special risks created by LICENSEE'S business. LICENSEE shall
supply to TEGG certificates of insurance evidencing compliance with these
requirements. The certificates of insurance shall include a statement by the
insurer that the policy or policies will not be canceled or materially altered
without at least thirty (30) days' prior written notice to TEGG.
26. Taxes, Indebtedness and Compliance with Laws
LICENSEE shall promptly pay when due all taxes and all accounts and other
indebtedness of every kind incurred by LICENSEE. LICENSEE shall comply with all
federal, state and local laws, rules and regulations and shall timely obtain any
and all permits, certificates or licenses necessary for the conduct of the
business of the LICENSEE. LICENSEE shall notify TEGG in writing within five (5)
days of the commencement of any action, suit or proceeding or the issuance of
any order, writ, injunction, award or decree of any court, agency or other
governmental instrumentality which may adversely affect the operation or
financial condition of LICENSEE.
27. Independent Contractor
It is understood and agreed that this Agreement does not create a fiduciary
relationship between TEGG and LICENSEE, that LICENSEE is, and shall remain an
independent contractor. Nothing contained in this Agreement or otherwise shall
constitute either party as an agent, partner, subsidiary, employee, servant or
legal representative of the other for any purpose whatsoever. LICENSEE shall be
responsible for the hiring, firing, disciplining and payment of wages,
employment taxes and benefits for all employees.
LICENSEE shall not have authority to incur any obligations or responsibilities
on behalf of TEGG or bind TEGG by any representation, and agrees not to hold
itself out as having such authority. LICENSEE shall not enter into any
contracts or incur any obligations in the name of TEGG or under the name "TEGG"
but shall enter into all contracts in its own corporate or company name and at
its own risk and expense. LICENSEE shall be solely responsible for the
direction, control and management of LICENSEE'S business and LICENSEE'S agents
and employees.
If applicable law shall imply a covenant of good faith and fair dealing in this
Agreement, the parties hereto agree that such covenant shall not imply any
rights or obligations that are inconsistent with a fair construction of the
terms of this Agreement. Additionally, if applicable law shall imply such
covenant, TEGG and LICENSEE acknowledge and agree that (a) this Agreement (and
the relationship of the parties which is inherent from this Agreement) grants
TEGG the discretion to make decisions, take actions and/or refrain from taking
actions not inconsistent with its explicit rights and obligations hereunder that
may favorably or adversely affect the interests of LICENSEE; (b) TEGG shall use
its business judgment in exercising such discretion based on its assessment of
its own interests and balancing those interests against the interests of
Authorized TEGG Licensees generally (including TEGG and its affiliates), and
specifically without considering the individual interests of LICENSEE or any
other particular Authorized TEGG Licensee or TEGG; (c) TEGG shall have no
liability to LICENSEE for the exercise of its discretion in this manner, so long
as such discretion is not exercised unreasonably toward LICENSEE; and (d) in
absence of such bad faith, no trier of fact in any legal action or arbitration
proceeding shall substitute its judgment for the business judgment so exercised
by TEGG.
LICENSEE agrees to conspicuously identify itself in all dealings with its
customers, contractors, suppliers, public officials and others as an independent
licensee of TEGG. LICENSEE agrees to give notice of independent ownership in
any reasonable fashion that TEGG may specify and require from time to time, in
the COM or otherwise.
28. Variance of Standards and Terms
LICENSEE acknowledges that because complete and detailed uniformity for all
Authorized TEGG Licensees under many varying conditions may not be possible or
practical, TEGG reserves the right, as it may consider in the best interests of
all concerned, to vary standards for any Authorized TEGG Licensee based upon the
peculiarities of the particular primary marketing area or circumstances, density
of population, business potential, population of trade area, existing business
practices or any other condition which TEGG considers important to the
successful operation of any LICENSEE. LICENSEE will have no right to require
TEGG to disclose any such variation to LICENSEE or to grant LICENSEE the same or
a similar variation under this Agreement.
LICENSEE further agrees that TEGG will have the right to grant the rights to
provide TEGG Services and to use the Proprietary Marks to other Authorized TEGG
Licensees under terms that may differ from the terms of this Agreement, so long
as the different provisions are due to the rights being granted at materially
different times or other non-arbitrary distinctions. For these reasons, TEGG'S
obligations and rights with respect to its various Authorized TEGG Licensees may
from time to time differ materially from the terms and conditions of this
Agreement, without in any way altering or affecting the provisions of this
Agreement. LICENSEE acknowledges that it will have no right to require TEGG to
grant LICENSEE the same or a similar variation under this Agreement.
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29. Indemnification
LICENSEE shall indemnify, defend and hold harmless TEGG, its subsidiaries,
affiliates and parent companies and each of their respective owners, directors,
officers, members, partners, employees, agents and representatives and each of
their respective successors and assigns ("the TEGG Indemnified Parties") from
any and all losses, liabilities, claims or demands whatsoever (including,
without limitation, costs, expenses and attorneys' fees in connection therewith)
arising directly or indirectly from, or in any manner based upon, occasioned by,
or attributable to the operations of LICENSEE and/or its TEGG Division, the
promotion, advertising, marketing and provision of TEGG Services, any other
activity of LICENSEE, or LICENSEE’S breach of this Agreement. However, LICENSEE
shall not be required under this Paragraph to indemnify for any claims arising
out of intentional or negligent acts or omissions of the TEGG Indemnified
Parties.
TEGG shall indemnify, defend and hold harmless LICENSEE, its subsidiaries,
affiliates and parent companies and their respective owners, directors,
their respective successors and assigns ("the LICENSEE Indemnified Parties")
from any and all losses, liabilities, claims or demands whatsoever (including
without limitation costs, expenses and attorneys’ fees in connection therewith)
arising directly or indirectly from or in any manner based upon, occasioned by
or attributable to the operations of TEGG, any other activity of TEGG or TEGG’S
breach of this Agreement. However, TEGG shall not be required under this
Paragraph to indemnify for any claims arising out of intentional or negligent
acts or omissions of the LICENSEE Indemnified Parties.
IV. RENEWAL, TRANSFER AND TERMINATION
30. Renewal
LICENSEE may renew this license, without payment of a renewal fee, for
anadditional period of six (6) years (the “Renewal Term”) provided that:
(a)
LICENSEE has given TEGG written notice of its intent to renew not less than six
(6) months nor more than nine (9) months prior to the end of the Initial Term or
any Renewal Term.
(b)
LICENSEE is not in material default of any provision of this Agreement, any
amendment hereto or any other agreement between LICENSEE and TEGG or its
subsidiaries and affiliates, and is then in substantial compliance with all the
terms and conditions of such agreements during the term of those agreements.
(c)
LICENSEE executes, at least two months before the end of the current term,
TEGG'S then-current form of License Agreement or other agreement, which is being
offered to prospective Licensees and to incumbent Licensees, which agreement
shall supersede in all respects this Agreement, and the terms of which may
differ from the terms of this Agreement including, without limitation, a higher
monthly royalty fee, a shorter or longer renewal period, and an increased
Primary Marketing Area. LICENSEE shall not, however, be required to pay the
initial license fee stated in such agreement, nor shall TEGG be obligated to
provide the introductory services given to an initial LICENSEE as stated in that
agreement, notwithstanding the foregoing renewal Agreement shall not materially
alter the rights of LICENSEE under this Agreement.
(d)
LICENSEE complies with TEGG'S then-current qualification and training
requirements.
(e)
LICENSEE complies with TEGG'S then-current requirements for test instruments and
safety items.
31. Transfer by TEGG
TEGG shall have the right to transfer or assign all or any part of its rights or
obligations herein to any person or legal entity, including, but not limited to,
an affiliated company.
32 Transfer by LICENSEE
LICENSEE understands and acknowledges that the rights and duties set forth in
this Agreement are personal to LICENSEE and neither LICENSEE nor any person,
partnership or corporation holding a fifty percent (50%) or greater interest in
LICENSEE shall sell, assign, transfer, mortgage or otherwise encumber or dispose
of all or any part of its interest in the license or in the LICENSEE without the
prior written consent of TEGG. Any purported assignment or transfer, by
operation of law or otherwise, requiring the consent of TEGG and not having such
consent shall be null and void and shall constitute a material breach of this
Agreement. TEGG shall not unreasonably withhold or delay its consent and shall
grant such consent upon execution of a general release, in a form prescribed by
TEGG, of any and all claims against TEGG, its subsidiaries and affiliates, and
their respective officers, directors, agents and employees; receiving reasonable
assurances that all financial obligations to TEGG relating to the license will
be met, that all other obligations undertaken under this Agreement will be met,
and that the proposed transfer will not adversely affect the TEGG Business
licensed hereunder, TEGG'S Proprietary Marks, the TEGG System, or TEGG. TEGG
may require that LICENSEE and the transferee execute such agreements or other
documents as will provide TEGG with such assurances, including, but not limited
to, TEGG'S then-current license agreement, subject to retaining the renewal
rights described in Section 30 of this Agreement. A transfer fee in the amount
of Five Thousand Dollars ($5,000) shall be paid to TEGG to cover administrative
and other expenses in connection with transfers. Consent shall not be required
and transfer fee shall not apply to any transfer or sale of stock among any of
the
11
present officers or directors or employees of the LICENSEE or transfer to any
members of their family, or transfer to a trust or for estate planning purposes.
If LICENSEE or a shareholder owning a twenty-five (25%) or greater interest in
this Agreement dies, and if under controlling local law, or testamentary
instrument, the deceased person's interest in the license and this Agreement is
distributable to heirs or legatees who are members of his immediate family, or
to any entity under the control of, or for the benefit of officers, directors,
or employees of the LICENSEE or members of their family, then such assignment
shall be permitted without the necessity of any transfer fee, provided such
heirs or legatees accept the conditions imposed on otherwise permitted
assignees.
In the event of a transfer which requires the consent of TEGG, TEGG shall not
impose as a condition upon such transfer, any requirement that the LICENSEE
remains liable under any terms of the License Agreement for the obligations of
the transferee.
33. Non-Waiver of Claims
TEGG'S consent to a transfer of any interest in the license granted herein shall
not constitute a waiver of any claims it may have against the transferring
party, nor shall it be deemed a waiver of TEGG'S right to demand exact
compliance with any of the terms of this Agreement by the transferee.
34. Termination by TEGG
(a) TEGG may terminate this Agreement, prior to its expiration
without notice, in the event LICENSEE becomes insolvent, makes a general
assignment for the benefit of its creditors, files a petition in bankruptcy or
consents to the filing of such a petition against it, is adjudged a bankrupt, or
if a receiver of its assets is appointed.
(b) LICENSEE shall be deemed to be in default and TEGG may, at its
option, terminate this Agreement, without affording LICENSEE any opportunity to
cure the default, effective immediately upon giving of notice to LICENSEE, upon
the occurrence of any of the following events:
(i)
if LICENSEE ceases to operate, fails to actively pursue (by at least one full
time sales person) or otherwise abandons (fails to competently perform referral
or any other contracted service work within a reasonable period of time)
offering, selling or providing TEGG Services or this license;
(ii)
if LICENSEE, its designated Principal Representative, or a principal officer or
stockholder holding a twenty-five percent (25%) or greater interest, is
convicted of a felony, or any other crime or offense that is reasonably likely,
in the sole opinion of TEGG, to adversely affect the reputation and goodwill of
TEGG, TEGG Services, the Proprietary Marks, or the goodwill associated with any
of them, or TEGG'S interest therein;
(iii)
if LICENSEE, or any of its owners, officers, directors, members, managers or
employees, purports to transfer any rights or obligations under this Agreement
to any third party without TEGG'S prior written consent contrary to the terms of
Section 32 of this Agreement;
(iv)
if LICENSEE, or any of its Principal Representatives, employees, directors,
officers, partners, proprietors, or owners of 5% or more of the voting shares of
ownership interest of LICENSEE, fails to comply with the provisions of Section
23 hereof;
(v)
if LICENSEE, or any of its owners, discloses or divulges the contents of the COM
or other trade secrets or confidential information provided to LICENSEE by TEGG
contrary to Section 19 hereof;
(vi)
if LICENSEE is in default as provided in Section 34(c) of this Agreement and has
received two (2) or more Notices of Termination pursuant to that Section for the
same, similar or different defaults during any preceding twelve (12) month
period.
(c) In the event LICENSEE fails to perform any other obligation
undertaken in this Agreement or fails to maintain any of the standards or
procedures prescribed herein or in the COM, TEGG may give LICENSEE notice of
termination of this Agreement, such termination to be effective thirty (30) days
after the giving of such notice, or at the end of any longer period required by
applicable law. If LICENSEE shall, during such thirty (30) day period or, if
more than thirty (30) days are reasonably required to cure the same, then such
additional time period as is reasonably required, so long as LICENSEE is
diligently pursuing the cure (thereof), cure the default, then this Agreement
shall not terminate.
35. Termination by LICENSEE
(a) LICENSEE shall have the right to terminate this Agreement on the
third anniversary of the Effective Date of the Initial Term. To terminate this
Agreement, LICENSEE needs only to notify TEGG in writing of its desire to
terminate the License Agreement at least 90 days prior to the third anniversary
of the Effective Date of the Initial Term.
12
(b) LICENSEE shall have the right to terminate this Agreement, prior
to its expiration and without notice, in the event that TEGG becomes insolvent,
makes a general assignment for the benefits of its creditors, is adjudged a
bankrupt, or if a receiver of its assets is appointed.
(c) In the event that TEGG shall fail to perform any of the
obligations undertaken in this Agreement, LICENSEE may give notice to TEGG of
its intent to terminate this Agreement. If TEGG has not, within thirty (30)
days of the receipt by TEGG of such notice, taken appropriate measures to cure
the default in its performance, LICENSEE may, upon seven (7) days' additional
notice, terminate this Agreement.
36. Obligations of LICENSEE Upon Termination
For purposes of applying the terms of this Section, termination shall mean any
termination of this Agreement whether by TEGG or LICENSEE for any reason,
including default by LICENSEE, and shall also mean any expiration of this
Agreement for any reason, whether by its terms, by failure of LICENSEE to renew,
or by the authorized refusal of TEGG to renew.
Upon the termination of this Agreement, LICENSEE shall immediately, and without
further notice, pay all monthly fees and other charges due TEGG, cease use of
the Proprietary Marks, and cease holding itself out as a current or former TEGG
LICENSEE, and shall notify in writing each of its customers then party to a TEGG
Services agreement that it is no longer a TEGG LICENSEE or providing TEGG
Services. LICENSEE shall take such action as may be necessary to cancel any
assumed name, fictitious name or equivalent registration which contains any of
the Proprietary Marks.
LICENSEE shall immediately cease use of the Proprietary Marks, providing TEGG
Service and cease use of all confidential methods, procedures, techniques and
computer programs used in or associated with providing TEGG Services, and of all
forms, stationery, signs, advertising and other materials associated with the
TEGG System, including removal of all Proprietary Marks and references to TEGG
from all vehicles and Web sites. LICENSEE shall immediately return to TEGG all
copies of the COM, all computer programs and all TEGG forms and materials and
all copies in its possession and that it provided or made available to its
officers, employees or other persons. Further, an affidavit shall be executed
by LICENSEE’S employees performing the functions of the positions defined in the
COM of Principal, Principal Sponsor, Principal’s Representative, Selling General
Manager, General Manager, Sales Manager, Service Manager, Service Supervisor,
Business Systems Specialist, Administrative Support Clerk, Designed Electrical
Service Representative, Maintenance Sales Representative, and Electrical
Services Specialist (Sales Professional), stating that each of them have
conducted a thorough investigation and have taken all necessary steps to insure
that all TEGG confidential materials and other property of TEGG have been
accumulated and returned to TEGG, and the use of all TEGG forms, TEGG'S
Proprietary Marks and confidential materials has been discontinued.
In the event that LICENSEE fails or refuses to comply with the requirements of
this Section within ten (10) days following the termination of this Agreement,
it is agreed that TEGG shall be appointed LICENSEE'S attorney-in-fact to enable
TEGG to take any and all actions necessary to undertake and complete LICENSEE'S
remaining obligations for TEGG hereunder, including but not limited to obtaining
immediate injunctive relief against LICENSEE from any Court having jurisdiction
at the expense of LICENSEE which LICENSEE agrees to pay upon demand and to
acknowledge the irreparable harm suffered by TEGG.
V. MISCELLANEOUS
37. Approvals and Waiver
Whenever this Agreement requires the prior approval or consent of TEGG, LICENSEE
shall make a timely written request to TEGG. No approval or consent by TEGG
shall be effective unless it is in writing. No TEGG approval or consent shall
No failure by LICENSEE or TEGG to enforce any right afforded under this
Agreement or to require strict compliance with any obligation contained herein
shall constitute a waiver of the right or of the right to demand strict
compliance. A waiver by LICENSEE or TEGG of a default by the other shall not
constitute a waiver of any subsequent default.
38. Pricing and Competition
Nothing in this Agreement, nor in any agreement between TEGG and any other TEGG
LICENSEE, nor anything contained in the COM, shall be construed to establish
minimum, standard or other pricing.
39. Notices
Any notices required under this Agreement shall be sent by registered, certified
or overnight mail to TEGG or LICENSEE at the address stated in the introductory
paragraph of this Agreement or to such other address as either party may
designate in writing. Any notice by registered, certified or overnight mail
shall be deemed to have been given on the date of receipt or the date when such
notice is first refused.
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40. Construction and Severability
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Pennsylvania. Each provision of this Agreement shall be
considered severable and if for any reason any provision herein is determined to
be invalid or contrary to law, such determination shall not impair the operation
or effect of the remaining provisions.
Nothing in this Agreement is intended, nor shall be construed, to confer any
rights or benefits on any person other than LICENSEE, TEGG and their successors
or assigns provided for under Article IV of this Agreement.
41. Applicable Law andDispute Resolution
This Agreement takes effect upon its acceptance and execution by TEGG. Except to
the extent governed by the Federal Arbitration Act, this Agreement shall be
interpreted and construed under the laws of the Commonwealth of Pennsylvania,
which laws shall prevail in the event of any conflict of law; provided, however,
that if any provision of this Agreement would not be enforceable under the laws
of Pennsylvania, and if the Licensee is located outside of Pennsylvania, and
further, if such provision would be enforceable under the laws of the state in
which the Licensee is located, then such provision shall be interpreted and
construed under the laws of that state. Nothing in this choice of law provision
is intended to make applicable any franchise or distributorship law or similar
law, rule or regulation that would otherwise not be applicable.
Except as provided below, the parties agree that, should any dispute arise
between them under, relating to or in connection with this Agreement, prior to
commencement of an arbitration or other proceeding pursuant to this Agreement,
they shall promptly each designate one or more representatives with authority to
resolve the dispute to meet face-to-face (or communicate in such other manner as
they may agree) in a good faith effort to amicably resolve the dispute. Each
party covenants to devote a minimum of three (3) hours to such discussions. The
parties further covenant that in the event that they remain unable to resolve
the dispute(s) through such discussions, they shall then promptly submit the
dispute(s) to non-binding mediation in Pittsburgh, Pennsylvania where they will
continue their attempts in good faith to amicably resolve the dispute under the
then-prevailing commercial mediation rules of a recognized dispute resolution
service such as the American Arbitration Association, JAMS/Endispute, or the
mediation programs sponsored by the Center for Public Resources. The parties
agree to participate in at least six (6) hours of mediation and to divide
equally the costs of the mediation, excluding their travel costs. The
discussions, mediation and all communication in connection with the mediation
will be confidential and non-discoverable in any litigation, arbitration or
other proceeding.
Except as provided below, any dispute arising out of or relating to this
Agreement, or a claimed breach thereof, that remains unresolved after
discussions and mediation shall be submitted to arbitration by the American
Arbitration Association in accordance with its Commercial Arbitration Rules.
The situs of the arbitration shall be Pittsburgh, Pennsylvania, unless otherwise
provided by law. The award shall be conclusive and binding upon the parties,
and judgment upon the award may be entered in any court of competent
jurisdiction. All matters relating to arbitration shall be governed by the
Federal Arbitration Act (9 U.S.C. §1 et seq.).
LICENSEE agrees that any breach or evasion of the obligations contained in
Sections 8, 16, 17, 19, 23, and 36 relating to the use of TEGG'S Proprietary
Marks and confidential and proprietary information supplied to LICENSEE will
result in immediate and irreparable harm to TEGG. TEGG shall therefore be
entitled to obtain immediate injunctive relief without resort to prior mediation
or to arbitration to compel specific performance by LICENSEE of its obligations
and to pursue any other legal or equitable remedy available. LICENSEE shall pay
to TEGG all costs and expenses, including reasonable attorneys' fees, incurred
by TEGG in obtaining such injunctive or other relief.
42. Independent Investigation
LICENSEE acknowledges that it has conducted an independent investigation of the
TEGG Business and System and recognizes that the business venture contemplated
by this Agreement involves business risks and its success will be largely
dependent upon the ability of LICENSEE as an independent businessman. TEGG
expressly disclaims the making of, and LICENSEE acknowledges that it has not
received, any warranty or guarantee, express or implied, as to the potential
sales volume, revenues, profits or other successes of the business venture
LICENSEE acknowledges that it has received, read and understood this Agreement
and that TEGG has accorded LICENSEE ample time and opportunity to consult with
advisors of its own choosing about the potential benefits and risks of entering
into this Agreement.
43. Effective Date
The Effective Date of this Agreement shall be the date both parties have
executed this agreement.
The Effective Date of this License Agreement therefore is
_________________________, 20 _____.
14
44. Approvals and Consents
Whenever the approval or consent of TEGG is required under this Agreement or the
Manual, such consent shall be requested, and obtained, in the manner specified
by this Agreement or the COM. TEGG agrees that it will not unreasonably delay,
withhold or deny approval or consent.
45. TEGG'S Withholding of Consent -- LICENSEE'S Exclusive Remedy
In no event may LICENSEE make any claim for money damages based on any claim or
assertion that TEGG has unreasonably withheld or delayed any consent or approval
to a proposed act by LICENSEE under the terms of this Agreement. LICENSEE
waives any such claim for damages. LICENSEE may not claim any such damages by
way of setoff, counterclaim or defense. LICENSEE'S sole remedy for the claim
will be an action or proceeding to enforce the Agreement provision, for specific
performance or for declaratory judgment.
46. Entire Agreement
This Agreement shall constitute the entire agreement between TEGG and LICENSEE
and shall supersede all prior agreements with respect to the subject matter
hereof. No amendment, change or modification to this Agreement shall be binding
unless made in a writing executed by TEGG and LICENSEE.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
executed this Agreement on the date and year first written above.
ATTEST:
TEGG Corporation
______________________________________
By: _______________________________,
Secretary
(Title)
[CORPORATE SEAL]
ATTEST:
LICENSEE
_____________________________________
By: _______________________________,
Secretary
(Title)
[CORPORATE SEAL]
Each of the undersigned owns a five percent (5%) or greater beneficial interest
in LICENSEE, each has read this Agreement and each agrees to be individually
bound by the terms of Sections 8, 19, 23, 24 and 32.
______________________________________
By: ______________________________________
Witness
______________________________________
By: ______________________________________
Witness
______________________________________
By: ______________________________________
Witness
______________________________________
By: _______________________________________
Witness
______________________________________
By: _______________________________________
Witness
15 |
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section13 or 15(d)of the Securities Exchange Act Date of Report:April 16, 2014 (Date of Earliest Event Reported:April 11, 2014) Akorn, Inc. (Exact Name of Registrant as Specified in its Charter) Louisiana 001-32360 72-0717400 (State or other Jurisdiction of Incorporation) (Commission File Number) (I.R.S. Employer Identification No.) 1925 W. Field Court, Suite 300 Lake Forest, Illinois60045 (Address of principal executive offices) (847) 279-6100 (Registrant’s telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below): [ ] Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240. 13e-4(c)) Item1.01 Entry into a Material Definitive Agreement. The information set forth under Item 5.02 of this Current Report on Form 8-K relating to the Executive Employment Agreements with each of Rajat Rai and Bruce Kutinsky, Pharm. D. is hereby incorporated into this Item 1.01 by reference. Item5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. On April 11, 2014, Akorn, Inc. (“Akorn”, or the “Company”) entered into an Executive Employment Agreement with each of Rajat Rai, its Chief Executive Officer, and Bruce Kutinsky, Pharm. D., its Chief Operating Officer (each an “Executive Employment Agreement”).The Executive Employment Agreement for Mr. Rai replaces the Executive Consulting Agreement between the Company and Mr. Rai dated December 8, 2009, as amended.Dr. Kutinsky had no previous employment agreement with the Company.Each of the Executive Employment Agreements is effective as of January 1, 2014, has an initial term of one-year, and automatically renews for successive one (1) year periods unless earlier terminated in accordance with the terms provided therein. The annual base pay and other compensation payable to the officers for their services in their respective capacities are set by the Compensation Committee of the Company’s Board of Directors and are not addressed in the Executive Employment Agreements. The Executive Employment Agreements address each officer’s obligations to the Company, as well as payments due to the officers upon termination under various scenarios.Each Executive Employment Agreement provides that if the agreement is terminated by the officer for “good reason” or by the Company without “cause”, as such terms are defined in each Executive Employment Agreement, each officer is entitled to severance payments and benefits, including one (1) year of base annual compensation and eligible bonuses, as well as one (1) year of continuation of benefits.If the Executive Employment Agreements are terminated either within the period of ninety (90)days prior to the Company entering into a definitive agreement that would result in a “change of control”, as defined in the Executive Employment Agreements, or withintwelve (12)monthsfollowing a “change in control”, the officers would be entitled to the following payments: ● Mr. Rai would be eligible to receive three (3) times his annual base salary and eligible bonus, and three (3) years’ continuation of various employee benefits, including life, health and disability insurance coverage. ● Dr. Kutinsky would be eligible to receive two (2) times his annual base salary and eligible bonus, and two (2) years’ continuation of various employee benefits, including life, health and disability insurance coverage. The Executive Employment Agreements impose confidentiality obligations, contain various restrictive covenants (such as non-competition and non-solicitation obligations), provide for indemnification of the officers, and contain other terms and conditions commonly contained in employment agreements for executive officers.The foregoing summary is qualified in its entirety by reference to the complete text of the Executive Employment Agreements for each of Mr. Rai and Dr. Kutinsky, copies of which are filed herewith as Exhibits 10.1 and 10.2, respectively, and incorporated herein by reference. Item9.01 Financial Statements and Exhibits. (d)Exhibits. See attached exhibit index. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized. Akorn, Inc. By: /s/Timothy A. Dick Timothy A. Dick Chief Financial Officer Date:April 16, 2014 Exhibit Index Exhibit No. Description of Exhibit Executive Employment Agreement between Akorn, Inc. and Raj Rai, its Chief Executive Officer, entered into on April 11, 2014. Executive Employment Agreement between Akorn, Inc. and Bruce Kutinsky, its Chief Operating Officer, entered into on April 11, 2014.
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Sunwin International Neutraceuticals, Inc. 6 Shenwang Ave. Qufu, Shandong, China telephone (china) (86) 537-4424999 telecopier (954) 363-7320 [email protected] May 6, 2010 'CORRESP' Mail Stop 4720 United States Securities and Exchange Commission treet, N.E. Washington, D.C.20549 Attention: Jim B. Rosenberg, Senior Assistant Chief Accountant Mark Brunhofer, Senior Staff Accountant Kei Nakada, Staff Accountant Re: Sunwin International Neutraceuticals, Inc. (the "Company") Form 10-K for Fiscal Year Ended April 22, 2009 Filed July 29, 2009 Commission File No. 000-53595 Ladies and Gentlemen: The Company is in receipt of the staff’s April 22, 2010 comment letter on the above-referenced filing.Following are the Company’s responses to the staff’s comments, which such responses appear in the same order as the comment letter for ease of review: Consolidated Financial Statements Note 7 – Income Taxes, page F-15 1.In your response to our previous comment one you indicate that your “permanent differences” relate to the issuance/grant of stock/equity instruments for services that you deem no Federal or state tax benefits will result.Although permanent differences are no longer defined in GAAP, the term generally implies a difference that by practice of law will not reverse in the future.The types of differences you identify appear to typically be treated s temporary differences under ASC 718-740-25.Please tell us why these differences are not temporary differences, why they will not reverse in the future and how your accounting treatment complies with GAAP with reference to the authoritative literature you relied upon. RESPONSE:The Company respectfully acknowledges that the tax differences labeled as “permanent differences” are more accurately described as “temporary differences” as a tax deduction will be afforded the Company upon vesting and issuance of the stock awards.The Company will correct this mislabeling prospectively in its forthcoming Annual Report for the fiscal year ended April 30, 2010 on Form 10-K and subsequent annual reports filed with the SEC and proposes to include the following description of such “temporary differences” to the extent such disclosure is applicable at the time of filing such report: The “temporary difference”, as noted in the tax provision table, is the amount added back for expenses related to the issuance/grant of stock/equity instruments for services, for financial statement purposes, to which the Company deems Federal and State tax benefits will not be recognized in the same period. Accordingly, these expenses are added back for purposes of calculating taxable income. The “income tax provision at Federal statutory rate” was computed using a marginal rate of 35%. The state income taxes, net of Federal benefit was computed using a rate of 4.6% for both the years ended April 30, 2010 and 2009. United States Securities and Exchange Commission May 6, 2010 Page 2 General 2.In our comment letter we asked you to acknowledge three statements for us directly from the company.Please have a duly authorized officer of the company provide this statement separately on EDGAR by acknowledging that: ·the company is responsible for the adequacy and accuracy of the disclosure in the filing; ·staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and ·the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States RESPONSE:The Company will acknowledge the three requested statements in this letter. We trust the foregoing responds to the staff's comments. In furtherance of the Company’s response to the staff’s April 22, 2010 comment letter on the above-referenced filing, the Company acknowledges that: • the Company is responsible for the adequacy and accuracy of the disclosure in the filing; • staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and • the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States Sincerely, /s/ Dongdong Lin Dongdong Lin Chief Executive Offier cc:Jim Schneider, Schneider, Weinberger & Bailey LLP Sherb & Co., LLP
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Title: Am I still at fault for causing a wreck if the other driver has no license?
Question:I falsely assumed that the two way stop I stopped at was a four way stop today. Since the other driver didn't have a stop sign he of course didn't stop and plowed straight into me. Additionally a third car got scratched a bit as our cars careened off into the curb. Clearly the accident is my fault. However the other driver had no driver's license. Am I still at fault for this accident, and if not would he also be at fault for the third person's scratches? This occurred in the state of Kentucky if that has any relevance.
Topic:
Traffic and Parking
Answer #1: You ran a stop sign that's why you are at fault, the other driver not having a license doesn't change that fact at all. |
Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION -OXLEY ACT OF 2002 In connection with the quarterly report (the “Report”) of Accelerize Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof, I, Michael Lin, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: May 11, 2015 By: /s/ Michael Lin Michael Lin Chief Financial Officer (Principal Financial Officer)
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Exhibit 10.32
EQUITY INTEREST PURCHASE AGREEMENT
Party A: Heat HP, Inc., a corporation organized under the laws of the state of
Nevada with its registered address at 1802 North Carson Street, Suite 212,
Carson City NV 89701.
Party B: Mr. He Yi with an address of Building 7-1-301, No.7 Yao Jia Yuan Xi Li,
Chaoyang District Beijing China.
This Equity Interest Purchase Agreement (the “EIPA”) is executed as of September
30, 2019 by and among Party A and Party B. Each of Party A and Party B shall be
referred to as a “Party,” and collectively, the “Parties.”
WHEREAS,
(1)
Party A is a corporation duly organized and validly existing under the laws of
the state of Nevada and owns 52% of the equity interests of SmartHeat Jinhui
(Beijing) Energy Technology Ltd (“Target”);
(2)
Target is a corporation duly organized and validly existing under the laws of
the Peoples Republic of China (“PRC”); and
(3)
Buyer is an individual citizen of the age of majority residing in the PRC with
all authority under the laws of PRC to enter into this Agreement.
NOW THEREFORE, in consideration of the representations, warranties, and
agreements contained in this EIPA, the Parties hereto agree as follows:
1. Equity Interest Purchase and Consideration
1.1. Party B hereby agrees to purchase, and Party A hereby agrees to sell and
transfer to Party B, 30% of its equity interests in the Target to Party B
effective as of August 30, 2019 (the “Closing Date”) for RMB 30 subject to the
termination provisions set forth in paragraph 6 below.
1.2. The Parties agree that such sale and purchase shall be conditioned upon
approval by the Board of Directors of Party A and a majority of its
stockholders.
2. Change of Registration
2.1. The Parties hereby agree that Party B shall file the applicable
registration change in the State Administration for Industry and Commerce in the
People’s Republic of China as equity interests in the Target are sold and
transferred by Party A and purchased and assumed by Party B to carry out the
intent of this EIPA and Party A shall cooperate with Party B in any such filing.
1
2.2. The cost related to the registration change with the People’s Republic of
China shall be undertaken by Party B. The taxes incurred from the transfer of
the equity interests, if any, shall be undertaken by Party B.
3. Representations and Warranties
3.1. Party A represents and warrants to the following:
3.1.1 Party A is selling the equity interests in the Target “as is” and makes no
other representations, warranties or covenants, except as expressly provided in
this Agreement.
3.1.2 Party A owns 52% of the equity interests in Target.
3.1.3 Party A has good and marketable title to the equity interests of the
Target owned by Party A, free and clear of all encumbrances, subject to any
transfer requirements in the People’s Republic of China.
3.1.4 Party A is duly organized and validly existing under the laws of the State
of Nevada, and the Target is registered under the proper governmental
authorities as required under the laws of the People’s Republic of China.
3.1.5 Party A has the full right, power and authority to enter into this EIPA
and to perform all of its obligations hereunder.
3.1.6 The execution and performance of this EIPA shall not breach any other
signed material contract or EIPA to which Party A is a party.
3.1.7 The representative who has executed the EIPA and this EIPA on behalf of
Party A has been duly authorized to execute this Restated Agreement.
3.2 Party B represents and warrants to the following:
3.2.1 Party B is an individual citizen of the People’s Republic of China.
3.2.2 Party B has the full right, power and authority to enter into this EIPA
3.2.3 The execution of this EIPA shall not breach any other written material
contract or to which Party B is a party.
3.2.4 Party B is duly authorized to execute the EIPA and this EIPA.
3.2.5 Party B has been given full opportunity to review all documents requested
by Party B, including, but not limited to the un-audited financial statements of
Target, to evaluate this transaction and acknowledges that it has been given
sufficient information to make its investment decision in the Target. Party B
acknowledges that the sale of the Target is “as is.”
2
3.2.6 Party B represents and warrants that under the relevant laws of the PRC it
shall assume all liabilities of the Target pursuant to this Agreement and agrees
that it shall assume all liabilities of the Target, whether known, unknown or
contingent after the Closing.
4. Closing
4.1 The Closings hereunder shall take place electronically, or at such other
place or by such other means as agreed by the Parties.
4.2 Party B shall deliver to Party A at the Closing, the consideration by wire
transfer of immediately available funds, check or cash funds.
4.2 As soon as practical after the Closing Date, Party B shall deliver to Party
A evidence of the transfer of the specified equity interest in the Target.
4.2 Party A shall deliver to Party B evidence of the satisfaction of the
conditions specified in Section 1.2 and the Parties shall exchange the Mutual
Release.
5. Notices and Delivery
5.1 The Parties acknowledge that any notice and other correspondence concerning
this Agreement (“Notice”) shall be made in writing and shall be (a) personally
delivered, or (b) sent by overnight courier and transmitted electronically, in
each case addressed or emailed to the Party to whom notice is being given at its
address set forth in the Preamble to this Agreement, or as to each Party, at
such other address or e-mail as may hereafter be designated by such Party in a
written notice to the other Party complying as to the delivery with the terms of
this paragraph 5.1.
5.2 All such notices, requests, demands and other communications shall be deemed
to have been given on (a) the date received if personally delivered, or (b) the
date sent if sent by overnight courier and e-mail.
6. Amendment, Termination and Transfer of this Restated Agreement
6.1 Any amendment or modification to this EIPA is required to be approved and
negotiated by all Parties and shall only be effective by way of a written
agreement executed by the Parties.
6.2 This EIPA may be terminated by either Party A or Party B:
6.2.1 At any time prior to the Closing Date, by mutual agreement between Party A
and Party B;
6.2.2 By a non-breaching Party, in the event a Party breaches this EIPA, and
such breach shall not be corrected within thirty days of written notice of the
breach sent by the non-breaching Party.
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6.2.3 If the transactions contemplated by this EIPA cannot be consummated as
consequence of a force majeure event.
6.3 Any Party seeking to terminate this EIPA shall provide written notice of the
termination to the other Party, which termination shall become effective upon
receipt of the other Party of the written notice.
6.4 The Parties agree not to transfer any or all of their obligations under this
EIPA without the written agreement of the non-transferring Party.
7. Dispute Resolution
7.1 This EIPA shall be governed by and construed under the internal laws of the
People’s Republic of China.
7.2 This EIPA shall be governed by procedures other than litigation for settling
all claims and disputes under the method set forth below:
7.2.1 The Parties agree to attempt in good faith to settle any dispute arising
under or relating to this EIPA by mediation before the Hong Kong International
Arbitration Centre (HKIAC) under the then-current version of HKIAC’s Commercial
Mediation Rules. The place of mediation shall be in Hong Kong and three
mediators shall be appointed, one by Party A, one by Party B, and one who shall
be selected by the Parties mutual agreement.
7.2.2 If the mediation is abandoned by the mediator or is otherwise concluded
without the dispute being resolved, the parties may, at their option refer the
dispute to arbitration at HKIAC in accordance with its then-current
International Arbitration Rules.
8. Miscellaneous
8.1 Taxes and expenses incurred by the transactions contemplated by this EIPA
shall be borne by the Parties in accordance with their respective obligations,
unless otherwise provided. The tax related to the change of registration shall
be borne by the Target.
8.2 This EIPA shall not be modified or altered except in a writing executed by
both of the Parties. For matters outside of this EIPA, the Parties shall sign a
supplemental agreement. The supplemental agreement, together with this EIPA,
shall constitute the entire agreement and have the same legal effect.
8.3 This EIPA shall be effective immediately upon the execution by the Parties.
This EIPA may be executed in any number of counterparts, each of which when so
counterparts, taken together, shall constitute one and the same instrument.
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8.4 Any provision of this EIPA which is prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof.
8.5 Section headings in this EIPA are included for convenience of reference only
and shall not constitute a part of this EIPA for any other purpose.
IN WITNESS WHEREOF, the parties hereto have caused this EIPA to be executed by
their respective officers thereunto duly authorized as of the date first above
written.
PARTY A:
HEAT HP, INC.
By:/s/ Jimin Zhang
Name: Jimin Zhang
Title: President
PARTY B:
Mr. He, Yi
Name: Mr. He Yi
5
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SUPPLEMENT DATED MAY 1, 2012 TO PROSPECTUS DATED MAY 1, 1989 The Equity Protector® Issued through WRL Series Life Account By Western Reserve Life Assurance Co. of Ohio The following information hereby supplements or amends, and to the extent is inconsistent replaces, certain information contained in your prospectus: The following is added to the front cover of the prospectus: Please direct transactions, claim forms, payments and other correspondence and notices as follows: Transaction Type Direct or Send to Telephonic Transaction 1-727- 299-1800 or 1-800-851-9777 (toll free) Facsimile Transaction 1-727-299-1648 (subaccount transfers only) 1-727-299-1620 (all other facsimile transactions) Electronic Communication www.westernreserve.com All payments made by check, and all claims , correspondence and notices Mailing Address:4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499 * Range of Expenses for the Portfolios1, 2 The table below shows the lowest and highest total operating expenses charged by the portfolios during the fiscal year ended December 31, 2011.Expenses of the portfolios may be higher or lower in the future.More detail concerning each portfolio’s fees and expenses is contained in the prospectus for each portfolio. Lowest Highest Total Annual Portfolio Operating Expenses (total of all expenses that are deducted from portfolio assets, including management fees, 12b-1 fees, and other expenses) 0.43% 1.07% Net Annual Portfolio Operating Expenses (total of all expenses that are deducted from portfolio assets, including management fees, 12b-1 fees, and other expenses, after contractual waiver of fees and expenses)3 0.43% 1.07% 1The portfolio expenses used to prepare this table were provided to Western Reserve by the funds.Western Reserve has not independently verified such information.The expenses shown are those incurred for the year ended December 31, 2011.Current or future expenses may be greater or less than those shown. 2 The table showing the range of expenses for the portfolios takes into account the expenses of several Transamerica Series Trust asset allocation portfolios and the Franklin Templeton VIP Founding Funds Allocation Fund that are each a “fund of funds.”A “fund of funds” portfolio typically allocates its assets, within predetermined percentage ranges, among certain other Fund portfolios and affiliated Fund portfolios (each such portfolio an "Acquired Fund").Each “fund of funds” has its own set of operating expenses, as does each of the portfolios in which it invests.In determining the range of portfolio expenses, Western Reserve took into account the information received from the Fund groups on the combined actual expenses for each of the “fund of funds” and for the portfolios in which it invests. The combined expense information includes the Acquired Fund (i.e., the underlying fund’s) fees and expenses for the Transamerica Series Trust asset allocation portfolios. See the prospectuses for the Transamerica Series Trust for a presentation of the applicable Acquired Fund fees and expenses. 3 The range of Net Annual Portfolio Operating Expenses takes into account contractual arrangements for 3 portfolios that require a portfolio’s investment adviser to reimburse or waive portfolio expenses until April 30, 2013. * INVESTMENT OPTIONS: Please note the following changes to your Transamerica Series Trust investment options: Effective August 16, 2011: Transamerica Clarion Global Real Estate Securities VP:The portfolio’s sub-adviser, ING Clarion Real Estate Securities, LLC was renamed CBRE Clarion Securities, LLC. Effective December 9, 2011: · Transamerica Morgan Stanley Growth Opportunities VP merged with Transamerica Morgan Stanley Mid-Cap Growth VP. · Transamerica WMC Diversified Equity VP merged with Transamerica WMC Diversified Growth VP. Effective February17, 2012: Transamerica Asset Management, Inc. assumed full responsibility for the day-to-day management of the following portfolios: Transamerica Asset Allocation - Conservative VP Transamerica Asset Allocation - Growth VP Transamerica Asset Allocation - Moderate Growth VP Transamerica Asset Allocation - Moderate VP Transamerica International Moderate Growth VP Todd R. Porter, CFA, was selected as portfolio manager for the portfolios.Mr. Porter was a portfolio construction consultant for each portfolio other than the Transamerica International Moderate Growth VP portfolio from the portfolio’s inception through 2005, and served as portfolio manager for the portfolios in 2005 and 2006.Mr. Porter also served as portfolio manager for Transamerica International Moderate Growth VP in 2006. The information in your prospectus regarding Morningstar is deleted in its entirety and all references to Morningstar are also deleted. Please see the Transamerica Series Trust prospectus for any changes regarding the portfolios listed above. * Effective January 6, 2012: Our affiliate, World Group Securities, merged with Transamerica Financial Advisors, Inc.(“TFA”).TFA serves as Western Reserve’s main distribution channel. * The following replaces the respective paragraph under “Revenue We Receive”: Rule 12b-1 Fees. We, and/or our affiliate, Transamerica Capital, Inc. (“TCI”) who is the principal underwriter for the Policies,indirectly receives 12b-1 fees from the funds available as investment choices under our variable insurance products. Any 12b-1 fees received by TCI that are attributable to our variable insurance products are then credited to us. These fees range from 0.00% to 0.35% of the average daily assets of the certain underlying fund portfolios attributable to the Policies and to certain other variable insurance products that we and our affiliates issue. * The following information is added to the section entitled “Ownership Rights”: No designation or change in designation of an owner will take effect unless we receive (i) a transfer of ownership form or (ii) an Internal Revenue Service Form W-9 along with a written request to designate or change the designation of an owner.The request will take effect as of the date we receive it, in good order, at our mailing address, or by fax at our administrative office (1-727-299-1620), subject to payment or other action taken by us before it was received. * The following paragraph is added to the section entitled “Disruptive Trading and Market Timing” after the second paragraph under “Deterrence”: In addition, transfers for multiple policies invested in the Transamerica Series Trust underlying fund portfolios which are submitted together may be disruptive at certain levels.At the present time, such aggregated transactions likely will not cause disruption if less than one million dollars total is being transferred with respect to any one underlying fund portfolio (a smaller amount may apply to smaller portfolios).Please note that transfers of less than one million dollars may be disruptive in some circumstances and this general amount may change quickly. * Illustrations: The information contained in both the explanation and "Hypothetical Illustrations" is out-of-date and should not be relied upon. * For additional information, you may contact us at our administrative office at 1-800-851-9777, from 8:30a.m. – 7:00p.m., Eastern Time or visit our website at: www.westernreserve.com.TCI serves as the principal underwriter for the Policies.More information about TCI is available at http://www.finra.orgor by calling 1-800-289-9999.You also can obtain an investor brochure from the Financial Regulatory Authority ("FINRA") describing its Public Disclosure Program. PLEASE RETAIN THIS SUPPLEMENT WITH YOUR MAY 1, 1
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EXHIBIT 10.5
LOAN AGREEMENT
THIS LOAN AGREEMENT (together with the exhibits attached hereto, this
“Agreement”) is made as of May 8, 2014 between PNC BANK, NATIONAL ASSOCIATION, a
national banking association, having an office at One North Franklin Street,
Suite 2150, Chicago, Illinois 60606 (“Lender”) and IREIT LITTLE ROCK PARK
AVENUE, L.L.C., a Delaware limited liability company (“Borrower”), having an
office at 2901 Butterfield Road, Oak Brook, Illinois 60523. All terms as used in
this Agreement shall, unless otherwise defined in the recitals or the main body
of this Agreement, have the meanings given to such terms in Exhibit A attached
hereto.
A. Borrower is or shall be the owner of a retail parcel improved with a shopping
center containing approximately 50,787 square feet of non-ground leased space
and approximately 18,599 square feet of ground leased space located at 410 South
University Avenue, 416 South University Avenue, 400 South University Avenue, 310
South University Avenue, 300 South University Avenue and 314 South University
Avenue, Little Rock, Arkansas 72205 which is commonly known as The Park Avenue
Shopping Center and is more particularly described in Exhibit B attached hereto
(the “Property”). The ground leased space contained at the Property consists of
the following tenants and their respective approximate building square footages
as set forth on the Survey and street addresses:
Tenant Square Footage Address (1) Cheddar’s Casual Café, Inc. 8,674 400 South
University Avenue (2) New Cingular Wireless d/b/a AT&T Mobility 3,868 300 South
University Avenue (3) Sterling Jewelers, Inc. d/b/a Jared Jewelers 6,057 310
South University Avenue TOTAL 18,599
B. At the request of Borrower, subject to the terms and conditions hereof,
Lender has agreed to make a loan to Borrower in the principal amount equal to
the least of: (i) Fifty Percent (50%) of the “as is” appraised value of the
Property as determined by Lender; (ii) Fifty Percent (50%) of the total
acquisition cost paid by Borrower to purchase the Property; (iii) an amount as
determined by Lender which satisfies the Pre-Closing Debt Service Coverage Ratio
Requirement (as such term is defined in Section 4.1(k) hereof); or (iv) FOURTEEN
MILLION SIXTY-ONE THOUSAND SIX HUNDRED FIFTY-EIGHT NO/100 DOLLARS
($14,061,658.00) (“Loan”), which is being extended to finance Borrower’s
acquisition of the Property. The Loan is not a revolving loan. Loan amounts
repaid may not be re-borrowed.
1
herein and in the other Loan Documents and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Lender and Borrower hereby covenants and agrees as follows:
ARTICLE I
LOAN PROVISIONS
Section 1.1 Loan. Subject to the terms and conditions set forth herein,
Lender has agreed to make the Loan to Borrower in the principal amount of
FOURTEEN MILLION SIXTY-ONE THOUSAND SIX HUNDRED FIFTY-EIGHT AND NO/100 DOLLARS
($14,061,658.00), the proceeds of which shall be used to finance Borrower’s
acquisition of the Property.
Section 1.2 Term of Loan. On the Maturity Date, the entire Debt, if not
sooner paid or payable, shall become due and payable in full.
Section 1.3 Disbursement and Prepayment.
(a) Loan Funding. Subject to the terms and conditions set forth in
this Agreement, proceeds of the Loan in an amount of ELEVEN MILLION SIX HUNDRED
EIGHTY-THREE THOUSAND SEVEN HUNDRED NINETY-THREE AND NO/100 DOLLARS
($11,683,793.00) shall be funded on the Closing Date. The Earnout Proceeds shall
be disbursed in accordance with Section 1.16 herein.
(b) Prepayment. The indebtedness evidenced by the Note may be prepaid
in whole or in part, at any time as set forth in the Note, subject, however, to
any Interest Rate Agreements and any payments due thereunder and to payment of
any break funding indemnification amounts owing pursuant to Section 1.7 below.
Any amounts prepaid on the indebtedness evidenced by the Note may not be
reborrowed.
Section 1.4 Interest Rates.
(a) Except as provided in Section 1.5, interest on the Loan shall
accrue at a fluctuating rate per annum equal to the sum of: (i) LIBOR in effect
on each Reset Date plus (ii) one hundred seventy-five basis points (1.75%).
LIBOR shall be adjusted on and as of: (i) each Reset Date, and (ii) the
effective date of any change in the LIBOR Reserve Percentage. The Lender shall
give prompt notice to the Borrower of LIBOR as determined or adjusted in
error;
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(b) Notwithstanding anything to the contrary or inconsistent herein,
in the event Lender determines (which determination shall be final and
conclusive) that LIBOR is not available as a result of the conditions contained
in Section 1.5 herein, interest on the Loan shall accrue at a fluctuating rate
per annum equal to the sum of: (i) the Base Rate; plus (ii) seventy-five basis
points (0.75%) as provided in Sections 1.5(a) and 1.5(b) hereof. If and when the
Prime Rate changes, the rate of interest with respect to any amounts hereunder
to which the Base Rate applies will change automatically without notice to the
Borrower, effective on the date of any such change; and
(c) From and after such time as an Event of Default occurs under
this Agreement or any of the Loan Documents, or if the Loan is not paid in full
on or prior to the Maturity Date, the unpaid balance outstanding under the Loan
shall bear interest at an interest rate equal to the applicable interest rate,
plus five percent (5%) (“Default Rate”).
Section 1.5 LIBOR.
(a) Unavailability of Deposits or Inability to Ascertain LIBOR. If
the Lender determines in its reasonable discretion (which determination shall be
final and conclusive) that, by reason of circumstances affecting the eurodollar
market generally, deposits in dollars (in the applicable amounts) are not being
offered to banks in the eurodollar market for the selected term, or adequate
means do not exist for ascertaining LIBOR, then Lender shall give notice thereof
to the Borrower. Thereafter, until Lender notifies the Borrower that the
circumstances giving rise to such suspension no longer exist: (a) the
availability of LIBOR shall be suspended; and (b) the interest rate for all
amounts outstanding under the Loan shall be converted on the next succeeding
Reset Date to the Interest Rate as provided in Section 1.4(b).
(b) Change in Applicable Laws, Regulations, Etc. In addition, if,
after the date of this Agreement, the Lender shall determine in Lender’s sole
but reasonable discretion (which determination shall be final and conclusive)
that any enactment, promulgation or adoption of or any change in any applicable
law, rule or regulation, or any change in the interpretation or administration
thereof by a governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by the Lender
with any guideline, request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency shall make it
unlawful or impossible for the Lender to make or maintain or fund loans based on
LIBOR, the Lender shall notify the Borrower. Upon receipt of such notice, until
determination no longer apply: (a) the availability of LIBOR shall be suspended,
and (b) the interest rate on all amounts outstanding under the Loan shall be
converted to the Interest Rate as provided in Section 1.4(b) either (i) on the
next succeeding Reset Date if the Lender may lawfully continue to maintain or
fund loans based on LIBOR to such day, or (ii) immediately if the Lender may not
lawfully continue to maintain or fund loans based on LIBOR.
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Section 1.6 Increased Costs; Yield Protection. The Borrower shall pay
to the Lender within ten (10) Business Days after written demand therefor,
together with the written evidence of the justification therefor, all direct
costs incurred, any losses suffered or payments made by Lender by reason of any
Change in Law (as hereinafter defined) imposing any reserve, deposit, allocation
of capital, tax or similar requirement (including without limitation, Regulation
D of the Board of Governors of the Federal Reserve System) on the Lender, its
holding company or any of their respective assets in connection with any amounts
outstanding on the Loan. “Change in Law” means the occurrence, after the date of
this Agreement, of any of the following: (a) the adoption or taking effect of
any law, rule, regulation or treaty, (b) any change in any law, rule, regulation
or treaty or in the administration, interpretation, implementation or
application thereof by any governmental authority or (c) the making or issuance
of any request, rule, guideline or directive (whether or not having the force of
law) by any governmental authority; provided that notwithstanding anything
herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer
Protection Act and all requests, rules, guidelines or directives thereunder or
issued in connection therewith and (y) all requests, rules, guidelines or
directives promulgated by the Bank for International Settlements, the Basel
Committee on Banking Supervision (or any successor or similar authority) or the
United States or foreign regulatory authorities, in each case pursuant to Basle
III, shall in each case be deemed to be a “Change in Law”, regardless of the
date enacted, adopted or issued.
Section 1.7 Break Funding Indemnification. The Borrower agrees to
indemnify the Lender against any liabilities, losses or expenses including,
without limitation, loss of margin, any loss or expense sustained or incurred in
liquidating or employing deposits from third parties, and any loss or expense
incurred in connection with funds acquired to effect, fund or maintain any
amounts hereunder (or any part thereof) bearing interest at LIBOR which the
Lender sustains or incurs as a consequence of either (i) the Borrower’s failure
to make a payment on the due date thereof, (ii) the Borrower’s revocation
(expressly, by later inconsistent notices or otherwise) in whole or in part of
any notice given to Lender to request, convert, renew or prepay any amounts
bearing interest at LIBOR; or (iii) the Borrower’s payment or prepayment
(whether voluntary, after acceleration of the maturity of the Debt or otherwise)
or conversion of any advance bearing interest at LIBOR on a day other than the
regularly scheduled due date therefor. A notice as to any amounts payable
pursuant to this paragraph given to the Borrower by the Lender shall, in the
absence of manifest error, be conclusive and shall be payable upon demand. The
Borrower’s indemnification obligations hereunder shall survive the payment in
full of all amounts payable hereunder.
Section 1.8 Computation of Interest. Interest accruing on the unpaid
principal balance of the Loan shall be computed based on the actual number of
days that principal is outstanding over a year consisting of three hundred sixty
(360) days. In no event will the rate of interest hereunder exceed the maximum
rate allowed by law.
4
The Interest Rates described in Section 1.4 of this Agreement reference nominal
interest rates described as an annual or per annum rate of interest.
Notwithstanding, interest on the Loan shall be computed and charged by Lender
using a banking convention sometimes referred to as “bank interest” and which
provides for interest calculated on the basis of a 360 day year.
Using this method of interest rate computation, Lender divides the nominal
interest rate by 360 to produce a daily interest factor which is then applied to
the outstanding principal balance for the actual number of days outstanding.
This has the effect of increasing the effective interest rate over a calendar
year by a factor of 1/72, or 1.01389.
Borrower hereby acknowledges that it understands the difference between these
methods and the effect on the interest Borrower will be obligated to pay to
Lender hereunder; that Borrower is entering into a business transaction with
Lender as an informed borrower; and, that Borrower has been represented and
advised by its own legal counsel.
Section 1.9 Principal and Interest Payments.
(a) Commencing on the first Reset Date after the date of this Note,
and continuing on each succeeding Reset Date thereafter through and including
the month in which the Maturity Date occurs, Borrower shall make monthly
payments of interest only on the outstanding principal balance of the Loan
computed at the applicable interest rates as set forth in Section 1.4; and
(b) A final payment of the entire Debt shall be due and payable on
the Maturity Date.
If any payment under this Agreement shall become due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day and
such extension of time shall be included in computing interest in connection
with such payment. The Borrower hereby authorizes the Lender to charge the
Borrower’s deposit account at the Lender for any payment when due hereunder.
Section 1.10 Late Charge. Borrower further agrees to pay a “Late Charge”
of five percent (5%) of any payments due hereunder if such amount is paid more
than ten (10) days after the due date thereof, to cover the extra expense
involved in handling delinquent payments. This provision shall not be deemed to
excuse a late payment or be deemed a waiver of any other rights Lender may have,
including the right to declare the entire principal and interest due on the Note
immediately due and payable. The final payment of the entire Debt due and
payable on the Maturity Date shall not be subject to the Late Charge under this
Section 1.10.
Section 1.11 Payments. All payments of principal and interest on the Loan
and all payments of any other fees and costs due hereunder shall be made in
immediately available funds. All such payments shall be made to Lender at the
address specified in Section 8.8, not later than 2:00 P.M., Chicago time, on the
date due, and funds received after that hour shall be deemed to have been
received by Lender on the next Business Day.
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Section 1.12 Loan Fees. Borrower shall pay to Lender a non-refundable loan
commitment fee for the Loan in the amount of SEVENTY THOUSAND THREE HUNDRED
EIGHT AND 29/100 DOLLARS ($70,308.29) (“Loan Commitment Fee”). On or before the
Closing Date, Borrower shall pay Lender the unpaid balance of the Loan
Commitment Fee. In the event Borrower exercises the First Extension Option,
Borrower shall pay Lender a non-refundable fee for the First Extension Option in
the amount equal to 0.15% of the outstanding principal balance of the Loan on
the Initial Maturity Date (“First Extension Option Fee”). In the event Borrower
exercises the Second Extension Option, Borrower shall pay Lender a
non-refundable fee for the Second Extension Option in the amount equal to 0.15%
of the outstanding principal balance of the Loan on the First Extended Maturity
Date (“Second Extension Option Fee”). The Loan Fee shall be deemed fully earned
on the Closing Date and the First Extension Option Fee shall be deemed fully
earned on the Initial Maturity Date and the Second Extension Option Fee shall be
deemed fully earned on the First Extended Maturity Date. The Loan Fee, the First
Extension Option Fee and the Second Extension Option Fee shall not be refundable
for any reason.
Section 1.13 Application of Payments. Prior to the occurrence of an Event
of Default, all payments and prepayments on account of the Loan shall be applied
as follows: (i) first, to fees, expenses, costs and other similar amounts then
due and payable to Lender, including without limitation, any late charges; (ii)
second, to accrued and unpaid interest on the principal balance of the Note;
(iii) third, to the payment of principal due in the month in which the payment
or prepayment is made, if any; (iv) fourth, to any escrows, impounds or other
amounts which may then be due and payable under the Loan Documents; (v) fifth,
to any other amount then due Lender hereunder or under any of the Loan
Documents; and (vi) last, to the unpaid principal balance of the Note. Any
prepayment shall not extend or postpone the due date or reduce the amount of any
subsequent monthly payment of principal or interest due hereunder. After an
Event of Default has occurred and is continuing, payments may be applied to
amounts owed hereunder and under the Note and other Loan Documents in such order
as Lender shall determine, in its sole discretion.
Notwithstanding anything to the contrary contained herein, no Swap Obligations
of any Non-Qualifying Party shall be paid with amounts received from such
Non-Qualifying Party under its Guaranty (including sums received as a result of
the exercise of remedies with respect to such Guaranty) or from the proceeds of
such Non-Qualifying Party’s Collateral if such Swap Obligations would constitute
Excluded Hedge Liabilities, provided, however, that to the extent possible
appropriate adjustments shall be made with respect to payments and/or the
proceeds of Collateral from other Borrowers and/or Guarantors that are Eligible
Contract Participants with respect to such Swap Obligations to preserve the
allocation to Obligations otherwise set forth herein.
6
Section 1.14 Extension Options.
(a) Borrower will have a one (1) time option to extend (the “First
Extension Option”) the Initial Maturity Date to the First Extended Maturity
Date, if (and only if) each of the following conditions (collectively, the
“First Extension Conditions”) have been satisfied within the applicable time
periods:
(i) Borrower shall have delivered to Lender written notice (the
“First Extension Notice”) of Borrower’s decision to extend the Initial Maturity
Date pursuant to this Section 1.14(a) no earlier than one hundred twenty (120)
days and no less than sixty (60) days prior to the Initial Maturity Date. The
First Extension Notice, upon its delivery to Lender, shall be irrevocable
subject to and provided the First Extension Update Appraisal Requirement (as
hereinafter defined) is satisfied; and
(ii) At the time Borrower gives the First Extension Notice and on the
Initial Maturity Date, no Event of Default shall exist as certified by Borrower
to Lender in a Certificate of No Event of Default to be executed by Borrower in
favor of Lender dated and delivered to Lender as of the Initial Maturity Date;
and
(iii) On or before the Initial Maturity Date, Borrower shall have paid
or provided Lender sufficient funds for the payment of all Loan Expenses
incurred by Lender in connection with the First Extension Option including,
without limitation, the First Extension Option Fee and the cost of the First
Extension Update Appraisal; and
(iv) Upon receipt of the First Extension Notice, Lender shall order a
current appraisal of the Property at Borrower’s expense (the “First Extension
Update Appraisal”). It is a condition precedent to Borrower’s exercise of the
First Extension Option that the then outstanding principal balance of the Loan
on the date of the First Extension Notice shall not exceed Fifty Percent (50%)
of the “as is” appraised value of the Property as reasonably determined by
Lender (the “First Extension Update Appraisal Requirement”). In the event that
the First Extension Update Appraisal Requirement is not satisfied, Borrower may
pay a principal payment on the Loan on or before the Initial Maturity Date in
such amount as determined by Lender so that the outstanding principal balance of
the Loan as of the Initial Maturity Date shall not exceed Fifty Percent (50%) of
the “as is” appraised value of the Property as reasonably determined by Lender;
and
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(v) Concurrently with the First Extension Notice, Borrower shall have
delivered to Lender a duly completed Borrower’s Covenant Compliance Certificate
certified as true and correct by an appropriate officer of the Managing Member
of Borrower, containing a computation and a confirmation that the Property has a
Debt Service Coverage Ratio of not less than 1.50:1.00, as of the date of the
First Extension Notice, together with such supporting documentation necessary
for Lender to determine such compliance. In the event that the foregoing Debt
Service Coverage Ratio is not satisfied, Borrower may pay a principal payment on
the Loan on or before the Initial Maturity Date in such amount as determined by
Lender that is necessary for the Property to meet the foregoing Debt Service
Coverage Ratio; and
(vi) Each representation and warranty made in the Loan Documents by a
Loan Party shall continue to be true and correct in all material respects as if
remade on the Initial Maturity Date; and
(vii) On or before the Initial Maturity Date, each Loan Party shall have
delivered to Lender its most current financial statements certified by an
appropriate officer of the Managing Member of Borrower for Borrower and by an
appropriate officer of Guarantor for Guarantor showing no Material Adverse
Change and a certification from such Loan Party that since the date of such
statements there has been no Material Adverse Change; and
(viii) On or before the Initial Maturity Date, each Loan Party shall have
delivered such documents reasonably required by Lender in connection with the
First Extension Option, including, without limitation, a reaffirmation of the
Guaranty (on a form acceptable to Lender).
In the event that any of the foregoing First Extension Conditions is not
satisfied strictly in accordance with the terms hereof or waived by Lender in
writing, the First Extension Option shall be null and void, and the Loan shall
mature on the Initial Maturity Date.
(b) Second Extension Option. If the Initial Maturity Date has been
extended to the First Extended Maturity Date, Borrower will have a one (1) time
option to extend (“Second Extension Option”) the First Extended Maturity Date to
the Second Extended Maturity Date, if (and only if) each of the following
conditions (collectively, the “Second Extension Conditions”) have been satisfied
within the applicable time periods:
(i) Borrower shall have delivered to Lender written notice (“Second
Extension Notice”) of Borrower’s decision to extend the First Extended Maturity
Date pursuant to this Section 1.14(b) no earlier than one hundred twenty (120)
days and no later than sixty (60) days prior to the First Extended Maturity
Date. The Second Extension Notice, upon its delivery to Lender, shall be
irrevocable; and
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(ii) At the time Borrower gives the Second Extension Notice and on
the First Extended Maturity Date, no Event of Default shall exist as certified
by Borrower to Lender in a Certificate of No Event of Default to be executed by
Borrower in favor of Lender dated and delivered to Lender as of the First
Extended Maturity Date; and
(iii) On or before the First Extended Maturity Date, Borrower shall
have paid all Loan Expenses incurred by Lender in connection with the Second
Extension Option including, without limitation, the Second Option Extension Fee;
and
(iv) Concurrently with the Second Extension Notice, Borrower shall have
Second Extension Notice, together with such supporting documentation necessary
the Loan on or before the First Extended Maturity Date in such amount as
determined by Lender that is necessary for the Property to meet the foregoing
Debt Service Coverage Ratio; and
(v) Each representation and warranty made in the Loan Documents by a
remade on the First Extended Maturity Date; and
(vi) On or before the First Extended Maturity Date, each Loan Party
shall have delivered to Lender its most current financial statements certified
by an appropriate officer of the Managing Member of Borrower for Borrower and by
an appropriate officer of Guarantor for Guarantor showing no Material Adverse
(vii) On or before the First Extended Maturity Date, each Loan Party
shall have delivered such documents reasonably required by Lender in connection
with the Second Extension Option, including, without limitation, a reaffirmation
of the Guaranty (on a form acceptable to Lender).
In the event that any of the foregoing Second Extension Conditions is not
writing, the Second Extension Option shall be null and void, and the Loan shall
mature on the First Extended Maturity Date.
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Section 1.15 Interest Rate Protection Products. Borrower shall afford
Lender a right of first opportunity to provide all Interest Rate Protection
Products but shall not be required to purchase such Interest Rate Protection
Products from Lender. If Borrower purchases an Interest Rate Protection Product
from Lender or any Affiliate of Lender, Borrower shall enter into the customary
ISDA (International Swap Dealer’s Association) form of agreement with schedules
to be mutually agreed upon between the parties (“Interest Rate Agreement”)
relating to such Interest Rate Protection Product. Any indebtedness incurred
pursuant to an Interest Rate Agreement entered into by Borrower with either
Lender or any Affiliate of Lender, shall constitute indebtedness secured by the
Mortgage and the other Loan Documents to the same extent and effect as if the
terms and provisions of such Interest Rate Agreement were set forth herein,
whether or not the aggregate of such indebtedness, together with the
disbursements made by Lender of the proceeds of the Loan, shall exceed the face
amount of the Note. Borrower hereby collaterally assigns to Lender any and all
Interest Rate Protection Products purchased or to be purchased by Borrower in
connection with the Loan, as additional security for the Loan, and agrees to
provide Lender with any additional documentation requested by Lender in order to
confirm or perfect such security interest during the term of the Loan. If
Borrower obtains an Interest Rate Protection Product from a party other than
Lender, Borrower shall deliver to Lender such third party’s consent to such
collateral assignment. No Interest Rate Protection Product purchased from a
third party may be secured by the Property or an interest in Borrower.
Section 1.16 Disbursement of Earnout Proceeds. Provided no Event of
Default exists, up to a maximum of TWO MILLION THREE HUNDRED SEVENTY-SEVEN
THOUSAND EIGHT HUNDRED SIXTY-FIVE AND NO/100 DOLLARS ($2,377,865.00) (“Earnout
Proceeds”) of the proceeds of the Loan shall be disbursed in accordance with
this Section 1.16. The Earnout Proceeds shall be disbursed by Lender to pay
fifty percent (50%) of the “earnout dollars” due Seller on each new fully
executed Lease for vacant space (“Earnout Lease”) procured by Seller pursuant to
Paragraph 15 of the Purchase Agreement (“Seller Earnout”). The Seller Earnout
and the Earnout Proceeds shall apply only to the vacant space as of the Closing
Date not to exceed 13,387 square feet. The Borrower shall be responsible for
funding fifty percent (50%) of all Seller Earnout dollars (“Borrower Earnout
Payment”). The Guarantor shall also be responsible for the Borrower Earnout
Payment when due by Borrower to Seller under Paragraph 15 of the Purchase
Agreement pursuant to Paragraph 3 of the Guaranty if Borrower fails to timely
make such payment. Each advance of the Earnout Proceeds shall be calculated by
dividing the total base rent (net of any concessions) due during the first year
of the Earnout Lease by 6.5989%. For example, if the Earnout Lease is for 5,000
square feet and the base rent is twenty dollars ($20.00) per foot, the total
Seller Earnout will be $1,515,151.52 ($100,000 ÷ 6.5989%). Lender will advance
$757,575.76 ($1,515,151.52 x 50%) and Borrower will fund $757,575.76
($1,515,151.52 x 50%). No Earnout Proceeds shall be disbursed if all of the
following conditions precedent have not been satisfied: (i) the Earnout Lease
(unless it is a Small Space Lease) is approved by Lender pursuant to Section
5.13 herein; (ii) the rent due under the Earnout Lease must be at a minimum
equal to the pro forma rent figures provided by Borrower to Lender for the
subject vacant space as set forth in Schedule 1.16 to this Agreement; (iii) the
Earnout Lease is fully executed and a copy has been delivered to Lender; (iv)
the subject tenant has taken occupancy of the leased premises under the subject
Earnout Lease and is paying the full rent as due under the Earnout Lease; (v)
the subject tenant has provided Lender with an
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Estoppel Certificate and if the subject Tenant’s Lease shall be in excess of
5,000 square feet or will be of record, a Subordination, Nondisturbance and
Attornment Agreement acceptable to Lender; (vi) Lender shall have received “date
down” and pending disbursement endorsements to the Lender’s Title Insurance
Policy obtained at Borrower’s expense extending the coverage to include the date
and amount of the advance for the Earnout Proceeds and such date down
endorsement shall show no exceptions to title other than the Permitted
Exceptions; and (vii) Lender has received confirmation acceptable to Lender
indicating that the Borrower and/or Guarantor has funded Borrower’s equity share
of the Seller Earnout which has been guaranteed by Guarantor. Borrower shall
only be permitted to receive Earnout Proceeds for the first thirty (30) months
following the Closing Date.
ARTICLE II
LOAN DOCUMENTS; SECURED OBLIGATIONS
Section 2.1 Loan Documents. The Obligations shall be evidenced and
secured by the Loan Documents, including the following documents, all dated as
of the date hereof:
(a) this Agreement;
(b) that certain Promissory Note in the principal amount of FOURTEEN
($14,061,658.00) given by Borrower to Lender and evidencing the Loan (together
with any Amendments thereto, the “Note”);
(c) that certain Mortgage, Security Agreement, Assignment of Rents
and Leases and Fixture Filing from Borrower as Trustee in favor of Lender
encumbering the Property (together with any Amendments thereto, the “Mortgage”);
(d) that certain Assignment of Rents and Leases from Borrower in
favor of Lender encumbering the leases and rents at the Property (together with
any Amendments thereto, the “Assignment of Leases and Rents”);
(e) the Financing Statements;
(f) that certain Environmental Indemnity Agreement from Borrower and
the Guarantor in favor of Lender (together with any Amendments thereto, the
“Environmental Indemnity”);
(g) that certain Guaranty of Payment and Recourse Obligations from
“Guaranty”);
(h) that certain Assignment and Subordination of Management Agreement
for the Property executed by Borrower in favor of Lender (together with any
Amendments thereto, the “Assignment and Subordination of Property Management
Agreement”);
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(i) that certain Consent to Assignment and Subordination of
Management Agreement and Estoppel executed by Inland National Real Estate
Services, LLC, a Delaware limited liability company (the “Property Manager”) in
favor of Lender (together with any Amendments thereto, the “Consent to
Assignment and Subordination of Management Agreement and Estoppel”);
(j) that certain Collateral Assignment of Purchaser’s Interest in
Vacancy, Garage Repairs and Real Estate Tax Escrow Agreement executed by and
between Borrower and Lender and acknowledged by Chicago Title Insurance Company
as Escrow Agent (“Collateral Assignment of Purchaser’s Interest in Vacancy,
Garage Repairs and Real Estate Tax Escrow Agreement”);
(k) that certain Loan Disbursement Authorization and Fee Settlement
Statement for the Loan executed by Borrower in favor of Lender (together with
any Amendments thereto, the “Loan Disbursement Statement”);
(l) that certain Delegation Letter and Supplement to Delegation
Letter – Authorization for Transaction Administration Using E-mail (PNC Forms)
to be executed by Borrower in favor of Lender; and
(m) the Interest Rate Agreement.
Section 2.2 Obligations. The grants, assignments, pledges, security
interests, encumbrances and transfers made under and created pursuant to the
Loan Documents are given for the purpose of securing (i) payment of the Debt;
and (ii) the performance of all other agreements, covenants, conditions and
obligations of Borrower and each other Loan Party contained herein or in the
other Loan Documents (collectively, items (i) and (ii) are the “Obligations”).
Obligations (as well as all indebtedness evidenced and/or secured by the Loan
Documents however such indebtedness may be described or defined in the other
Loan Documents) shall include the liabilities to Lender with respect to any Swap
Obligation in connection with the Loan, however, notwithstanding anything to the
contrary contained herein and/or in any of the Loan Documents, the Obligations
(as well as all indebtedness evidenced and/or secured by the Loan Documents
however such indebtedness may be described or defined in the other Loan
Documents) shall not include any Excluded Hedge Liabilities. The foregoing
sentence is hereby incorporated by this reference into each of the Loan
Documents.
Section 2.3 Right of Set-Off. As additional security for the payment
and performance of the Obligations, Borrower hereby grants to Lender a lien upon
and a security interest in all amounts that may be owing from time to time by
Lender to Borrower in any capacity, including, but not limited to, any balance
or share belonging to Borrower and any deposit or other account of Borrower with
Lender. This lien and security interest is in addition to, and not in limitation
of, any right of set-off which Lender may have under Applicable Law.
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Section 2.4 Keepwell. Each Loan Party, if it is a Qualified ECP Loan
Party, jointly and severally, hereby absolutely unconditionally and irrevocably:
(a) guarantees the prompt payment and performance of all Swap Obligations owing
by each Non-Qualifying Party (it being understood and agreed that this guarantee
is a guaranty of payment and not of collection) and (b) undertakes to provide
such funds or other support as may be needed from time to time by any
Non-Qualifying Party to honor all of such Non Qualifying Party’s obligations
under this Agreement or any Loan Document in respect of Swap Obligations
(provided, however, that each Qualified ECP Loan Party shall only be liable
under this Section 2.4 for the maximum amount of such liability that can be
hereby incurred without rendering its obligations under this Section 2.4, or
otherwise under this Agreement or any Loan Document, voidable under applicable
law, including applicable law relating to fraudulent conveyance or fraudulent
transfer, and not for any greater amount). The obligations of each Qualified ECP
Loan Party under this Section 2.4 shall remain in full force and effect until
payment in full of the Obligations and termination of this Agreement and the
Loan Documents. Each Qualified ECP Loan Party intends that this Section 2.4
constitute, and this Section 2.4 shall be deemed to constitute, a guarantee of
the obligations of, and a “keepwell, support, or other agreement” for the
benefit of each other Borrower and Guarantor for all purposes of Section
1a(18)(A)(v)(II) of the CEA.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties. The Recitals set forth
above are made a part of this Article and constitute representations and
warranties of Borrower to Lender. Borrower further represents and warrants to
Lender as follows:
(a) Loan Closing Conditions. Borrower has fully satisfied and/or
performed each of the Loan Closing Conditions as of the Closing Date or said
Loan Closing Conditions have been waived in writing by Lender.
(b) Loan Documents. Each of the Loan Documents is in full force and
effect.
(c) No Event of Default. No Event of Default has occurred and, at
the Closing Date, no Event of Default will have occurred immediately upon the
funding of the Loan.
(d) No Set-Off. The Loan Documents, and the performance of each Loan
Party’s obligations thereunder, are not subject to any right of rescission,
set-off, counterclaim or defense by any Loan Party, including the defense of
usury, nor would the exercise of any of the terms of the Loan Documents, or the
exercise of any right thereunder, render the Loan Documents or any remedy
provided for thereunder unenforceable, and no Loan Party has asserted any right
of rescission, set-off, counterclaim or defense with respect thereto.
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(e) Lien of Loan Documents. Each of the Loan Documents which
purports to grant or assign to Lender a Lien on any Collateral creates a valid,
enforceable Lien on such Collateral in favor of Lender subject only to the
Permitted Exceptions.
(f) Organization; Good Standing; Formation and Organizational
Documents. Borrower is duly organized, validly existing and in good standing and
qualified to do business in the jurisdiction of its organization and the State
where the Property is located, and Borrower has all requisite power and
authority to execute, deliver and perform its obligations under each Loan
Document to which it is a party. Borrower has delivered to Lender all formation
and organizational documents of Borrower and Guarantor and all such formation
and organizational documents remain in full force and effect and have not been
amended or modified since they were delivered to Lender.
(g) Due Authorization; Enforceability. Each Loan Party has taken all
necessary action to authorize the execution, delivery and performance of the
Loan Documents, and no consent, authorization or approval of any Person is
necessary to authorize any Loan Party to execute, deliver and perform its
obligations under the Loan Documents to which it is a party. Each of the Loan
Documents has been duly executed and delivered by or on behalf of each Loan
Party, and constitutes the legal, valid and binding obligations of each Loan
Party enforceable against each Loan Party in accordance with its terms.
(h) No Conflicts. The execution, delivery and performance of the Loan
Documents by each Loan Party does not and will not (i) conflict with, result in
or cause any breach or violation under Applicable Law, (ii) conflict with or
result in a breach of any term or provision of, or constitute a default under,
any of its organizational documents or any indenture, mortgage, loan agreement
or other agreement or instrument to which any Loan Party is bound or by which
any Loan Party’s property or assets are subject, (iii) result in the creation or
imposition of any Lien (other than pursuant to the Loan Documents) upon any of
the property or assets of each Loan Party, or (iv) result in any violation of
the provisions of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over any Loan Party or any of
its properties or assets.
(i) Consents. No consent, approval, authorization or order of, or
qualification with, any court or Governmental Authority or any other Person is
required in connection with the Property and the execution, delivery or
performance by each Loan Party of the Loan Documents.
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(j) No Litigation. There are no actions, suits or proceedings at
law or in equity by or before any Governmental Authority or any other Person now
pending or, to Borrower’s Knowledge, threatened against or affecting the
Property, any of the Collateral or any Loan Party other than such actions, suits
or proceedings as (A) have been disclosed to Lender in writing and (B)
individually and in the aggregate are not likely to result in a Material Adverse
Change.
(k) No Restriction. No Loan Party is in default (after any applicable
notice and grace period) in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any agreement or
instrument to which it is a party which could result in a Material Adverse
Change.
(l) Ownership Interest. The Guarantor is the owner of one hundred
percent (100%) of the membership interest in the Borrower.
(m) Ownership of Properties; Liens. The Borrower is the sole owner of
all of the Collateral, free and clear of all Liens, charges and claims
marks, copyrights and the like), other than Permitted Exceptions.
(n) Financial Condition. Each financial statement concerning each
Loan Party and the Property provided to Lender from time to time fairly and
accurately presents, in all material respects the financial position of each
Loan Party and the Property, as the case may be, as of the date of such
financial statement.
(o) Fraudulent Transfer; Solvency. No assets of Borrower have been
acquired through any transaction or series of transactions which could be deemed
or determined to be a fraudulent transfer or conveyance under Applicable Law.
Borrower has not entered into the Loan Documents, with the actual intent to
hinder, delay, or defraud any creditor or any other Person, and Borrower has
received reasonably equivalent value in exchange for its obligations under the
Loan Documents. Giving effect to the transactions contemplated by the Loan
Documents, the fair saleable value of Borrower’s assets exceeds Borrower’s total
Indebtedness. Borrower’s assets do not constitute unreasonably small capital to
carry out Borrower’s business as conducted or as proposed to be conducted and
Borrower has not incurred, or does not intend or believe that Borrower will
incur, Indebtedness beyond Borrower’s ability to pay such Indebtedness as it
matures (taking into account the timing and amounts to be payable on or in
respect of its obligations).
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(p) No Bankruptcy Filing. No Loan Party is a debtor in any
outstanding action or proceeding pursuant to any Bankruptcy Law and no Loan
Party is (i) contemplating either the filing of a petition under any Bankruptcy
Law or the liquidation of all or any portion of its assets or property or (ii)
aware that any other Person is contemplating the filing against Borrower or
Guarantor of a petition under any Bankruptcy Law.
(q) Title. As of the Closing Date, Borrower shall have good and
marketable fee simple title to the Property, free and clear of all liens,
encumbrances and charges whatsoever other than Permitted Exceptions and the
Liens created by the Loan Documents in favor of Lender.
(r) Flood Zone. No portion of the Property is located in an area
identified by the Federal Emergency Management Agency or the Federal Insurance
Administration as an area having special flood hazards (Zones A, B or Zone V).
(s) Access. The Property has adequate rights of access to dedicated
public ways either abutting the Property or through Easement Areas (and makes no
use of any means of access, ingress or egress that is not pursuant to such
dedicated public ways or Easement Areas). Without limiting the foregoing, all
roads necessary for the full utilization of the Property as currently used (i)
have been completed and paid for and dedicated to public use and accepted by the
applicable Governmental Authority or (ii) are part of the Property. Vehicular
and pedestrian access (including curb cuts) to and from the Property is
permitted to all such streets, roads or highways as shown on the Survey.
(t) Utilities. The Property is served by water, electric, gas,
sewer, sanitary sewer and storm drain facilities and all other utilities
necessary and sufficient for its current and intended use, and such utilities
enter the Property directly from a public right-of-way abutting the Property or
through Easement Areas, and all such utilities are connected so as to serve the
Property without passing over other property other than Easement Areas.
(u) No Encroachments. The improvements at the Property lie wholly
within the boundaries and building restriction lines of the Property and do not
encroach upon easements or other encumbrances upon the Property, including any
required set-back, and no improvements on adjoining properties encroach upon the
Property.
(v) Compliance with Applicable Law: Zoning. The Property is in
compliance in all material respects with Applicable Law. The Property is
presently zoned to permit its current use. The Property complies with all zoning
requirements and does not rely on any pre-existing use or rights.
(w) Permits and Licenses. All licenses and permits currently required
for the Property have been obtained, paid for and are in full force and effect.
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(x) Separate Tax Lot. The Property consists of separate tax lots and
said lots do not include any property not included within the Property.
(y) Forfeiture. There has not been committed by Borrower any act or
omission affording any Governmental Authority the right of forfeiture as against
(i) the Property or any part thereof or (ii) any monies paid in performance of
the Obligations or (iii) any license or permit for the Property. Borrower has
not purchased the Property or any portion thereof or interest therein with the
proceeds of any illegal activity.
(z) Casualty. The Property has not been damaged or injured as a
result of any Casualty.
(aa) No Condemnation. No Condemnation proceedings have been commenced,
or, to the Borrower’s Knowledge, are threatened against the Property or any
roadways or Easement Areas providing access to the Property.
(bb) No Violations. Borrower has not received any notice of violations
of any Applicable Law in respect of the Property.
(cc) Insurance. Policies satisfying the insurance coverages, amounts
and other requirements set forth in this Agreement are in full force and effect
and, to Borrower’s Knowledge, no Person, has done, by act or omission, anything
which would impair the coverage of any Policy.
(dd) Full and Accurate Disclosure. No statement of fact made by or on
behalf of Borrower in any Loan Document contains any untrue statement of a
material fact or omits to state any material fact necessary to make statements
contained herein or therein not misleading. There is no fact known to Borrower
which has not been disclosed in writing to Lender which has resulted in or may
result in a Material Adverse Change. All reports, documents, instruments,
information and forms of evidence delivered to Lender concerning the Loan or
security for the Loan or required by the Loan Documents are accurate, correct
and sufficiently complete to give Lender true and accurate knowledge of their
subject matter, and do not contain any material misrepresentation or omission.
(ee) Foreign Person. No Loan Party is a “foreign person” within the
meaning of § 1445(f)(3) of the Code.
(ff) Use of Loan Proceeds. Borrower shall use the proceeds of the Loan
in accordance with the provisions of Section 1.1.
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(gg) Business Loan. The Loan, including interest rate, fees and charges
as contemplated hereby, (i) is a business loan within the purview of 815 ILCS
205/4(1)(c), as amended from time to time, (ii) is an exempted transaction under
the Truth In Lending Act, 12 U.S.C. 1601 et seq., as amended from time to time,
and (iii) does not, and when disbursed shall not, violate the provisions of the
usury laws and any consumer credit laws of the state of Illinois.
(hh) Leases. With respect to the Leases: (i) Borrower has delivered to
Lender true, correct and complete copies of the Leases; (ii) no rent has been
prepaid; (iii) there is no existing default or breach of any covenant or
condition on the part of Borrower or any tenant; (iv) there are no amendments of
or modifications thereto except as disclosed in writing to Lender; (v) Borrower
is the absolute owner of the Leases with full right and title to assign the same
and the rents thereunder to Lender; (vi) they are valid and in full force and
effect; (vii) there is no outstanding assignment or pledge thereof or of the
rents due or to become due thereunder; and (viii) no rents payable thereunder
have been discounted, released, waived, compromised or otherwise discharged.
(ii) Master Operating Agreement for Common Area and Parking. With
respect to the Master Operating Agreement for Common Area and Parking dated
November 23, 2011 and recorded on December 21, 2011 as Instrument No. 2011075207
in the Real Property Records of Pulaski County, Arkansas, as amended by that
certain First Amendment to Master Operating Agreement for Common Area and
Parking Garage dated January 18, 2012 and recorded on January 25, 2012 as
Instrument No. 2012004672 in the Real Property Records of Pulaski County,
Arkansas and by that certain Second Amendment to Master Operating Agreement for
Common Area and Parking Garage dated January 4, 2013 and recorded on January 9,
2013 as Instrument No. 2013002409 in the Real Property Records of Pulaski
County, Arkansas to which the Property is subject (collectively, as amended
aforesaid, the “MOPA”): (i) Borrower has delivered to Lender a true, correct and
complete copy of the MOPA; (ii) Borrower is the Operator under the MOPA; (iii)
Borrower is current on all payments due by it under the MOPA; (iv) there is no
existing default or breach of any covenant or obligation on the part of Borrower
or any of the other parties to the MOPA (or by any properties benefited and/or
burdened by the MOPA) and, to the best of Borrower’s Knowledge, no event has
occurred which, with the giving of notice or passage of time, or both, could
result in such default; (v) there are no Capital Contributions due under the
MOPA from the Owners under the Budget in effect for the current year (as such
terms are defined in the MOPA) and no Capital Contributions are presently
anticipated for the current year; (vi) there are no amendments of or
modifications to the MOPA except as disclosed in writing to Lender; (vii)
Borrower, as the owner of the Property, has full right and title to collaterally
assign Borrower’s interest in and to the MOPA and all of Borrower’s rights and
all amounts due to Borrower thereunder to Lender; (viii) the MOPA is valid and
in full force and effect; (ix) there is no outstanding assignment or pledge
thereof by Borrower or of the amounts due or to become due to Borrower
thereunder; and (x) no amounts hereafter payable to Borrower thereunder have
been discounted, released, waived, compromised or otherwise discharged.
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(jj) Operation and Easement Agreement. With respect to the Operation
and Easement Agreement dated September 8, 2009 by and between Target Corporation
(“Target”) and SPC Park Avenue Limited Partnership, a Delaware limited
partnership (“Developer”), recorded on September 8, 2009 as Instrument No.
2009061439, as amended by that certain First Amendment to Operation and Easement
Agreement between Target and Developer dated April 25, 2011 and recorded on
October 11, 2011 as Instrument No. 2011060113, and as further amended by that
certain Second Amendment to Operation and Easement Agreement dated February 13,
2012 between Target and Developer and recorded on February 23, 2012 as
Instrument No. 2012010431, all in the Official Records of Pulaski County,
Arkansas (collectively, as amended aforesaid, the “OEA”) and that certain
Agreement Regarding OEA executed by and among the Developer, Borrower and James
E. Strode as Guarantor, dated as of February 21, 2014, wherein the parties
evidenced their agreement regarding certain provisions of the OEA (the
“Agreement Regarding OEA”): (i) Borrower has delivered to Lender true, correct
and complete copies of the OEA and the Agreement Regarding the OEA; (ii) in
accordance with the Agreement Regarding the OEA, following Borrower’s purchase
of the Property, the Developer has and continues to be the Operator under the
OEA for all purposes and maintains and operates the Common Area located on the
Target Tract and Borrower (or its successors and/or assigns) shall only be
required to maintain and operate the Common Area (as such terms are defined in
the OEA) on the Property; (iii) Borrower does not have any liability under the
OEA unless Borrower elects to become the Operator under the OEA in accordance
with Section 2 of the Agreement Regarding OEA; (iv) there is no existing default
or breach of any covenant or obligation on the part of Borrower or any of the
parties to the OEA and, to the best of Borrower’s Knowledge, no event has
result in such default; (v) there are no amendments of or modifications to the
OEA and the Agreement Regarding the OEA except as disclosed in writing to
Lender; (vi) Borrower, as the owner of the Property, has full right and title to
collaterally assign Borrower’s interest in and to the OEA and the Agreement
Regarding OEA and all of Borrower’s rights and all amounts due to Borrower
thereunder to Lender; (vii) the OEA and the Agreement Regarding the OEA are
valid and in full force and effect; (viii) there is no outstanding assignment or
pledge thereof by Borrower or of the amounts due or to become due to Borrower
thereunder; and (ix) no amounts hereafter payable to Borrower thereunder have
Section 3.2 Representations and Warranties to be Continuing. Borrower
hereby covenants and agrees that all of the representations and warranties in
Section 3.1 are true and correct as of the Closing Date. All representations and
warranties made in this Agreement or in any other document delivered to Lender
by or on behalf of Borrower shall survive the making of the Loan and shall
continue in full force and effect until the Obligations are fully satisfied.
Borrower shall inform Lender in writing immediately upon discovering any breach
of such representations or warranties.
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Section 3.3 Acknowledgment of Lender’s Reliance. Borrower acknowledges
that the Loan will be made by Lender in reliance upon the representations and
warranties contained in the Loan Documents or any certificate delivered to
Lender pursuant to the Loan Documents. Lender shall be entitled to such reliance
notwithstanding any investigation which has been or will be conducted by Lender
or on its behalf.
ARTICLE IV
CONDITIONS PRECEDENT TO LOAN CLOSING
Section 4.1 Loan Closing Conditions. The obligation of Lender to make
the Loan on the Closing Date is subject to the fulfillment by Borrower of the
following conditions precedent (“Loan Closing Conditions”) no later than the
Closing Date, each in form and substance satisfactory to Lender (but if any Loan
Closing Condition is not fully satisfied by the Closing Date and Lender elects,
in its sole and absolute discretion, to proceed with funding of the Loan, no
such unsatisfied Loan Closing Condition shall be deemed waived (at such time or
any other time) unless Lender gives Borrower written notice that it is
permanently waiving any such Loan Closing Condition):
(a) Loan Documents. Lender shall have received the Loan Documents,
in each case, duly executed, delivered and, where appropriate, acknowledged by
Borrower and Guarantor as applicable.
(b) Property Condition Report. Lender shall have received and
approved a property condition report for the Property obtained at Borrower’s
cost, prepared by an engineer or architect acceptable to Lender and addressed to
Lender.
(c) Environmental Reports. Lender shall have received and approved a
current Phase I environmental site assessment report for the Property which must
be acceptable to Lender, obtained at Borrower’s cost, and prepared by an
environmental engineer acceptable to Lender, and, Lender hereby acknowledges
receipt of the Phase I Environmental Site Assessment Report dated December 12,
2013 as CBRE Project No. 13-460TX-2188 prepared by CBRE, Inc. for the Property.
In addition, Lender shall have received a Reliance Letter in the standard PNC
form to be issued by the environmental engineering firm which prepared the Phase
I Environmental Site Assessment Report of the Property authorizing Lender’s
reliance of the Phase I Environmental Site Assessment Report and Lender hereby
acknowledges receipt of such reliance letter dated February 26, 2014. In
addition, if required by Lender, in its discretion, soil reports for the
Property.
(d) Representations and Warranties. The representations and
warranties of Borrower and Guarantor contained in the Loan Documents shall be
true and correct on and as of the Closing Date.
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(e) No Event of Default. No Event of Default shall have occurred and
shall be continuing; and Borrower and Guarantor shall be in compliance with all
terms and conditions set forth in each Loan Document on their part to be
observed or performed.
(f) Material Adverse Change. No event or series of events shall have
occurred which has resulted in or is reasonably likely to result in a Material
Adverse Change.
(g) Casualty. No Casualty has occurred or Condemnation proceeding has
been initiated, which in Lender’s sole and absolute discretion, could result in
a Material Adverse Change.
(h) Closing Expenses. Lender shall have received reimbursement for
all of Lender’s Closing Expenses.
(i) Required Deliveries. Lender shall have received, reviewed and
approved each of the items set forth on Exhibit C attached hereto, each of which
shall be in form and content acceptable to Lender.
(j) Maximum Loan to Value of the Property. The Loan must have a
maximum fifty percent (50%) loan to value of the Property based on the “As Is”
value per the Appraisal which must be acceptable to Lender.
(k) Pre-Closing Debt Service Coverage Ratio Requirement. Lender shall
have received evidence from Borrower satisfactory to Lender which confirms that
the Debt Service Coverage Ratio calculated based on pro forma stabilized Net
Operating Income of the Property is not less than 1.50:1.00 (the “Pre-Closing
Debt Service Coverage Ratio Requirement”).
(l) Maximum Loan to Acquisition Cost of the Property. The Loan must
not exceed fifty percent (50%) of the Borrower’s total acquisition cost for the
Property.
ARTICLE V
ADDITIONAL BORROWER’S COVENANTS
Borrower covenants and agrees as follows:
Section 5.1 Insurance.
(a) Policies. Borrower shall insure at its cost and expense or cause to be
insured at the cost and expense of the tenants of the Property and keep insured
the Property against such perils and hazards, and in such amounts and with such
limits, and pursuant to such policies issued by such insurers, as Lender may
from time to time reasonably require (collectively, “Policies”), and, in any
event, including:
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(i) All Risk. Insurance against loss to the Property shall be on an “All Risk”
(Special Perils) and during any period of construction must be on an “All Risk
“Builders’ Risk”, non-reporting “Completed Value” form covering insurance risks
no less broad than those covered under a Standard Multi Peril (SMP) policy form,
which contains a Commercial ISO “Causes of Loss - Special Form”, including
theft, and insurance against such other risks as Lender may reasonably require,
including, but not limited to, insurance covering the cost of demolition of
undamaged portions of any portion of the Property when required by Applicable
Law and the increased cost of reconstruction to conform with current code or
ordinance requirements and the cost of debris removal. In addition, any “All
Risk Builders Risk” Policies shall cover the following to the extent available:
real estate property taxes; architect, engineering, and consulting fees; legal
and accounting fees; advertising and promotion expenses; interest on money
borrowed; and any and all other expenses which may be incurred as a result of
any property loss or destruction by an insured. Such Policies shall be in
amounts equal to the full replacement cost of the Property on an As Built Basis,
including all fixtures, equipment, construction materials and Personal Property
on and off-site but in no event less than the aggregate amount of the Loan. Such
Policies shall also contain a no co-insurance clause and an agreed amount
endorsement (with such amount to include the replacement cost of any foundation
and any underground pipes), a permission to occupy endorsement (if such
endorsement is applicable because such coverage would otherwise be excluded) and
deductibles which are in amounts reasonably acceptable to Lender.
(ii) Workers’ Compensation. During the construction of any improvements to the
Property (i) insurance covering claims based on the owner’s or employer’s
contingent liability not covered by the insurance provided in Section 5.1(a)(i)
and (ii) workers’ compensation insurance covering all Persons engaged in such
alterations or improvements.
(iii) Flood. Insurance against loss or damage by flood in compliance with the
Flood Disaster Protection Act of 1973, as amended from time to time, if the
Property is now, or at any time while the Loan remains outstanding shall be,
situated in any area which an appropriate Governmental Authority designates as a
special flood hazard area, Zone A or Zone V, in amounts equal to the full
replacement value of all above grade structures on the Property.
(iv) Earthquake. Insurance against loss or damage by earthquake or mud slide, if
any Property is now, or at any time while the Loan remains outstanding shall be,
situated in any area which is classified as a Major Damage Zone, Zones 3 and 4,
by the International Conference of Building Officials in an amount equal to the
probable maximum loss for the Property, fixtures and equipment, plus the cost of
debris removal.
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(v) Public Liability. Comprehensive liability insurance against death, bodily
injury and property damage arising in connection with the Property. Such
Policies shall be written on a Standard ISO occurrence basis form or equivalent
form, shall list Borrower as the named insured, shall designate thereon the
location of the Property and have such limits as Lender may reasonably require,
but in no event less than ONE MILLION DOLLARS ($1,000,000.00) per occurrence and
TWO MILLION DOLLARS ($2,000,000.00) in the aggregate. Borrower shall also obtain
excess umbrella liability insurance with such limits as Lender may reasonably
require, but in no event less than TEN MILLION DOLLARS ($10,000,000.00).
(vi) Business Interruption. Business Interruption and loss of rental value
insurance in an amount reasonably acceptable to Lender.
(vii) Other Insurance. Such other insurance relating to the Property as Lender
may, from time to time, reasonably require.
(b) Policy Requirements.
(i) All insurance shall: (i) be carried by companies with a Best’s rating of A/X
or better, or otherwise reasonably acceptable to Lender; (ii) be in form and
content acceptable to Lender; (iii) provide for thirty (30) days’ advance
written notice to Lender before any cancellation, adverse material modification
or notice of non-renewal; and (iv) to the extent not otherwise specified herein,
contain deductibles and limits which are in amounts acceptable to Lender.
(ii) All physical damage Policies and renewals shall contain (i) standard
mortgage and waiver of subrogation clauses in favor of Lender, and (ii) a
lender’s loss payable clause in favor of Lender for personal property, contents,
inventory and equipment. All liability Policies and renewals shall name Lender
as an additional insured. No Person (other than Lender) shall appear in the
mortgagee or loss payable clause without Lender’s prior written consent, as it
pertains to the Property. In the event of the foreclosure of the Mortgage or any
other transfer of title to the Property in full or partial satisfaction of the
Loan, all right, title and interest of Borrower shall pass to the purchaser or
grantee.
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(c) Delivery of Policies. Borrower shall deliver to Lender a binder (accompanied
by an insurance certificate) marked “paid” or other evidence satisfactory to
Lender of the continuing coverage before the expiration of existing Policies and
if the same is not issued by the insurer within such timeframe, then Borrower
shall deliver evidence to Lender of the continuing coverage evidenced by a
renewal insurance certificate delivered to Lender before the expiration of
existing Policies. If Lender has not received the items specified in the
immediately preceding sentence within the time frames therein specified (even if
advised orally or in writing that such Policies have been renewed or otherwise
obtained), Lender shall have the right, but not the obligation, to purchase such
insurance. Any amounts so disbursed by Lender in so doing shall be deemed to be
Protective Advances, but nothing contained in this Section shall require Lender
to incur any expense or take any action hereunder, and inaction by Lender shall
never be considered a waiver of any right accruing to Lender on account of this
Section.
(d) Separate Insurance. Borrower shall not carry (and shall not allow or permit
any other Loan Party to carry) any separate insurance on the Property concurrent
in kind or form with any insurance required hereunder or contributing in the
event of loss without Lender’s prior written consent, and any such Policy shall
have attached a standard non-contributing mortgagee clause, with loss payable to
Lender, and shall otherwise meet all other requirements set forth herein.
(e) Event of Default. Any default, breach or violation of this Section 5.1 shall
be an automatic Event of Default (without any notice, grace or cure period).
Section 5.2 Title to Property. Borrower shall warrant and defend title
to the Collateral and the Property and every part thereof, and the validity and
priority of the liens and security interests created by the Loan Documents
against the claims of all Persons whatsoever. Borrower shall reimburse Lender
for any losses, costs, damages or expenses (including reasonable attorneys’
fees) incurred by Lender if an interest in the Property or the Collateral is
claimed by another Person, and any amounts expended by Lender in respect of such
losses, costs, damages or expenses shall be deemed a Protective Advance.
Section 5.3 Zoning. Borrower will cause the Property to be in
compliance with Applicable Law. Without limiting the generality of the
foregoing, Borrower shall not initiate, join in, acquiesce in, or consent to any
change in, or modification or qualification of, any private or public
restrictive covenant, zoning law or other restriction, limiting, conditioning,
changing, qualifying or defining the uses which may be made of the Property or
any part thereof without the prior written consent of Lender. If under
applicable zoning provisions, the use of all or any portion of the Property is
or shall become a nonconforming use, Borrower will not cause or permit the
nonconforming use to be discontinued or abandoned without the prior written
consent of Lender.
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Section 5.4 Recorded Documents/Purchase Agreement. Without the prior
written consent of the Lender, Borrower shall not permit or cause any other
Person to, record any map, plat, parcel map, lot line adjustment or other
subdivision map, easement, reciprocal easement agreement, declaration or any
other recorded document of any kind covering any portion of the Property, or any
amendment to any of the foregoing. Lender shall not unreasonably withhold,
condition, and/or delay its consent to any request by Borrower to grant any
utility or governmental easements covering any portion of the Property.
Borrower shall not permit the Purchase Agreement to be amended in any material
respect without the prior written consent of Lender, which consent shall not be
unreasonably withheld, conditioned or delayed.
Any default, breach or violation of this Section 5.4 which continues after ten
(10) days’ notice from Lender of such default, breach or violation shall be an
automatic Event of Default (without any further notice, grace or cure period).
Section 5.5 Maintenance of the Property and Ownership Obligations.
Borrower shall maintain, or cause the tenants to maintain, the Property in a
good and safe condition and repair. No improvements at the Property shall be
removed, demolished or materially altered without the prior written consent of
Lender.
Section 5.6 Taxes and Liens.
(a) Taxes and Other Charges. Borrower shall promptly pay or caused
to be paid all taxes, assessments, governmental licenses and impositions, and
other similar charges (the “Taxes”), all ground rents, maintenance charges,
charges for utility services and similar charges (the “Other Charges”), in each
case now or hereafter levied or assessed or imposed against the Property or any
part thereof as same become due and payable. Borrower will deliver to Lender,
promptly upon Lender’s request, evidence satisfactory to Lender that the Taxes
and Other Charges have been so paid or are not then delinquent. Borrower shall
furnish to Lender paid receipts for the payment of the Taxes and Other Charges
prior to the date the same shall become delinquent.
(b) Liens. Subject to Section 5.6(c) below, Borrower shall not suffer
and shall promptly cause to be paid and discharged any Lien (other than
Permitted Exceptions) against the Collateral or the Property or any portion
thereof.
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(c) Contest. After prior written notice to Lender, Borrower, at its
own expense, may contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the amount or validity or
application in whole or in part of any of the Taxes, Other Charges or any Lien
(other than the Lien of the Loan Documents) provided that, and only for so long
as (1) no Event of Default exists; (2) neither any Collateral nor the Property
or any part thereof or interest therein will in the opinion of Lender be in
danger of being sold, forfeited, terminated, canceled or lost; (3) in the case
of Taxes, Borrower has paid or caused to be paid the same before delinquent even
though they are contesting the same; (4) such contest shall be permitted under
and be conducted in accordance with Applicable Law and in accordance with the
provisions of any other instrument or agreement affecting any Property to which
Borrower is subject and shall not constitute a default thereunder; (5) Borrower
promptly pays or causes to be paid any contested amount if and to the extent the
outcome of such contest requires the payment of the same; and (6) unless
Borrower shall have paid or caused to be paid the same under protest, at
Lender’s option Borrower shall have or shall cause to be either (i) deposited
with Lender adequate cash reserves for the payment thereof, together with all
interest and penalties which may accrue thereon, or (ii) furnished to Lender
such other security Lender may deem adequate to insure the payment of such
contested amounts together with all interest and penalties which may accrue
thereon; provided, however, Lender agrees that Borrower may satisfy the
requirements of this clause (6) by obtaining or causing to be obtained in favor
of Lender an indemnity (in form and content acceptable to Lender) from the Title
Company or other surety acceptable to Lender in respect of any Lien being
contested by Borrower.
Section 5.7 Waste. Borrower shall not, (a) commit or suffer any
physical waste of any Property, (b) make or permit to be made any change in the
use of the Property which will in any way materially increase the risk of fire
or other hazard, (c) take or cause to be taken any action that might invalidate
or give cause for cancellation of any Policy, or (d) do or permit to be done
thereon anything that could in any way impair the value of the Property or any
Collateral. Any default, breach or violation of this Section 5.7 shall be an
Section 5.8 Compliance With Laws. Borrower shall promptly comply with
all Applicable Law relating to the Property. Borrower shall give prompt notice
to Lender of the receipt by Borrower of any notice related to a violation of any
Applicable Law and of the commencement of any proceedings or investigations
which relate to compliance with Applicable Law.
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Section 5.9 Books and Records.
(a) Inspections. Borrower will keep and maintain, in accordance with
generally accepted accounting principles consistently applied, proper and
accurate books, records and accounts reflecting its financial affairs. Upon
reasonable advance notice, Lender and its consultants shall have the right from
time to time at all times during normal business hours to examine such books,
records and accounts at the office of Borrower or other Person maintaining such
books, records and accounts and to make copies or extracts thereof as Lender
shall desire. Any default, breach or violation of this Section 5.9 which
continues after ten (10) days’ notice from Lender of such default, breach or
violation shall be an automatic Event of Default (without any further notice,
grace or cure period).
(b) Financial Reports. Borrower shall deliver or cause to be
delivered to Lender each of the following:
(i) Borrower Annual Financial Statements. Within one hundred twenty
(120) days after the end of each calendar year during the term of the Loan,
complete copies of Borrower’s annual internally prepared financial statements
for such calendar year in accordance with generally accepted accounting
practices consistently applied, including a statement of operations (profit and
loss), a statement of cash flows (GAAP basis), a calculation of net operating
income, a balance sheet and such other information (including non-financial
information) as reasonably requested by Lender, all of the foregoing financial
statements and information shall be prepared and certified as true, complete and
correct by an appropriate officer of the Managing Member of Borrower.
(ii) Borrower Quarterly Financial Statements. Within forty-five (45)
days after the end of each calendar quarter ending March 31, June 30 and
September 30, complete copies of Borrower’s internally prepared financial
statements for such fiscal quarter in accordance with generally accepted
accounting practices consistently applied, including a statement of operations
(profit and loss), a statement of cash flows (GAAP basis), a calculation of net
operating income, a balance sheet and such other information (including
non-financial information) as reasonably requested by Lender, all of the
foregoing financial statements and information shall be prepared and certified
as true, complete and correct by an appropriate officer of the Managing Member
of Borrower.
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(iii) Guarantor’s Annual Financial Statements. Within ninety (90) days
after the end of each fiscal year of the Guarantor during the term of the Loan,
complete copies of Guarantor’s annual GAAP-based unqualified audited financial
statements for such fiscal year in accordance with generally accepted accounting
loss), a statement of cash flows, a balance sheet and such other information
(including non-financial information) as reasonably requested by Lender, all of
the foregoing financial statements and information shall be prepared and audited
by an independent auditor of recognized standing, selected by the Guarantor and
reasonably acceptable to the Lender and certified as true and correct by the
Guarantor’s treasurer or chief financial officer. Guarantor’s Form 10-K timely
filed with the SEC shall satisfy the requirements in this Section 5.9(b)(iii).
(iv) Guarantor’s Quarterly Financial Statements. Within forty-five (45)
days after the end of each fiscal quarter of the Guarantor during the term of
the Loan, complete copies of Guarantor’s quarterly compiled financial statements
for such fiscal quarter in accordance with generally accepted accounting
practices consistently applied and SEC guidelines, including a statement of
operations (profit and loss), a statement of cash flows, a balance sheet and
such other information (including non-financial information) as reasonably
requested by Lender, all of the foregoing financial statements and information
shall be prepared and compiled by an independent auditor of recognized standing,
selected by the Guarantor and reasonably acceptable to the Lender and certified
as true and correct by the Guarantor’s treasurer or chief financial officer.
Guarantor’s Form 10-Q timely filed with the SEC shall satisfy the requirements
of this Section 5.9(b)(iv).
(v) Quarterly Operating Statements. Within forty-five (45) days after
the end of each calendar quarter, complete copies of Borrower’s internally
prepared operating statements for the Property showing all Gross Income, all
Operating Expenses and all profit and loss for the subject calendar quarter in a
form reasonable acceptable to Lender and containing such detail and such other
information (including non-financial information) as reasonably requested by
Lender, all of the foregoing operating statements and information shall be
prepared and certified as true, complete and correct by an appropriate officer
of the Managing Member of Borrower.
(vi) Rent Rolls. Only if requested by Lender and then upon Lender’s
request, a certified copy of the updated rent roll for the Property in a form
reasonably acceptable to Lender, which shall be prepared and certified as true,
complete and correct by an appropriate officer of the Managing Member of
Borrower.
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(vii) Budgets and Forecasts. Only if requested by Lender and then upon
Lender’s request, copies of the projected operating budgets and forecasts for
the Property for the ensuing year containing such detail as Lender shall
reasonably require which, which shall be prepared and certified as true, correct
and complete by an appropriate officer of the Managing Member of Borrower.
(viii) Annual Tenant Sales and Co-Tenancy Reports. Only if requested by
Lender and then upon Lender’s request, annual tenant sales reports for those
Tenants of the Property which are required to report their annual tenant sales
to Borrower in a form acceptable to Lender. Within thirty (30) days of Lender’s
request, co-tenancy reports for the Property in a form acceptable to Lender,
which shall be certified as true, correct and complete by an appropriate officer
(ix) Leasing Activity Reports. Only if requested by Lender and then
upon Lender’s request, leasing activity reports for the Property in a form
acceptable to Lender, which shall be prepared and certified as true, correct and
complete by an appropriate officer of the Managing Member of Borrower.
(x) Other Information. Within ten (10) days after request, such
further detailed information covering the Property and the financial affairs of
any Loan Party and/or any related entity thereof, as may be reasonably requested
by Lender.
All financial statements regarding Borrower and Guarantor which are delivered by
Borrower to Lender pursuant to this Section 5.9(b) shall be submitted by
Borrower to Lender in one of the following four (4) methods:
Email: MACROBUTTON HtmlResAnchor [email protected]
Fax: 913-253-9813
(Please use the ‘fine’ quality setting when faxing)
Regular Mail:
PNC Bank, NA
Attn: Credit Administration
PO Box 25964
Shawnee Mission, KS 66225-5964
Overnight Mail:
PNC Bank, NA
Attn: Credit Administration
10851 Mastin, Suite 300
Overland Park, KS 66210
913-253-9000
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Any default, breach or violation of this Section 5.9(b) which continues after
fifteen (15) days’ notice from Lender of such default, breach or violation shall
be an Event of Default (without any further notice, grace or cure period).
(c) Litigation. Borrower shall give prompt written notice to Lender
of any material litigation or governmental proceedings pending against the
Property or any Loan Party.
(d) Bankruptcy. Borrower shall give prompt written notice to Lender
of any voluntary or involuntary bankruptcy, reorganization, insolvency or
similar proceeding under any Bankruptcy Law against any Loan Party.
Section 5.10 Continued Existence. Borrower shall do or cause to be done
all things necessary to preserve, renew and keep in full force and effect its
existence, and material rights, licenses, permits and franchises in compliance
with Applicable Law. Any violation of this Section 5.10 which continues for ten
(10) days after Borrower’s Knowledge of such default, breach or violation
(commencing from the date such knowledge was first obtained) shall be an
Section 5.11 Additional Ownership Covenants. Until the Obligations have
been paid in full and fully performed, there shall be no changes in the
ownership, control or management of Borrower without the prior written consent
of Lender unless the same constitutes and satisfies all of the requirements of a
Permitted Transfer.
Section 5.12 Merger, Consolidation or Sale. Until the Obligations have
been paid in full and fully performed, Borrower shall not merge or consolidate
with any other Person or sell, lease or transfer or otherwise dispose of any of
its assets to any Person outside the ordinary course of its business without the
prior written consent of Lender unless the same constitutes and satisfies all of
the requirements of a Permitted Transfer.
Section 5.13 Leases. Borrower, as applicable, shall faithfully perform the
landlord’s covenants under the Leases. Borrower shall neither do nor neglect to
do, nor permit to be done (other than enforcing the terms of the Leases in
exercising Borrower’s remedies thereunder following a default or event of
default on the part of any tenant in the performance of its obligations pursuant
to any Lease), anything which may cause the modification or termination of any
Lease, or of the obligations of any tenant, or which may diminish or impair the
value of the any Lease or the rents provided for therein, or the interest of
Borrower or Lender therein or thereunder without the prior written consent of
Lender. Further, Borrower shall not, without the prior written consent of Lender
obtained in each instance:
(a) Lease to any Person, all or any part of the Property except for
Small Space Leases;
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(b) Lease to any Person, all or any part of the Property pursuant to
a Lease that contains any provision that deviates by more than ten percent (10%)
from the existing Lease for the subject portion of the Property;
(c) Cancel, terminate or accept a surrender or suffer or permit any
cancellation, termination or surrender of any Lease or any guaranty of and
Lease;
(d) Modify any Lease in any respect except for Small Space Leases;
(e) Commence any summary proceeding or other action to recover
possession of the Property pursuant to any Lease, other than a proceeding
brought in good faith by reason of a default by any tenant thereunder;
(f) Receive or collect, or permit the receipt or collection of, any
rents for more than one month in advance of the payment due date;
(g) Except for the Loan Documents, execute any agreement or
instrument or create or permit a Lien which may be or become superior to any
Lease;
(h) Suffer or permit to occur any release of liability of any tenant
or the accrual of any right to withhold payment of any rent except as
specifically provided in the Leases;
(i) Sell, assign, transfer, mortgage, pledge or otherwise dispose
of or encumber any Lease or any of the rents due thereunder except for the Loan
Documents;
(j) Alter, modify or change the terms of any guaranty of any Lease
or consent to the release of any party thereto;
(k) Request, consent, agree to, or accept the subordination of any
Lease to any mortgage (other than the Mortgage) or other encumbrance now or
hereafter affecting the Property; or
(l) Consent to the assignment of any Lease or any subletting of the
Property demised pursuant to any Lease except for the Loan Documents and except
as specifically provided in any Lease previously approved by Lender in writing.
In addition, Borrower shall immediately notify Lender in writing if: (a) any
tenant defaults (following the expiration of any applicable cure period) under
any Lease; or (b) any Lease terminates for any reason.
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Section 5.14 Compliance. The Borrower shall use the proceeds of the Loan
for business purposes as set forth in Section 1.1 not in contravention of any
requirements of law and not in violation of this Agreement, and shall comply, in
all respects, including the conduct of its business and operations and the use
of its properties and assets, including, without limitation, the Property, with
all applicable laws, rules, regulations, decrees, orders, judgments, licenses
and permits. In addition, and without limiting the foregoing sentence, the
Borrower shall (i) ensure, and cause each of its subsidiaries to ensure, that no
person who owns twenty percent (20.00%) or more of the equity interests in the
Borrower, or otherwise controls Borrower or any of its respective subsidiaries
is or shall be listed on the Specially Designated Nationals and Blocked Person
List or other similar lists maintained by the Office of Foreign Assets Control
(“OFAC”), the Department of the Treasury or included in any Executive Orders,
(ii) not use or permit the use of the proceeds of the Loan to violate any of the
foreign asset control regulations of OFAC or any enabling statute or Executive
Order relating thereto, and (iii) comply, and cause each of its respective
subsidiaries to comply, with all applicable Bank Secrecy Act (“BSA”) laws and
regulations, as amended.
ARTICLE VI
ASSIGNMENTS, SALE AND ENCUMBRANCES
Section 6.1 Lender’s Right to Assign. Lender may assign, negotiate,
pledge or otherwise hypothecate this Agreement, including the Note, and other
Loan Documents to any bank, participant or financial institution, and in case of
such assignment, Borrower will accord full recognition thereto and agrees that
all rights and remedies of Lender in connection with the interest so assigned
shall be enforceable against Borrower by such bank, participant, or financial
institution with the same force and effect and to the same extent as the same
would have been enforceable by Lender but for such assignment; provided,
however, that Lender may not assign, negotiate, pledge or otherwise hypothecate
this Agreement, including the Note and any other Loan Documents (or any portion
thereof) to any entity that is not a “United States person” within the meaning
of Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended.
Section 6.2 Prohibition of Assignments and Encumbrances by Borrower.
Borrower shall not, without the prior written consent of Lender, create, effect,
consent to, attempt, contract for, agree to make, suffer or permit any
Prohibited Transfer.
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ARTICLE VII
DEFAULTS; REMEDIES
Section 7.1 Events of Default. The term “Event of Default” as used in
this Agreement shall mean the occurrence of any one or more of the following
events set forth in this Section 7.1:
(a) (i) Borrower shall fail to make any payment to Lender under the
Loan Documents when due and payable, and Borrower’s failure to make such payment
shall continue for ten (10) days (inclusive of the first day such payment was
due), except that no grace or cure period shall apply to payment of any amounts
due on the Maturity Date, or (ii) Borrower shall fail to pay the entire Debt or
any portion thereof on the Maturity Date;
(b) Any failure of Borrower for a period of thirty (30) days (except
as to Events of Default specified elsewhere in this Section 7.1 or where a
longer or shorter period is specified herein or in the other Loan Documents for
a particular default) after written notice from Lender to Borrower to observe or
perform any of the covenants of Borrower under the terms of this Agreement or
any other of the Loan Documents except payment of the Note; provided, if such
failure is not susceptible of cure within said period, as reasonably determined
by Lender, and provided Borrower is in good faith attempting to cure the same,
Borrower shall have such additional time as is necessary not to exceed ninety
(90) days;
(c) The occurrence of a Prohibited Transfer;
(d) The existence of any collusion, fraud, dishonesty or bad faith by
or with the acquiescence of Borrower or Guarantor which in any way relates to or
affects the Loan or the Property;
(e) If at any time any representation, statement, report or
certificate made now or hereafter by Borrower or Guarantor is not true and
correct in any material respect, or any statement or representation made in the
loan application submitted to Lender for the Loan is not true and correct in any
material respect;
(f) If all or a substantial part of the assets of Borrower or
Guarantor is attached, seized, subjected to a writ or distress warrant, or is
levied upon, unless such attachment, seizure, writ, warranty or levy is vacated
within sixty (60) days;
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(g) If Borrower or Guarantor is enjoined, restrained or in any way
prevented by court order from performing any of its obligations hereunder or
under the other Loan Documents or conducting all or a substantial part of its
business affairs; or if a proceeding seeking such relief is not dismissed within
sixty (60) days of being filed or commenced;
(h) If a notice of lien, levy or assessment is filed of record with
respect to all or a substantial part of the property of Borrower or Guarantor by
the United States, or any other governmental authority is not released within
twenty (20) days or bonded over to Lender’s reasonable satisfaction;
(i) If there occurs a Material Adverse Change in the financial
condition of Borrower or Guarantor;
(j) Default in the payment when due (subject to any applicable cure
period), whether by acceleration or otherwise, of any other indebtedness for
borrowed money of, or guaranteed by, Borrower or default in the performance or
observance of any obligation or condition with respect to any such other
indebtedness if the effect of such default is to accelerate the maturity of any
such indebtedness, or to permit the holder or holders thereof, or any trustee or
agent for such holders, to cause such indebtedness to become due and payable
prior to its expressed maturity date and, in Lender’s reasonable judgment, such
default will have a material adverse effect on the ability of Borrower to pay or
perform the Obligations;
(k) If Borrower or Guarantor:
(i) Shall file a voluntary petition in bankruptcy or for
arrangement, reorganization or other relief under any chapter of the Federal
Bankruptcy Code or any similar law, state or federal, now or hereafter in
effect;
(ii) Shall file an answer or other pleading in any proceedings
admitting insolvency, bankruptcy, or inability to pay its debts as they mature;
(iii) Shall have any involuntary proceeding under the Federal
Bankruptcy Act or similar law, state or federal, now or hereafter in effect,
filed against any one of them, and such proceedings shall not have been vacated
within sixty (60) days after the filing thereof;
(iv) Shall have an order appointing a receiver, trustee or liquidator
entered against any of them or for all or a major part of its property or any
Property and the same shall not have been vacated within thirty (30) days
following entry thereof;
(v) Shall be adjudicated a bankrupt;
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(vi) Shall make an assignment for the benefit of creditors or shall
admit in writing its inability to pay its debts generally as they become due or
shall consent to the appointment of a receiver or trustee or liquidator of all
or the major part of its property, or any Property; or
(vii) Is a firm, partnership, limited liability company or corporation
and said firm, partnership, limited liability company or corporation is
dissolved, terminated or merged;
(l) The dissolution, termination or merger of any of Borrower or
Guarantor unless such dissolution, termination or merger is permitted under the
terms of Section 14 of the Mortgage;
(m) There is a discontinuance by the Guarantor of the Guaranty or the
Guarantor shall contest the validity of the Guaranty;
(n) The failure of Borrower to comply with any of the covenant
contained in Paragraph 15 of the Mortgage captioned, “Single Asset Entity”;
(o) Borrower and Guarantor shall fail to make any payment to Seller
of the Seller Earnout when due and payable to the Seller under the terms of the
Purchase Agreement;
(p) If any representation or warranty contained in Section 8.29 of
this Agreement captioned, “Anti-Money Laundering/International Trade Law
Compliance”, is or becomes false or misleading at any time; or
(q) If any event occurs under the terms of this Agreement or any
other Loan Document, which by such terms constitutes or is stated to be an
“Event of Default” or an automatic “Event of Default”;
it being understood and agreed that if any event or circumstance occurs or
exists which is an Event of Default under any one subsection of subsections (a)
through (q) (inclusive) of this Section 7.1, then an “Event of Default” under
the Loan Documents shall exist (and shall be deemed continuing) regardless of
whether any other term or provision of any Loan Document provides for any, or
for any different, notice, grace and/or cure period, in which case such other
notice, grace or cure period shall be void and of no force or effect.
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Section 7.2 Remedies.
(a) Upon the occurrence of any Event of Default, Borrower agrees
that Lender may (but without any obligation to do so) take such action, without
notice or demand, as Lender deems advisable to protect and enforce its rights
against Borrower, the Guarantor and in and to the Collateral, including, but not
limited to, the following actions, each of which may be pursued concurrently,
separately or otherwise, at such time and in such order as Lender may determine,
in its sole and absolute discretion, without impairing or otherwise affecting
the other rights and remedies of Lender (and any and all costs and expenses,
including reasonable attorneys’ fees, paid or incurred by Lender in connection
with the following shall constitute a Protective Advance):
(i) declare the entire unpaid Debt to be immediately due and
payable without any further notice, demand or other action by Lender;
(ii) subject to the terms of the Mortgage, institute proceedings,
judicial or otherwise, or take any other action, for the enforcement of Lender’s
rights under the Loan Documents or at law or in equity, including the
appointment of a receiver, the foreclosure, auction or sale (public or private)
of the Collateral or any portion thereof;
(iii) terminate, in whole or in part, any obligation Lender may have
hereunder or under any other Loan Document;
(iv) institute an action, suit or proceeding in equity for the specific
performance of any of the Obligations;
(v) pay, perform, or cause the performance of any of the Obligations,
complete construction of any work at the Property, in each case in its own name
or in the name of Borrower, it being understood and agreed that Borrower hereby
grants to Lender a power of attorney coupled with an interest to take any such
action;
(vi) recover judgment on the Note either before, during or after any
proceedings for the enforcement of any other Loan Document;
(vii) exercise any and all rights and remedies granted to a secured party
upon default under the applicable Uniform Commercial Code;
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(viii) exercise all or any one or more of the rights, powers and other
remedies available to Lender under the Loan Documents, at law or in equity, at
any time and from time to time, whether or not all or any portion of the Debt
shall be declared due and payable, and whether or not Lender shall have
commenced any foreclosure proceedings or other action for the enforcement of its
rights and remedies under any of the Loan Documents with respect to the
Collateral;
(ix) apply any sums held by the Lender, or held in escrow or otherwise
by Lender belonging to Borrower to the payment of the Debt; and
(x) pursue such other remedies and rights as Lender may have under
Applicable Law or at equity or available under the Loan Documents.
(b) Proceeds. The proceeds of any disposition of the Collateral, or
any part thereof, or any other sums collected by Lender pursuant to the Loan
Documents (including the collection of rents), may be applied by Lender to the
payment of the Debt or any part thereof in such priority and amounts as Lender
in its sole and absolute discretion shall determine.
(c) Lender Action. Upon the occurrence of any Event of Default,
Lender may, but without any obligation to do so and without notice to or demand
on Borrower and without releasing Borrower from any Obligation, take any action
in such manner and to such extent as Lender may deem necessary to protect the
Collateral and/or take any action to cure any Event of Default. Borrower agrees
that Lender is authorized to enter upon the Property for such purposes, or
appear in, defend, or bring an action or proceeding to protect its interest in
the Property or to collect the Debt, and the cost and expense thereof (including
reasonable attorneys’ fees), shall constitute a Protective Advance and shall be
payable on demand. The Borrower hereby waives any and all presentment, demand,
notice of dishonor, protest, and all other notices and demands in connection
with the enforcement of Lender’s rights under the Loan Documents, and hereby
consents to, and waives notice of release, with or without consideration of the
Guarantor or any Collateral, notwithstanding anything contained herein or in the
Loan Documents to the contrary.
(d) No Further Right to Cure. Once an Event of Default has occurred
hereunder, in Lender’s sole discretion, such Event of Default shall be deemed
continuing hereunder regardless of whether Borrower, Guarantor, Lender, or any
other Person has taken any action to remedy or cure the cause of such Event of
Default.
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(e) No Waiver, Etc. The failure of Lender to insist upon strict
performance of any term, covenant or condition contained herein or in the other
Loan Documents shall not be deemed to be a waiver, modification, amendment or
estoppel thereof and Borrower or other Person shall not be entitled to rely on
such action or inaction. Borrower shall not be relieved of or released from its
Obligations by reason of (i) the failure of Lender to comply with any request of
Borrower to take any action to enforce any of the provisions hereof or any other
Loan Document, (ii) the release, regardless of consideration, of the whole or
any part of the Collateral, or of the Guarantor or any Person liable for the
Debt or any portion thereof, or (iii) any agreement or stipulation by Lender
extending the time of payment or otherwise modifying or supplementing the terms
of the Loan Documents. Lender may resort for the payment of the Debt to any
Collateral held by Lender in such order and manner as Lender, in its sole and
absolute discretion, may elect. Lender may take action to recover the Debt, or
any portion thereof, or to enforce any covenant hereof without prejudice to the
right of Lender thereafter to recover against the Collateral under the Loan
Documents. The rights of Lender under each of the Loan Documents shall be
separate, distinct and cumulative and none shall be given effect to the
exclusion of the others. No act of Lender shall be construed as an election to
proceed under any one provision of any Loan Document to the exclusion of any
other provision. Lender shall not be limited exclusively to the rights and
remedies herein stated but shall be entitled to every right and remedy now or
hereafter afforded at law or in equity.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Further Assurances. Borrower forthwith upon the execution
and delivery of this Agreement and thereafter from time to time at Lender’s
request, will cause any of the Loan Documents (including any additional
Financing Statements or continuation statements) to be filed, registered or
recorded in such manner and in such places as may be required or permitted by
any Applicable Law in order to publish notice of and fully protect, perfect or
continue the perfection of any Lien in favor of Lender and the interest of
Lender in the Collateral. In addition, Borrower will, at its sole cost and
expense, (i) do, execute, acknowledge and deliver or cause to be done, executed,
acknowledged and delivered all and every such further acts, deeds, conveyances,
mortgages assignments, financing statements, continuation statements, notices of
require, for the better assuring, carrying out, conveying, assigning,
transferring, pledging, hypothecating, perfecting, preserving and confirming
unto Lender the Liens and other property rights granted, bargained, sold,
conveyed, confirmed, pledged, assigned, warranted or transferred, or intended
now or hereafter so to be, under the Loan Documents, or which Borrower may be or
may hereafter become bound to convey, assign, transfer, pledge, or hypothecate
to Lender, or for carrying out the intention or facilitating the performance of
the terms of the Loan Documents and (ii) furnish or cause to be furnished to
Lender all instruments, documents, surveys, certificates, plans and
specifications, appraisals, title and other insurance reports and agreements,
and each
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and every other document, certificate, agreement and instrument required to be
furnished by Borrower pursuant to the terms of the Loan Documents or reasonably
requested by Lender in connection therewith. Borrower, on demand, will execute
and deliver one or more financing statements or other instruments, to evidence
more effectively the security interest of Lender in the Collateral.
Section 8.2 Estoppel Certificates/Subordination, Non-Disturbance and
Attornment Agreements.
(a) Borrower’s Estoppel Certificates. Borrower, within ten (10)
Business Days after request by Lender, shall furnish to Lender a current written
statement, dated as of the date of Borrower’s response, duly acknowledged and
certified, setting forth (i) the amount of the Debt, (ii) the rate or rates of
interest on the Note, (iii) the terms of payment and Maturity Date of the Note ,
(iv) the date installments of interest and/or principal were last paid, (v) a
list of all the Loan Documents, (vi) that, except as specifically provided in
such statement and to Borrower’s Knowledge, there are no defaults or events
which with the passage of time or the giving of notice or both, would constitute
an Event of Default under the Loan Documents, (vii) that the Loan Documents are
valid, legal and binding obligations of Borrower, enforceable against Borrower
in accordance with their terms and have not been modified or if modified, giving
particulars of such modification, (viii) whether any offsets or defenses exist
against the Obligations and, if any are alleged to exist, a detailed description
thereof, and (ix) as to any other matters reasonably requested by Lender.
(b) Tenant Estoppel Certificates. On or prior to the Closing Date,
Borrower shall deliver to Lender a Tenant Estoppel Certificate from all tenants
with Leases in excess of 2,000 square feet at the Property which must total
ninety-five percent (95%) of the Leases at the Property, the form of which shall
be approved by Lender. Following a period of twelve (12) months after the
Closing Date (unless an Event of Default occurs, then Lender may request a
Tenant Estoppel Certificate at any time), Borrower, within five (5) days after
request by Lender, shall send out a Tenant estoppel request to any other tenant
previously approved by Lender using the same form of tenant estoppel certificate
form accepted by Lender for Closing or such other form as may be provided for in
any Lease previously approved by Lender in writing and such tenant estoppel
certificate shall be delivered to Lender within forty-five (45) days of the date
of Borrower’s written request such tenant for same. So long as no Event of
Default exists, Lender shall not request a tenant estoppel certificate from any
tenant more frequently than once per calendar year.
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(c) Subordination, Non-Disturbance and Attornment Agreements. On or
prior to the Closing Date, Borrower shall deliver to Lender a Subordination,
Non-Disturbance and Attornment Agreement from the following Tenants whose Leases
are each in excess of 5,000 square feet: Staples the Office Superstore East,
Inc.; Cheddar’s Casual Café, Inc.; Sterling Jewelers, Inc. d/b/a Jared Jewelers
and any other tenant whose Lease is of record which includes, without
limitation, Verizon Wireless Tennessee Partnership d/b/a Verizon Wireless; the
form of which shall be approved by Lender. Following the Closing Date, Borrower,
within thirty (30) days after request by Lender, shall furnish to Lender,
Subordination, Non-Disturbance and Attornment Agreements from any and all other
tenants at the Property previously approved by Lender in writing, whose Leases
are each in excess of 5,000 square feet or whose Lease is of record, the form of
which shall be acceptable to Lender.
Section 8.3 Principles of Construction. The following principles of
construction shall apply to this Agreement:
(a) The titles and headings of the Articles, Sections and
subsections of this Agreement have been inserted for convenience of reference
only and are not intended to summarize or otherwise describe the subject matter
of such Articles, Sections and subsections and shall not be given any
consideration in the construction of this Agreement.
(b) All references to Sections and Exhibits are to Sections and
Exhibits in or to this Agreement unless otherwise specified. Any reference to
“this Section” in this Agreement shall mean the Section in which such reference
appears, and shall also be deemed refer to the subsections contained in such
Section.
(c) Unless otherwise specified, the words “hereof”, “herein” and
“hereunder” and words of similar import, when used in this Agreement, shall
Agreement.
(d) The words “includes”, “including” and similar terms shall be
construed as if followed by the words “without limitation.”
(e) Unless otherwise specified, all meanings attributed to defined
terms herein shall be equally applicable to both the singular and plural forms
of the terms so defined.
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(f) To the extent that any provision in this Agreement requires,
expressly or implicitly, performance, observance or compliance by any Person
other than Borrower, or requires Borrower to cause such performance, observance
or compliance, such provision shall be construed as Borrower’s obligation to
cause such other Person to perform, observe or comply with such provision, and,
accordingly, the failure by such Person to perform, observe or comply with such
provision shall be considered a breach by Borrower of its obligations under this
Agreement. Further, whenever any provision of this Agreement prohibits any
Person from doing or causing to be done, or requires any Person to abstain from
doing or causing or permitting, any act or thing, such provision shall be deemed
to have been breached if such act or thing is done by Borrower or other Person
acting by or on behalf of such Person. The foregoing is subject to any
applicable cure periods afforded Borrower under this Agreement.
(g) Definitions contained in this Agreement or any other Loan
Document which identify documents, including this Agreement or any other Loan
Document, shall be deemed to include all Amendments thereto.
(h) Any reference in the Loan Documents to the successors or assigns
of Borrower shall not be construed to imply any consent or approval by Lender of
any such succession or assignment.
(i) Borrower acknowledges and agrees that this Agreement and the
other Loan Documents shall not be construed more strictly against the Lender
because the Lender or its legal counsel was the primary draftsperson of this
Agreement or such other Loan Document, as the case may be.
Section 8.4 Parties Bound, Etc. The provisions of this Agreement shall
be binding upon and inure to the benefit of Borrower and Lender and their
respective permitted successors and assigns, provided nothing in this Section
shall be deemed to give Borrower the right to transfer any interest in the
Property.
Section 8.5 Waivers. Lender may at any time and from time to time waive
any one or more of the conditions, requirements or obligations contained herein,
but any such waiver shall be deemed to be made in pursuance hereof and not in
modification thereof, and any such waiver in any instance or under any
particular circumstance shall not be effective unless in writing and shall not
be considered a waiver of such condition in any other instance or any other
circumstance.
Section 8.6 Severability. If any term, covenant or provision of this
Agreement or any other Loan Document shall be held to be invalid, illegal or
unenforceable in any respect, this remainder of this Agreement or such other
Loan Document shall remain in full force and effect and shall be construed
without such term, covenant or provision.
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Section 8.7 Release of Collateral. Lender may release, regardless of
consideration, any part of the Collateral without in any way impairing or
affecting the validity, priority or perfection of its Lien on or in the
remaining Collateral.
Section 8.8 Notices. Any notice, demand or other communication required
or permitted hereunder shall be in writing and shall be deemed to have been
given: (i) if and when personally delivered, or (ii) if sent by overnight
express carrier, then on the next Business Day following delivery to the
overnight express carrier and addressed to a party at its address set forth
below:
If to Borrower:
IREIT Little Rock Park Avenue, L.L.C.
c/o Inland Real Estate Income Trust, Inc.
2901 Butterfield Road
Attn: President
The Inland Real Estate Group, Inc.
2901 Butterfield Road
Attn: Robert Baum, Esq., General Counsel
If to Lender:
One North Franklin Street, Suite 2150
Chicago, Illinois 60606
Attn: Joel G. Dalson, Senior Vice President
Robbins, Salomon & Patt, Ltd.
180 North LaSalle Street, Suite 3300
Chicago, Illinois 60601
Attn: Andrew M. Sachs, Esq.
or to such other address the party to receive such notice may have heretofore
furnished to all other parties by notice in accordance herewith. Except as
otherwise specifically required herein, no notice of the exercise of any right
or option granted to Lender herein is required to be given.
Section 8.9 Modification. This Agreement may not be modified, amended
or terminated, except by an agreement in writing executed by Lender and
Borrower. Borrower acknowledges that the Loan Documents set forth the entire
agreement and understanding of Lender and the Borrower with respect to the Loan
and that no oral or other agreements, understandings, representations or
warranties exist with respect to the Loan other than those expressly set forth
in the Loan Documents. All prior agreements among or between such parties,
whether oral or written, are superseded by the terms of the Loan Documents.
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Section 8.10 Indemnity. Borrower hereby agrees to defend, indemnify and
hold harmless Lender, its directors, officers, employees, agents, successors and
assigns (each an “Indemnified Lender Party”) from and against any and all
losses, damages, liabilities, claims, actions, judgments, court costs and legal
or other expenses (including attorneys’ fees) which such Indemnified Lender
Party may incur as a direct or indirect consequence of: (i) the use of the
Property or any portion thereof; (ii) the compliance of the Property and each
portion thereof with Applicable Law, (iii) the purpose to which Borrower applies
the proceeds of the Loan; (iv) the failure of Borrower to perform any
obligations as and when required by any of the Loan Documents; (v) any failure
at any time of Borrower’s representations or warranties to be true and correct;
or (vi) any act or omission by Borrower or other Person (other than Lender) with
respect to the Property or any portion thereof. Borrower shall pay to such
Indemnified Lender Party, within ten (10) days of such Indemnified Lender
Party’s demand therefore (which demand shall be accompanied by reasonable backup
documentation evidencing any amounts owing to such Indemnified Lender Party
under this indemnity), any amounts owing under this indemnity. To the extent
that any Indemnified Lender Party has made any payment on account of any matter
for which it is indemnified hereunder which is not repaid within such time,
Lender shall be deemed to have made a Protective Advance in the amount so owing
to such Indemnified Lender Party. Borrower’s duty and obligation to defend,
indemnify and hold harmless each Indemnified Lender Party shall survive
cancellation of the Note, repayment of the Debt and the release or reassignment
of any Collateral. Notwithstanding anything in this Agreement to the contrary,
no Indemnified Lender Party shall be entitled to be indemnified for its own
gross negligence or willful misconduct.
Section 8.11 Lender Consent and Approval. Except as may otherwise be
expressly provided to the contrary, wherever pursuant to this Agreement or any
other Loan Document or otherwise with respect to the Loan, Lender exercises any
right given to it to consent or not consent, or to approve or disapprove, or any
arrangement or term is to be satisfactory to Lender or Lender is otherwise
entitled to exercise its judgment or discretion, the decision of Lender to
consent or not consent, or to approve or disapprove or to decide that
arrangements or terms are satisfactory or not satisfactory or otherwise to
exercise its judgment or discretion, shall be in the sole and absolute
discretion of Lender and shall be final and conclusive.
Section 8.12 Reasonableness. If at any time Borrower believes that Lender
has not acted reasonably in granting or withholding any approval or consent
under the Loan Documents or any other document or instrument now or hereafter
executed and delivered in connection therewith or otherwise with respect to the
Loan, as to which approval or consent either Lender has expressly agreed to act
reasonably, or absent such agreement, a court of law having jurisdiction over
the subject matter would require Lender to act reasonably, then as Borrower’s
sole and exclusive remedy, Borrower shall be entitled to seek injunctive relief
or specific performance. Further, Borrower hereby covenants and agrees that no
action or claim for monetary damages other than actual damages, consequential
damages or punitive damages or any other damages (including lost profit) shall
in any event or under any circumstance be maintained by Borrower against Lender,
and Borrower hereby waives any right to any such damages.
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Section 8.13 Relationship. The relationship of Lender, on the one hand,
and Borrower, on the other hand, is strictly and solely that of lender and
borrower and nothing contained in the Loan Documents or any other document or
instrument now or hereafter executed and delivered in connection therewith or
otherwise in connection with the Loan is intended to create, or shall in any
event or under any circumstance be construed as creating, a partnership, joint
venture, tenancy-in-common, joint tenancy or other relationship of any nature
whatsoever between Lender, on the one hand, and Borrower, on the other hand,
other than as lender and borrower. Lender neither undertakes nor assumes any
responsibility or duty to Borrower, except as expressly provided in this
Agreement and the other Loan Documents, or to any other Person.
Section 8.14 Brokers and Financial Advisors. Borrower hereby represents to
Lender that no Borrower or any Affiliate thereof has dealt with financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement. Borrower agrees
to indemnify and hold the Lender harmless from and against any and all claims,
liabilities, costs and expenses of any kind in any way (including reasonable
attorneys’ fees) relating to or arising from a claim by any Person that such
Person acted on behalf of Borrower or any Affiliate thereof in connection with
the transactions contemplated herein. The provisions of this Section shall
survive the expiration and termination of this Agreement and the repayment of
the Debt.
Section 8.15 Counterclaims. Borrower hereby waives the right to assert a
counterclaim, other than a mandatory or compulsory counterclaim, in any action
or proceeding brought against it by Lender arising out of or in any way
connected with the Loan or the Loan Documents.
Section 8.16 Loan Expenses. Borrower covenants and agrees to immediately
pay Lender on demand all costs and expenses (“Loan Expenses”) including
reasonable attorneys’ fees, incurred by Lender in connection with or relating to
the Loan, including: (i) Lender’s Closing Expenses; (ii) the Borrower’s ongoing
performance of and compliance with its agreements and covenants contained in the
Loan Documents on its part to be performed or complied with after the Closing
Date, including confirming compliance with environmental and insurance
requirements; (iii) any request made to Lender for consent or approval of any
matter; (iv) the negotiation, preparation, execution, delivery and
administration of any consents, amendments, waivers, extensions or other
modifications to the Loan Documents or any other document or matter requested by
Borrower and/or Lender; (v) all federal, state, county and local taxes, filing,
registration or recording fees and all other taxes, duties, imposts, assessments
and charges arising out of or in connection with the execution and delivery of
any of Loan Documents; (vi) title insurance premiums and escrow charges; and
(vii) reasonable attorneys’ fees incurred by Lender in connection with any of
the foregoing, including in connection with any bankruptcy or similar proceeding
affect the Property, the Collateral or Borrower. All Loan Expenses incurred by
Lender shall be due and payable within ten (10) Business Days of demand, and
(without limiting any other right or remedy of Lender) if not paid within such
10-day period shall bear interest at the Default Rate from the date of such
demand until the date paid.
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Section 8.17 Protective Advances.
(a) Protective Advances. Borrower covenants and agrees to
immediately pay Lender on demand all costs and expenses, including reasonable
attorneys’ fees, incurred by Lender in connection with or as a consequence of
any of the following (each a “Protective Advance”): (i) any Event of Default
under the Loan Documents including any reasonable third party out-of-pocket
costs and expenses and other amounts expended by Lender in curing or attempting
to cure the same; (ii) any bankruptcy proceeding of Borrower; (iii) the
collection of the Debt, (iv) the enforcement of Lender’s rights and remedies
under the Loan Documents or enforcing or preserving any rights in response to
third party claims or the prosecuting or defending of any action or proceeding
or other litigation, in each case against, under or affecting the Property,
Borrower, the Loan Documents, or any Collateral; or (v) any payment or other
amount which is designated as a Protective Advance by any other provision of the
Loan Documents. All Protective Advances made by Lender under the Loan Documents
shall be evidenced by, and be deemed to be advanced as principal under the Note,
regardless of whether any such Protective Advance causes the principal balance
of the Note to exceed the original stated amount of the Note, and shall be due
and payable on demand. Borrower expressly acknowledges that Lender is authorized
to make Protective Advances regardless of whether Lender shall have commenced
any action or proceeding against Borrower. Subject to Section 8.17(b), the
making of any Protective Advance by Lender shall constitute an automatic Event
of Default hereunder (with no notice, cure or grace period).
(b) With respect to any event or circumstance which is a breach,
default or violation under one or more Loan Documents, if Lender makes a
Protective Advance to cure such default, breach or violation prior to the
expiration of any Applicable Grace Period, the making of such Protective Advance
shall not constitute an Event of Default hereunder if prior to the expiration of
such Applicable Grace Period Borrower repays to Lender the amount of such
Protective Advance together with interest thereon at the Default Rate from the
date such Protective Advance was made to the date repaid to Lender.
Section 8.18 Attorneys’ Fees. Borrower will pay Lender’s reasonable
attorneys’ fees and reasonable third party out-of-pocket costs in connection
with the enforcement of this Agreement; without limiting the generality of the
foregoing, if at any time or times hereafter the Lender employs counsel for
advice or other representation with respect to any matter concerning Borrower,
this Agreement, the Property or the Loan Documents or to protect, collect,
lease, sell, take possession of, or liquidate the Property, or to attempt to
enforce or protect any security interest or lien or other right in the Property
or under any of the Loan Documents, or to enforce any rights of the Lender or
obligations of Borrower or any other person, firm or corporation which may be
obligated to Lender by virtue of this Agreement or under any of the Loan
Documents or any other agreement, instrument or document, heretofore or
hereafter delivered to Lender in furtherance hereof, then in any such event all
of the reasonable attorneys’ fees arising from such services, and any expenses,
reasonable third party out-of-pocket costs and charges relating thereto, shall
constitute an additional indebtedness owing by Borrower to Lender payable on
demand and evidenced and secured by the Loan Documents.
Section 8.19 Rescission of Payments. If at any time all or any part of any
payment made by Borrower in connection with this Agreement or any other Loan
Document is rescinded, returned or Lender is otherwise required to hold such
payment in trust for or otherwise return the payment to another Person, for any
reason whatsoever (including the insolvency, bankruptcy or reorganization of
Borrower or any other Person), then the Obligations of Borrower shall, to the
extent of the payment rescinded or returned, be deemed to have continued in
existence notwithstanding such previous payment, and the Obligations of Borrower
under the Loan Documents shall continue to be effective or be reinstated, as the
case may be, as to such payment, all as though such previous payment had never
been made.
Section 8.20 No Third Party Beneficiary. No Person other than Lender and
Borrower and their permitted successors and assigns or any Indemnified Lender
Party shall have any rights under this Agreement.
Section 8.21 Counterparts. To facilitate execution, this Agreement may be
executed in as many counterparts as may be convenient or required. It shall not
signature of all Persons required to bind any party, appear on each counterpart.
be necessary in making proof of this Agreement to produce or account for more
of, each of the parties hereto. Any signature page to any counterpart may be
detached from such counterpart without impairing the legal effect of the
signatures thereon and thereafter attached to another counterpart.
Section 8.22 Facsimile and Photocopy. Lender and Borrower hereby agree
that any facsimile or photocopy signature on any Loan Document or on any notice,
document or other certificate delivered pursuant to the Loan Documents shall be
deemed to have the same force and effect as an original signature, and to the
fullest extent permitted by Applicable Law may be used in lieu of an original
signature to evidence the execution and delivery of the document, certificate or
instrument to which such facsimile or photocopy signature is attached.
Section 8.23 Time. Time is of the essence of each and every term of this
Agreement and the other Loan Documents except and only to the extent
specifically waived by Lender in writing.
45
Section 8.24 WAIVER OF STATUTORY RIGHTS. BORROWER SHALL NOT APPLY FOR OR
AVAIL ITSELF OF ANY APPRAISEMENT, VALUATION, STAY, EXTENSION OR EXEMPTION LAWS,
OR ANY SIMILAR LAWS NOW EXISTING OR HEREAFTER ENACTED, IN ORDER TO PREVENT OR
HINDER THE ENFORCEMENT OF THE LOAN DOCUMENTS, BUT HEREBY WAIVES THE BENEFIT OF
SUCH LAWS TO THE FULL EXTENT THAT IT MAY DO SO UNDER APPLICABLE LAW. BORROWER
HEREBY WAIVES ANY AND ALL RIGHT TO HAVE THE PROPERTY AND ESTATES COMPRISING THE
COLLATERAL MARSHALED AND AGREES THAT ANY COURT HAVING JURISDICTION OVER ANY
EXERCISE OF LENDER’S REMEDIES MAY ORDER THE COLLATERAL SOLD AS AN ENTIRETY OR IN
SEPARATE PARTS. BORROWER HEREBY WAIVES, TO THE FULL EXTENT IT MAY DO SO OR NOT
PROHIBITED UNDER APPLICABLE LAW, ANY AND ALL RIGHTS OF REDEMPTION FROM SALE
UNDER ANY ORDER OR DECREE OF FORECLOSURE, UCC AUCTION OR UNDER ANY PUBLIC OR
PRIVATE SALE PERMITTED UNDER ANY APPLICABLE LAW NOW EXISTING OR HEREAFTER
ENACTED.
Section 8.25 USURY LAWS.
(a) BORROWER ACKNOWLEDGES AND AGREES THAT ALL AMOUNTS PAYABLE UNDER
THE LOAN DOCUMENTS FORM AN INTEGRAL COMPONENT OF THE DEBT AND PAYMENT OF THE
SAME IS A MATERIAL INDUCEMENT TO LENDER TO MAKE THE LOAN AND ENTER INTO THE LOAN
DOCUMENTS, AND THAT LENDER WOULD NOT BE WILLING TO MAKE THE LOAN AND ENTER INTO
THE LOAN DOCUMENTS BUT FOR BORROWER’S AGREEMENT TO PAY THE ENTIRE DEBT PURSUANT
TO THE TERMS OF THE LOAN DOCUMENTS. BORROWER FURTHER ACKNOWLEDGES AND AGREES
THAT THE PAYMENT OF THE ENTIRE DEBT IS FAIR AND REASONABLE IN LIGHT OF THE SIZE
OF THE RISK TAKEN BY LENDER AND THAT PAYMENT OF THE ENTIRE DEBT OR ANY COMPONENT
THEREOF WILL NOT VIOLATE APPLICABLE USURY LAWS. WITHOUT LIMITING THE FOREGOING,
BORROWER HEREBY WAIVES ANY RIGHT OR DEFENSE THEY MAY HAVE TO THE PAYMENT OF THE
DEBT OR ANY PORTION THEREOF BASED ON ANY USURY, PENALTY OR OTHER SIMILAR LAWS OR
EQUITABLE PRINCIPLES.
46
(b) BORROWER ACKNOWLEDGES AND AGREES, WITHOUT LIMITING THE ABOVE,
THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS IS SUBJECT TO THE EXPRESS
CONDITION THAT AT NO TIME SHALL BORROWER BE OBLIGATED OR REQUIRED TO PAY ANY
AMOUNT UNDER THE LOAN DOCUMENTS INCLUDING ANY INTEREST ON THE PRINCIPAL BALANCE
OF THE LOAN AT A RATE IN EXCESS OF THE MAXIMUM INTEREST RATE WHICH BORROWER IS
PERMITTED BY APPLICABLE LAW TO CONTRACT OR AGREE TO PAY. IN DETERMINING WHETHER
OR NOT THE INTEREST OR ANY OTHER AMOUNT PAID OR PAYABLE UNDER THE LOAN DOCUMENTS
EXCEEDS THE MAXIMUM RATE PERMITTED UNDER APPLICABLE LAW (A) BORROWER AND LENDER
SHALL TO THE EXTENT PERMITTED UNDER APPLICABLE LAW CHARACTERIZE ANY
NON-PRINCIPAL PAYMENT, AS A FEE, PREMIUM OR EXPENSE RATHER THAN INTEREST, AND
(B) ALL SUMS PAID OR AGREED TO BE PAID TO LENDER FOR THE USE, FORBEARANCE, OR
DETENTION OF THE DEBT, SHALL, TO THE EXTENT PERMITTED BY APPLICABLE LAW, BE
AMORTIZED, PRORATED, ALLOCATED, AND SPREAD THROUGHOUT THE FULL STATED TERM OF
THE LOAN UNTIL PAYMENT IN FULL SO THAT THE RATE OR AMOUNT OF INTEREST ON ACCOUNT
OF THE DEBT DOES NOT EXCEED THE MAXIMUM LAWFUL RATE OF INTEREST. IF BY THE TERMS
OF THE LOAN DOCUMENTS, BORROWER IS AT ANY TIME REQUIRED OR OBLIGATED TO PAY ANY
AMOUNT UNDER THE LOAN DOCUMENTS INCLUDING INTEREST ON THE PRINCIPAL BALANCE DUE
UNDER THE LOAN AT A RATE IN EXCESS OF SUCH MAXIMUM RATE, SUCH INTEREST SHALL BE
DEEMED TO BE IMMEDIATELY REDUCED TO SUCH MAXIMUM RATE AND ALL PREVIOUS PAYMENTS
IN EXCESS OF THE MAXIMUM RATE SHALL BE DEEMED TO HAVE BEEN PARTIAL PREPAYMENTS
(WHETHER OR NOT PERMITTED OR PROHIBITED UNDER THE LOAN DOCUMENTS) IN REDUCTION
OF PRINCIPAL AND NOT ON ACCOUNT OF THE INTEREST DUE.
47
Section 8.26 GOVERNING LAW. THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF
ILLINOIS, AND THE LOAN WILL BE MADE BY LENDER IN THE STATE OF ILLINOIS, AND THE
PROCEEDS OF THE LOAN DELIVERED PURSUANT HERETO WILL BE DISBURSED FROM THE STATE
OF ILLINOIS, WHICH STATE THE LENDER AND BORROWER AGREE HAS A SUBSTANTIAL
RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY,
AND IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN SUCH STATE (EXCLUDING APPLICATION OF ANY PRINCIPLE OF CONFLICT OF
LAWS WHICH WOULD DIRECT THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION)
AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT
PERMITTED BY LAW OR NOT PROHIBITED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION
GOVERNS THIS AGREEMENT, AND THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.
Section 8.27 JURISDICTION.
(a) SUIT BY BORROWER. BORROWER HEREBY AGREES THAT ANY LEGAL SUIT,
ACTION OR PROCEEDING BROUGHT BY BORROWER OR ANY AFFILIATE THEREOF AGAINST LENDER
(OTHER THAN COMPULSORY COUNTERCLAIMS PERMITTED HEREUNDER IN CONNECTION WITH ANY
ACTION, SUIT OR PRECEDING COMMENCED BY LENDER IN A JURISDICTION OUTSIDE OF
ILLINOIS) ARISING OUT OF OR RELATING TO THE LOAN, THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS OR RELATING TO THE PROPERTY SHALL ONLY BE INSTITUTED BY
BORROWER OR SUCH AFFILIATE THEREOF IN COURTS OF THE STATE OF ILLINOIS LOCATED IN
THE COUNTY OF COOK, STATE OF ILLINOIS OR THE UNITED STATES DISTRICT COURT
LOCATED IN THE CITY OF CHICAGO, ILLINOIS. BORROWER HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO BRING ANY LEGAL OR
EQUITABLE SUIT, ACTION OR PROCEEDING AGAINST LENDER ARISING OUT OF OR RELATING
TO THE LOAN, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR RELATING TO
THE PROPERTY IN ANY OTHER COURT OTHER THAN COURTS OF THE STATE OF ILLINOIS
LOCATED IN THE COUNTY OF COOK OR THE UNITED STATES DISTRICT COURT LOCATED IN THE
CITY OF CHICAGO, ILLINOIS.
48
(b) SUIT BY LENDER. WITH RESPECT TO ANY CLAIM OR ACTION ARISING
HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS, BORROWER (I) IRREVOCABLY SUBMITS TO
THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND THE
UNITED STATES DISTRICT COURT LOCATED IN THE CITY OF CHICAGO, ILLINOIS, (II)
IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE
OF ARKANSAS AND THE PERTINENT UNITED STATES DISTRICT COURT FOR LITTLE ROCK,
ARKANSAS THE LOCATION OF THE PROPERTY, (III) AGREES THAT ALL SUCH CLAIMS OR
ACTIONS MAY, IN LENDER’S DISCRETION, BE HEARD AND DETERMINED IN SUCH COURTS OF
THE STATE OF ILLINOIS OR THE STATE OF WISCONSIN OR, TO THE EXTENT PERMITTED BY
LAW, IN SUCH FEDERAL COURTS AND (IV) IRREVOCABLY WAIVES ANY (A) OBJECTION WHICH
IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BROUGHT
IN ANY SUCH COURT AND (B) ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING IN
THIS AGREEMENT WILL BE DEEMED TO PRECLUDE LENDER FROM BRINGING AN ACTION OR
PROCEEDING WITH RESPECT HERETO IN ANY OTHER JURISDICTION.
(c) AGENT FOR PROCESS. BORROWER WILL MAINTAIN AN AGENT FOR SERVICE
OF PROCESS IN ILLINOIS AND GIVE PROMPT NOTICE TO LENDER OF THE NAME AND ADDRESS
OF ANY NEW AGENT APPOINTED BY BORROWER. BORROWER FURTHER AGREES THAT THE FAILURE
OF ITS AGENT FOR SERVICE OF PROCESS TO GIVE BORROWER NOTICE OF ANY SERVICE OF
PROCESS WILL NOT IMPAIR OR AFFECT THE VALIDITY OF SUCH SERVICE OR OF ANY
JUDGMENT BASED THEREON.
Section 8.28 WAIVER OF RIGHT TO TRIAL BY JURY. BORROWER HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY FOR ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (A) ARISING UNDER THE LOAN DOCUMENTS OR (B) IN ANY WAY RELATING TO THE
PROPERTY, THE LOAN, THE LOAN DOCUMENTS OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND BORROWER AND LENDER HEREBY AGREE
AND CONSENT THAT LENDER MAY FILE AN ORIGINAL COUNTERPART OF THIS AGREEMENT OR A
COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
BORROWER TO THE WAIVER OF ANY RIGHT BORROWER MIGHT OTHERWISE HAVE TO TRIAL BY
JURY.
49
Section 8.29 Anti-Money Laundering/International Trade Law Compliance
Representa-tion and Warranty. The Borrower represents and warrants to the
Lender, as of the date of this Agreement that: (a) no Covered Entity is a
Sanctioned Person; and (b) no Covered Entity, either in its own right or through
any third party, (i) has any of its assets in a Sanctioned Country or in the
possession, custody or control of a Sanctioned Person in violation of any
Anti-Terrorism Law; (ii) does business in or with, or derives any of its income
from investments in or transactions with, any Sanctioned Country or Sanctioned
Person in violation of any Anti-Terrorism Law; or (iii) engages in any dealings
or transactions prohibited by any Anti-Terrorism Law.
Section 8.30 Anti-Money Laundering/International Trade Law Compliance
Covenant. Borrower covenants and agrees to all of the covenants and obligations
contained in this Section 8.30. No Covered Entity will become a Sanctioned
Person. No Covered Entity, either in its own right or through any third party,
will (a) have any of its assets in a Sanctioned Country or in the possession,
custody or control of a Sanctioned Person in violation of any Anti-Terrorism
Law; (b) do business in or with, or derive any of its income from investments in
or transactions with, any Sanctioned Country or Sanctioned Person in violation
of any Anti-Terrorism Law; (c) engage in any dealings or transactions prohibited
by any Anti-Terrorism Law or (d) use the Advances to fund any operations in,
finance any investments or activities in, or, make any payments to, a Sanctioned
Country or Sanctioned Person in violation of any Anti-Terrorism Law. The funds
used to repay the Debt and the Obligations will not be derived from any unlawful
activity. Each Covered Entity shall comply with all Anti-Terrorism Laws. The
Borrower shall promptly notify the Lender in writing upon the occurrence of a
Reportable Compliance Event.
Any default, breach or violation of any covenant contained in this Section 8.30
shall be an automatic Event of Default (without any notice, grace or cure
period).
Section 8.31 Definitions Regarding “Anti-Money Laundering”/International
Trade Law Compliance. For purposes of Sections 8.29, 8.30 and 7.01(p), the
“Anti-Terrorism Laws” shall mean any Laws relating to terrorism, trade sanctions
programs and embargoes, import/export licensing, money laundering or bribery,
and any regulation, order, or directive promulgated, issued or enforced pursuant
to such Laws, all as amended, supplemented or replaced from time to time.
50
“Covered Entity” shall mean: (a) each Borrower, each of Borrower’s Subsidiaries,
all Guarantors and all pledgors of Collateral and (b) each Person that, directly
or indirectly, is in control of a Person described in clause (a) above. For
purposes of this definition, control of a Person shall mean the direct or
indirect (x) ownership of, or power to vote, 25% or more of the issued and
outstanding equity interests having ordinary voting power for the election of
directors of such Person or other Persons performing similar functions for such
Person, or (y) power to direct or cause the direction of the management and
policies of such Person whether by ownership of equity interests, contract or
otherwise.
“Governmental Body” shall mean any nation or government, any state or other
political subdivision thereof or any entity, authority, agency, division or
department exercising the executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to a government
(including any supra-national bodies such as the European Union or the European
Central Bank) and any group or body charged with setting financial accounting or
regulatory capital rules or standards (including, without limitation, the
Financial Accounting Standards Board, the Bank for International Settlements or
the Basel Committee on Banking Supervision or any successor or similar authority
to any of the foregoing).
“Law” shall mean any law(s) (including common law), constitution, statute,
treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling,
order, executive order, injunction, writ, decree, bond, judgment, authorization
or approval, lien or award of or any settlement arrangement, by agreement,
consent or otherwise, with any Governmental Body, foreign or domestic.
“Reportable Compliance Event” shall mean that any Covered Entity becomes a
Sanctioned Person, or is charged by indictment, criminal complaint or similar
charging instrument, arraigned, or custodially detained in connection with any
Anti-Terrorism Law or any predicate crime to any Anti-Terrorism Law, or has
knowledge of facts or circumstances to the effect that it is reasonably likely
that any aspect of its operations is in actual or probable violation of any
“Sanctioned Country” shall mean a country subject to a sanctions program
maintained under any Anti-Terrorism Law.
“Sanctioned Person” shall mean any individual person, group, regime, entity or
thing listed or otherwise recognized as a specially designated, prohibited,
sanctioned or debarred person, group, regime, entity or thing, or subject to any
limitations or prohibitions (including but not limited to the blocking of
property or rejection of transactions), under any Anti-Terrorism Law.
51
Section 8.32 USA PATRIOT ACT NOTICE. To help the government fight the
funding of terrorism and money laundering activities, Federal law requires all
financial institutions to obtain, verify and record information that identifies
each Borrower that opens an account. What this means: when the Borrower opens an
account, the Lender will ask for the business name, business address, taxpayer
identifying number and other information that will allow the Lender to identify
the Borrower, such as organizational documents. For some businesses and
organizations, the Lender may also need to ask for identifying information and
documentation relating to certain individuals associated with the business or
organization.
(SIGNATURE PAGE IMMEDIATELY FOLLOWS)
IN WITNESS WHEREOF, Borrower and Lender have duly executed this Loan Agreement
BORROWER:
IREIT LITTLE ROCK PARK AVENUE, L.L.C.,
By:
Inland Real Estate Income Trust, Inc.,
a Maryland corporation
Its: Sole Member By: /s/ David Z. Lichterman
Print
Name:
David Z. Lichterman Its:
Vice President, Treasurer
& CAO
LENDER:
a national banking association.
By:
/s/ Joel G. Dalson
Printed
Name:
Joel G. Dalson
Title: Senior Vice-President
52
EXHIBIT A
(Definition of Certain Terms)
“Affiliate” of any specified Person means (i) any other Person controlling,
controlled by or under common control with such specified Person; (ii) any
immediate or extended family member of such Person; and (iii) any other Person
controlling, controlled by or under common control with such family member. In
addition, each Borrower or other Person holding any Ownership Interest shall be
deemed an Affiliate of (x) each other Borrower or other Person holding any
Ownership Interest and (y) each other Person controlling, controlled by or under
common control with such other Borrower or other Person holding any Ownership
Interest. For the purposes of this definition, “control” when used with respect
to any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities or other beneficial interests, by contract or otherwise; and
“Agreement” means this Loan Agreement, as the same may from time to time be
amended.
“Agreement Regarding OEA” has the meaning set forth in Section 3.1(jj) of this
Agreement.
“Amendments” means any and all amendments, modifications, extensions,
replacements, terminations, renewals, substitutions, consolidations,
restatements, or supplements made from time to time.
“Applicable Grace Period” means a period of time, if any, with respect to any
event or circumstance which is a breach, default or violation under one or more
Loan Documents for which a notice, grace or cure period is given under such Loan
Document(s), the period (A) commencing on the date such event or circumstance
first occurred and (B) ending on the date such notice, grace or cure period
would have expired had no cure been effected.
“Applicable Law” means (i) all existing and future governmental statutes, laws,
rules, orders, regulations, ordinances, judgment decrees and injunctions of any
Governmental Authority (including Environmental Laws) affecting either the
Lender, Borrower, any Property, any Collateral, or any part thereof (whether now
or hereafter enacted and in force), including those relating to zoning,
occupancy, building codes, health, fire and safety; (ii) all permits, licenses
and authorizations and regulations relating thereto, including the building
permit and certificates of occupancy; and (iii) all covenants, conditions and
restrictions contained in any agreements, instruments or other documents at any
time in force (whether or not involving any Governmental Authority) affecting
the Property or any part thereof.
“Bankruptcy Code” means the Bankruptcy Reform Act of 1978 (11 U.S.C. § 101-1330)
as now or hereafter amended or recodified.
A-1
“Bankruptcy Law” means the Bankruptcy Code and any other existing or future law
of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, conservatorship or similar law, rule or regulation for the
relief of debtors.
“Base Rate” means the highest of: (A) the Prime Rate and (B) the sum of the
Federal Funds Open Rate plus fifty (50) basis points.
“Borrower” has the meaning set forth in the introductory paragraph of this
Agreement.
“Borrower Earnout Payment” has the meaning set forth in Section 1.16 of this
Agreement.
“Borrower’s and Guarantor’s Counsel Opinions” means the opinions of legal
counsel in form and content satisfactory to Lender covering such matters as
Lender shall reasonably request, including: (a) organization, legal existence,
good standing and qualification of Borrower in each applicable jurisdiction, (b)
organizational power and authority of Borrower; (c) the due execution and
delivery of each of the Loan Documents by Borrower and the Guarantor and the
enforceability of each of the Loan Documents under Illinois and Arkansas law, as
applicable; (d) absence of conflicts with organizational documents and
Applicable Law; (e) litigation; (f) no further consents required; (g) perfection
of Liens; (h) usury and (i) choice of law.
“Borrower’s Knowledge” means the actual knowledge of Borrower.
“Business Day” means any day other than: (i) a Saturday or a Sunday and (ii) a
day on which federally insured depository institutions in the State of Illinois
are authorized or obligated by applicable law to be closed.
“Casualty” means any loss, damage or destruction of the Property or any portion
thereof by fire, casualty, act of god or otherwise.
“CEA” shall mean the Commodity Exchange Act (7 U.S.C. §1 et seq.), as amended
from time to time, and any successor statute.
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, and any other amendments thereto now or hereafter
enacted.
“CFTC” shall mean the Commodity Futures Trading Commission.
“Closing Date” means May 8, 2014.
“Code” means the Internal Revenue Code of 1986, and as it may be further amended
from time to time, any successor statutes thereto, and applicable U.S.
Department of Treasury regulations issued pursuant thereto in temporary or final
form.
A-2
“Collateral” means any and all property, real or personal, tangible or
intangible, described in the Loan Documents as being mortgaged, assigned,
pledged or transferred to Lender by Borrower as security for the Obligations.
“Collateral Assignment of Purchaser’s Interest in Vacancy, Garage Repairs and
Real Estate Tax Escrow Agreement” has the meaning set forth in Section 2.1(j) of
this Agreement.
“Condemnation” means any taking of the Property or any portion thereof by any
Condemning Authority through eminent domain or otherwise, including any transfer
made in lieu of or in anticipation of the exercise of such taking.
“Condemning Authority” means any Person who has condemnation or eminent domain
powers over the Property or any portion thereof.
“Debt” means the following: (a) all sums due and payable under the Loan
Documents, including the whole of the principal sum of the Note and all accrued
and unpaid interest thereon, together with any and all other sums due under the
Note, additional fees and costs, all as may be set forth with greater
specificity in the applicable terms and provisions of the Note or the other Loan
Documents, (b) all Protective Advances, (c) all Loan Expenses, (d) all other
monies or amounts agreed or provided to be paid by Borrower under the Loan
Documents, and (e) all other sums advanced and costs and expenses (including
reasonable attorneys’ fees) incurred by Lender in connection with the foregoing
indebtedness or any part thereof, any renewal, extension, or change of or
substitution for the foregoing indebtedness or any part thereof.
“Debt Service” means, for any period, the presumed sum of all principal and
interest payments which would be due and payable during such period on the Loan
assuming the amortization of the total principal amount of the Loan based on the
greater result of: (i) the actual interest expense for the Loan and scheduled
principal amortization, if any, of the total Loan commitment; (ii) a seven and
73/100ths percent (7.73%) mortgage constant (based upon a 6.00% per annum
interest rate amortized over a twenty-five (25) year amortization schedule of
the total Loan commitment); or (iii) “mortgage style” amortization of the total
Loan commitment over a twenty-five (25) year amortization schedule at a per
annum interest rate equal to the higher of: (a) two percent (2.00%) over the
yield to maturity of the most recent 10-year U.S. Treasury Note, or (b) six
percent (6.00%), as determined by Lender at the time of testing the Debt Service
Coverage Ratio. For purposes of calculating the Debt Service Coverage Ratio
pursuant to Sections 1.14(a)(v) and 1.14(b)(iv) of this Agreement, Debt Service
will be calculated on an annualized basis.
“Debt Service Coverage Ratio” means for any period, the current actual ratio of
Borrower’s Net Operating Income to Borrower’s Debt Service.
“Default Rate” has the meaning set forth in Section 1.4(c) of this Agreement.
“Developer” has the meaning set forth in Section 3.1(jj) of this Agreement.
A-3
“Earnout Lease” has the meaning set forth in Section 1.16 of this Agreement.
“Earnout Proceeds” has the meaning set forth in Section 1.16 of this Agreement.
“Easement Areas” means real property which: (a) directly abuts any Property and
(b) directly abuts a public right-of-way, which real property is the subject of
an easement (whether or not recorded) agreement which benefits any Property, all
of which Easement Areas are listed in Schedule A of the Lender’s Title Insurance
Policy so as to be included in the “insured property” description.
“Effective Date” means the date indicated in a document or agreement to be the
date on which such document or agreement becomes effective, or, if there is no
such indication, the date of execution of such document or agreement.
“Eligible Contract Participant” shall mean an “eligible contract participant” as
defined in the CEA and regulations thereunder.
“Eligibility Date” shall mean, with respect to each Borrower and Guarantor and
each Swap, the date on which this Agreement or any Loan Document becomes
effective with respect to such Swap (for the avoidance of doubt, the Eligibility
Date shall be the Effective Date of such Swap if this Agreement or any Loan
Document is then in effect with respect to such Borrower or Guarantor, and
otherwise it shall be the Effective Date of this Agreement and/or such Loan
Document(s) to which such Borrower or Guarantor is a party).
“Environmental Indemnity” has the meaning set forth in Section 2.1 of this
Agreement.
“Environmental Laws” means any and all present and future laws, statutes,
ordinances, rules, regulations, orders, and determinations of any Governmental
Authority, pertaining to health, Hazardous Materials, natural resources,
conservation, wildlife, pollution or the environment, including CERCLA.
“Event of Default” has the meaning set forth in Section 7.1 of this Agreement.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“Excluded Hedge Liability or Liabilities” shall mean, with respect to each
Borrower and Guarantor, each of its Swap Obligations if, and only to the extent
that, all or any portion of this Agreement or any Loan Document that relates to
such Swap Obligation is or becomes illegal under the CEA, or any rule,
regulation or order of the CFTC, solely by virtue of such Borrower’s and/or
Guarantor’s failure to qualify as an Eligible Contract Participant on the
Eligibility Date for such Swap. Notwithstanding anything to the contrary
contained in the foregoing or in any other provision of this Agreement or any
Loan Document, the foregoing is subject to the
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following provisos: (a) if a Swap Obligation arises under a master agreement
governing more than one Swap, this definition shall apply only to the portion of
such Swap Obligation that is attributable to Swaps for which such guaranty or
security interest is or becomes illegal under the CEA, or any rule, regulations
or order of the CFTC, solely as a result of the failure by such Borrower or
Guarantor for any reason to qualify as an Eligible Contract Participant on the
Eligibility Date for such Swap; (b) if a guarantee of a Swap Obligation would
cause such obligation to be an Excluded Hedge Liability but the grant of a
security interest would not cause such obligation to be an Excluded Hedge
Liability, such Swap Obligation shall constitute an Excluded Hedge Liability for
purposes of the guaranty but not for purposes of the grant of the security
interest; and (c) if there is more than one Borrower or Guarantor executing this
Agreement or the Loan Documents and a Swap Obligation would be an Excluded Hedge
Liability with respect to one or more of such Persons, but not all of them, this
definition of Excluded Hedge Liability or Liabilities with respect to each such
Person shall only be deemed applicable to (i) the particular Swap Obligations
that constitute Excluded Hedge Liabilities with respect to such Person, and (ii)
the particular Person with respect to which such Swap Obligations constitute
Excluded Hedge Liabilities.
“Existing Leases” means those Leases of the Property which are in existence as
of the Closing Date executed by and between Borrower as Landlord and each of the
Existing Tenants.
“Existing Tenants” means those tenants of the Property under the Existing Leases
as reflected on the certified Rent Roll for the Property dated as of the Closing
Date received by Lender from Borrower.
“Federal Funds Open Rate” means, for any day, the rate per annum (based on a
year of 360 days and actual days elapsed) which is the daily federal funds open
rate as quoted by ICAP North America, Inc. (or any successor) as set forth on
the Bloomberg Screen BTMM for that day opposite the caption “OPEN” (or on such
other substitute Bloomberg Screen that displays such rate), or as set forth on
such other recognized electronic source used for the purpose of displaying such
rate as selected by Lender (an “Alternate Source”) (or if such rate for such day
does not appear on the Bloomberg Screen BTMM (or any substitute screen) or on
any Alternate Source, of if there shall at any time, for any reason, no longer
exist a Bloomberg Screen BTMM (or any substitute screen) or any Alternate
Source, a comparable replacement rate determined by Lender at such time (which
determination shall be conclusive absent manifest error); provided however, that
if such day is not a Business Day, the Federal Funds Open Rate for such day
shall be the “open” rate on the immediately preceding Business Day. The rate of
interest charged shall be adjusted as of each Business Day based on changes in
the Federal Funds Open Rate without notice to the Borrower.
“Financing Statements” means the UCC financing statements covering any
Collateral as Lender may require from time to time.
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“First Extended Maturity Date” means the first to occur of: (i) May 8, 2020 or
(ii) the date on which the Debt becomes due and payable pursuant to the
provisions of the Loan Documents (whether by acceleration or otherwise). If such
First Extended Maturity Date is not a Business Day, such First Extended Maturity
Date shall be the next succeeding Business Day.
“First Extension Conditions” has the meaning set forth in Section 1.14(a) of
this Loan Agreement.
“First Extension Notice” has the meaning set forth in Section 1.14(a)(i) of this
Loan Agreement.
“First Extension Option” has the meaning set forth in Section 1.14(a) of this
Loan Agreement.
“First Extension Option Fee” has the meaning set forth in Section 1.12 of this
Loan Agreement.
“First Extension Update Appraisal” has the meaning set forth in Section
1.14(a)(iv) of this Loan Agreement.
“First Extension Update Appraisal Requirement” has the meaning set forth in
Section 1.14(a)(iv) of this Loan Agreement.
“GAAP” means generally accepted accounting principles applied in a manner
consistent with those used in preparation of the most recent financial
statements for Borrower and Guarantor delivered to Lender under Section 5.9(b)
of this Loan Agreement.
“Governmental Authority” means the United States of America, any state thereof,
any political subdivision of the United States of America or any state
(including any city or county in such states), and any department, commission,
agency, board, bureau, court or administrative, regulatory, adjudicatory, or
arbitrational body or other instrumentality or agency of any kind or any of them
having jurisdiction in any way over any Property, Borrower, or any other Person
referred to in this Agreement.
“Gross Revenues” means for any period, the revenues determined in accordance
with generally accepted accounting principles consistently applied, derived from
the ownership, operation, use, leasing and occupancy of the Property during such
period for: (a) tenants in occupancy with executed Leases which comply with
Section 5.13 of this Loan Agreement that are paying minimum base rent and common
area maintenance fees under Leases which are not in default (beyond all
applicable cure periods) and (b) for tenants with executed Leases which comply
with Section 5.13 of this Loan Agreement, are not in default (beyond all
applicable cure periods) and that will occupy and pay minimum base rent and
common area maintenance fees
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within ninety (90) days of the measurement date (“90 Day Rent”), all as verified
in a sworn statement of Borrower delivered to Lender for the Property, together
with all necessary supporting documentation reasonably requested by Lender;
provided, however, that in no event shall Gross Revenues include: (i) income
from tenants in bankruptcy; (ii) income from tenants operating under defaulted
Leases; (iii) income from tenants not paying contractual rent or common area
maintenance fees but no default has been declared; (iv) income from tenants not
in occupancy other than 90 Day Rent; (v) income from tenants whose Lease expires
within sixty (60) days from the measurement date and have not executed a Lease
renewal; (vi) Lease termination fees; (vii) late fees from tenants; (viii) any
gain arising from any write-up of assets; (ix) any proceeds of the Loan; (x)
proceeds or payments under insurance policies; (xi) gross receipts of licensees,
concessionaires or similar third parties, except that portion paid to Borrower,
if any; (xii) condemnation proceeds or sales proceeds in lieu of and/or under
threat of condemnation; (xiii) any security deposits received from tenants in
the Property, unless and until the same are applied to rent or other obligations
in accordance with the tenant’s Leases; or (xiv) any other extraordinary items,
in Lender’s reasonable discretion. Gross Revenues shall be calculated assuming a
vacancy rate equal to the greater of the actual vacancy rate or five percent
(5%) of Gross Revenues.
“Guaranty” has the meaning set forth in Section 2.1 of this Agreement.
“Guarantor” shall mean Inland Real Estate Income Trust, Inc., a Maryland
corporation.
“Hazardous Material” means any substance that is defined or listed as a
hazardous, toxic or dangerous substance under any present or future
Environmental Law or that is otherwise regulated or prohibited or subject to
investigation or remediation under any present or future Environmental Law
because of its hazardous, toxic, or dangerous properties, including (i) any
substance that is a “hazardous substance” under CERCLA, and (ii) asbestos,
petroleum, petroleum products and polychlorinated byphenyls.
“Hedging Obligations” shall have the same meaning ascribed to such term as
contained in the Mortgage and incorporated herein by this reference.
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“Indebtedness” means, as applied to any Person, all of the obligations,
liabilities and indebtedness of such Person, whether now existing or hereafter
arising, secured or unsecured, contingent or otherwise, “recourse” or
“non-recourse,” whether owing by one such Person alone or with one or more other
Persons in a joint, several, or joint and several capacity, including, without
limitation, the following: (a) all debt and similar monetary obligations; (b)
all liabilities secured by a Lien, whether or not any liability secured thereby
shall have been assumed by another Person; (c) all obligations arising under
capital leases; (d) all guarantees, endorsements and other contingent
obligations for borrowed money, whether direct or indirect, in respect of
Indebtedness of others; (e) any agreement or obligation to reimburse, indemnify,
defend or hold harmless any Person under any circumstance; (f) the acquisition
cost of any asset to the extent payable before or after the time of acquisition
or possession by the party liable where the advance or deferred payment is
arranged primarily as a method of raising capital or financing the acquisition
of that asset; (g) all obligations to reimburse any issuer in respect of any
letter of credit; (h) all operating expenses and trade payables; and (i) all
obligations arising by overdraft, contract, or by quasi-contract, tort, statute,
other operation of law, or otherwise.
“Initial Maturity Date” means the first to occur of: (i) May 8, 2019 or (ii) the
date on which the Debt becomes due and payable pursuant to the provisions of the
Loan Documents (whether by acceleration or otherwise). If such Initial Maturity
Date is not a Business Day, such Initial Maturity Date shall be the next
succeeding Business Day.
“Interest Rate Agreement” has the meaning set forth in Section 1.13 of this
Agreement.
“Interest Rate Protection Product” means any agreement, device or arrangement
designed to protect Borrower from fluctuations of interest rates, exchange rates
or forward rates for the Loan, including, but not limited to, dollar denominated
or cross currency exchange agreements, foreign currency exchange agreements,
interest rate caps, collars or floors, forward rate currency or interest rate
options, puts, warrants, swaps, swaptions, U.S. Treasury locks and U.S. Treasury
options.
“Leases” means any lease, license, occupancy agreement or other agreement
(whether written or oral), existing as of the Closing Date or hereafter entered
into by or on behalf of Borrower, pursuant to which any person or entity is
granted a possessory interest in or right to use or occupy all or any portion of
any space in any Property, and every modification, amendment or other agreement
relating to such lease or other agreement entered into in connection with such
lease.
“Lender” has the meaning set forth in the introductory paragraph of this
Agreement.
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“Lender’s Closing Expenses” means all out-of-pocket fees, costs and expenses and
disbursements of Lender including all reasonable attorneys’ fees incurred by
Lender, in connection with (i) the negotiation, preparation, execution and
delivery of the Loan Documents, (ii) the creation, perfection or protection of
Lender’s Liens in the Collateral (including fees and expenses for title and lien
searches and filing and recording fees, intangible taxes, personal property
taxes, due diligence expenses, travel expenses, costs of appraisals,
environmental reports, surveys and engineering reports) and (iii) due diligence
and review, including title, survey, and all other matters related to making the
Loan.
“Lender’s Title Insurance Policy” means, with respect to the Property, ALTA
extended coverage loan title insurance policies: (a) issued by the Title
Company, which policies shall name Lender as the insured party, (b) insuring
Lender’s Mortgage on the Property, (c) showing no encumbrances against the
Property other than Permitted Exceptions, (d) in an amount equal to the Loan and
(e) otherwise in form and content satisfactory to Lender, in Lender’s sole and
absolute discretion. The Lender’s Title Insurance Policy shall include the
following endorsements or affirmative coverages in form and substance
satisfactory to Lender: Restrictions, Encroachments and Minerals (ALTA
9-06-Lender’s Comprehensive); Zoning 3.1 (with Parking); Contiguity; Deletion of
Arbitration; Location of Improvements; Access; Same As Survey; Variable Interest
Rate; and such other endorsements as Lender shall determine to be prudent and
commercially reasonable to provide insurance against specific risks identified
by Lender in connection with the Property.
“LIBOR” means, for each Reset Date, the interest rate per annum determined by
the Lender by dividing (i) the rate which appears on the Bloomberg Page BBAM1
(or on such other substitute Bloomberg page that displays rates at which US
market), or the rate which is quoted by another source selected by the Lender
which has been approved by ICE Benchmark Administration Limited as an authorized
information vendor for the purpose of displaying rates at which US dollar
deposits are offered by leading banks in the London interbank deposit market (an
“Alternate Source”), at approximately 11:00 a.m., London time, two (2) Business
Days prior to such Reset Date, as the one (1) month London interbank offered
rate for U.S. Dollars commencing on such Reset Date (or if there shall at any
time, for any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute
page) or any Alternate Source, a comparable replacement rate determined by the
Lender at such time (which determination shall be conclusive absent manifest
error), by (ii) a number equal to 1.00 minus the LIBOR Reserve Percentage.
“LIBOR Reserve Percentage” means the maximum effective percentage in effect on
such day as prescribed by the Board of Governors of the Federal Reserve System
(or any successor) for determining the reserve requirements (including, without
limitation, supplemental, marginal and emergency reserve requirements) with
respect to eurocurrency funding (currently referred to as “Eurocurrency
Liabilities”).
A-9
“Lien” means any mortgage, lien (statutory or other), pledge, hypothecation,
assignment, preference, priority, security interest, or any other encumbrance or
charge (including any conditional sale or other title retention agreement, any
sale-leaseback, any financing lease having substantially the same economic
effect as any of the foregoing, the filing of any financing statement or similar
instrument under the applicable Uniform Commercial Code or comparable law of any
other jurisdiction, domestic or foreign, and mechanics’, materialmen’s and other
similar liens and encumbrances).
“Loan” has the meaning set forth in Paragraph B of the Recitals of this
Agreement.
“Loan Closing Conditions” has the meaning set forth in Section 4.1 of this
Agreement.
“Loan Documents” means the documents set forth in Section 2.1 of this Agreement
and any and all other documents, instruments and agreements now existing or
hereafter entered into, evidencing, securing or otherwise relating to the Loan,
together with any Amendments to such Loan Documents.
“Loan Expenses” has the meaning set forth in Section 8.16 of this Agreement.
“Loan Party” means each of the Borrower and the Guarantor.
“Material Adverse Change” means, individually or in the aggregate, the
occurrence of any event or the failure of any event to occur which has resulted
in a material adverse change (in comparison to any state of affairs existing
before or after the Closing Date) to: (i) the business operations, assets or
condition (financial or otherwise) of Borrower or Guarantor, (ii) the ability of
Borrower or Guarantor to perform, or of Lender to enforce, any material
provision of the Loan Documents or (iii) the value or use of the Property or the
operation thereof.
“Maturity Date” means the first to occur of (i) the Initial Maturity Date, as
the same may be extended in accordance with the provisions of Section 1.14 of
this Loan Agreement or (ii) the date on which the Debt becomes due and payable
pursuant to the provisions of the Loan Documents (whether by acceleration or
otherwise).
“MOPA” has the meaning set forth in Section 3.1(ii) of this Agreement.
“Mortgage” has the meaning set forth in Section 2.1 of this Agreement.
“Net Operating Income” means for any period, the amount by which Gross Revenues
attributable to the Property for such period exceeds Operating Expenses
attributable to the Property for such period. For purposes of calculating the
Debt Service Coverage Ratio pursuant to Sections 1.14(a)(v) and 1.14(b)(iv) of
this Agreement, the calculation of Net Operating Income will include the prior
four (4) calendar quarters but if the Property has been owned by Borrower for
less than four (4) quarters, then on an annualized basis based on the most
recent quarter for which Borrower has owned the Property.
A-10
“Non-Qualifying Party” shall mean any Borrower or any Guarantor that on the
applicable Eligibility Date fails for any reason to qualify as an Eligible
Contract Participant.
“Note” has the meaning set forth in Section 2.1 of this Agreement.
“Obligations” has the meaning set forth in Section 2.2 of this Agreement.
“Operating Expenses” means for any period, the greatest of (i) the pro forma
costs and expenses of owning, operating, managing and maintaining the Property
contained in the most recent appraisal of the Property completed in connection
with the Loan and approved by Lender, or (ii) the actual costs and expenses of
owning, operating, managing and maintaining the Property during the prior twelve
(12) month period incurred by Borrower, determined on a cash basis (except for
real and personal property taxes and insurance premiums, which shall be
determined on an accrual basis) as verified in a sworn statement of Borrower
delivered to Lender together with all necessary supporting documentation
reasonably requested by Lender, or (iii) the actual costs and expenses of
owning, operating, managing and maintaining the Property during the prior
calendar quarter (after proration of real estate taxes and insurance) incurred
by Borrower and annualized as verified in a sworn statement of Borrower,
reasonably requested by Lender. Operating Expenses shall include, without
limitation, required repairs and maintenance, payroll expenses, management fees
of the greater of the actual management fees or three and one-half percent
(3.50%) of Gross Revenues, real estate taxes, insurance premiums, utility costs
and a reserve in the amount of twenty cents (20¢) per square foot for tenant
improvements, leasing commissions and capital expenditures to the Property;
provided, however, that in no event shall Operating Expenses include (i)
interest on principal due on the Loan; (ii) any fees paid to Lender in
connection with the Loan evidenced hereunder; (iii) capital expenditures and
tenant improvement and leasing commission costs; or (iv) depreciation and
amortization and other non-cash items.
“Other Charges” has the meaning set forth in Section 5.6(a) of this Agreement.
“Ownership Interest” means: (i) any interest in any Property or (ii) any
interest in any Person which has a direct or indirect interest in any Property
in each case whether such interest is direct or indirect, contingent or fixed,
on any level or tier, of any nature whatsoever, whether in the form of a
partnership interest, stock interest, membership interest, equitable interest,
beneficial interest, profit interest, loss interest, voting rights, control
rights or otherwise.
“Parking Garage” has the meaning set forth in the MOPA.
“Permitted Exceptions” means the exceptions to title acceptable to Lender.
A-11
“Permitted Transfer” has the meaning contained in Paragraph 14 of the Mortgage
which is incorporated herein by this reference.
“Person” means any individual, sole proprietorship, corporation, general
partnership, limited partnership, limited liability company or partnership,
joint venture, association, joint-stock company, bank, trust, land trust,
estate, unincorporated organization, any federal, state, county or municipal
government (or any agency or political subdivision thereof), or any other form
of entity.
“Personal Property” all fixtures, furnishings, supplies, equipment and all other
types of personal property, tangible or intangible, including contract rights,
necessary for the use of the Property. Personal Property shall exclude property
belonging to any tenant.
“Pre-Closing Debt Service Coverage Ratio Requirement” has the meaning set forth
in Section 4.1(k) of this Agreement.
“Prime Rate” means the rate publicly announced by Lender from time to time by
Lender as its prime rate. The Prime Rate is determined from time to time by
Lender as a means of pricing some loans to its borrowers. It is not tied to any
external rate of interest or index, and does not necessarily reflect the lowest
rate of interest actually charged by Lender to any particular class or category
of customers.
“Prohibited Transfers” shall mean any sale, conveyance, assignment, alienation,
lien, mortgage, pledge or transfer of all or any portion of the Property or of
any of the interests as described in Paragraph 14 of the Mortgage which is
incorporated herein by this reference which: (i) does not constitute and satisfy
all of the requirements of a Permitted Transfer and (ii) if not a Permitted
Transfer, is made without Lender’s prior written consent.
“Property” has the meaning set forth in the Recitals to this Agreement.
“Protective Advances” has the meaning set forth in Section 8.17 of this
Agreement.
“Published Rate” shall mean the rate of interest published each Business Day in
The Wall Street Journal “Money Rates” listing under the caption “London
Interbank Offered Rates” for a one month period (or, if no such rate is
published therein for any reason, then the Published Rate shall be the
eurodollar rate for a one month period as published in another publication
selected by the Lender).
A-12
“Purchase Agreement” means collectively, the Letter of Intent Agreement dated
November 8, 2013 executed by and between the Seller and Inland Real Estate
Acquisitions, Inc. or its designee as Purchaser relating to the sale and
purchase of the Property, as amended by First Amendment to Agreement dated
December 16, 2013, Second Amendment to Agreement dated December 18, 2013, Third
Amendment to Agreement dated December 20, 2013, Fourth Amendment to Agreement
dated January 9, 2014, Fifth Amendment to Agreement dated January 16, 2014 and
Sixth Amendment to Agreement dated February 4, 2014, all of the foregoing
Amendments executed by and between the Seller and Inland Real Estate
Acquisitions, Inc. as Purchaser.
“Qualified ECP Loan Party” shall mean each Borrower or Guarantor that on the
Eligibility Date is (a) a corporation, partnership, proprietorship,
organization, trust, or other entity other than a “commodity pool” as defined in
Section 1a(10) of the CEA and CFTC regulations thereunder that has total assets
exceeding $10,000,000 or (b) an Eligible Contract Participant that can cause
another person to qualify as an Eligible Contract Participant on the Eligibility
Date under Section 1a(18)(A)(v)(II) of the CEA by entering into or otherwise
providing a “letter of credit or keepwell, support, or other agreement” for
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.
“Rent Roll” has the meaning set forth in Exhibit C.
“Reset Date” means (i) the Closing Date, and (ii) subject to the proviso below,
the first (1st) day of every month thereafter, provided that: (a) if any such
day is not a Business Day, then the first succeeding day that is a Business Day
shall instead apply, unless that day falls in the next succeeding calendar
month, in which case the next preceding day that is a Business Day shall instead
apply, and (b) if such day is a day of a calendar month for which there is no
numerically corresponding day in certain other months (each, a “Non-Conforming
Month”), then any Reset Date that falls within a Non-Conforming Month shall be
the last day of such Non-Conforming Month.
“Second Extended Maturity Date” means the first to occur of: (i) May 8, 2021 or
Second Extended Maturity Date is not a Business Day, such Second Extended
Maturity Date shall be the next succeeding Business Day.
A-13
“Second Extension Conditions” has the meaning set forth in Section 1.14(b) of
this Loan Agreement.
“Second Extension Notice” has the meaning set forth in Section 1.14(b)(i) of
this Loan Agreement.
“Second Extension Option” has the meaning set forth in Section 1.14(b) of this
Loan Agreement.
“Second Extension Option Fee” has the meaning set forth in Section 1.12 of this
Loan Agreement.
“Seller” means collectively, SPC Park Avenue Limited Partnership, a Delaware
limited partnership and SPC Condo Limited Partnership, a Delaware limited
partnership.
“Seller Earnout” has the meaning set forth in Section 1.16 of this Agreement.
“Small Space Leases” means Leases for not more than 10,000 square feet at the
Property.
“Survey” means the current title survey of the Property, certified to the Title
Company and Lender and their successors and/or assigns, that (i) are in form and
content satisfactory to Lender; (ii) are prepared by a professional and properly
licensed land surveyor satisfactory to Lender in accordance with the Minimum
Standard Detail Requirements for ALTA/ACSM Land Title Surveys jointly
established and adopted by ALTA, NSPS and ACSM in 2011; (iii) and include the
following additional Table A items: 1, 2, 3, 4, 6(b), 7(a), 8, 9, 10 (only where
party-walls are a factor), 11(b), 12, 13, 14, 16, 17, 18, 19, 20 and 21; (iv)
reflect the same legal descriptions contained in the Owner’s Title Insurance
Policy; and (v) contain certifications in form and substance reasonably
acceptable to Lender, including a certification that no portion of the Property
lies within a flood plain.
“Swap” shall mean any “swap” as defined in Section 1a(47) of the CEA and
regulations thereunder, other than (a) a swap entered into, or subject to the
rules of, a board of trade designated as a contract market under Section 5 of
the CEA, or (b) a commodity option entered into pursuant to CFTC Regulation
32.3(a).
“Swap Obligation” means any obligation to pay or perform under any agreement,
contract or transaction that constitutes a Swap.
“Target Tract” has the meaning set forth in the OEA.
“Taxes” has the meaning set forth in Section 5.6 of this Agreement.
“Title Company” means Chicago Title Insurance Company.
A-14
“UCC Searches” means UCC searches of each Loan Party, in such jurisdictions as
Lender shall specify, covering personal property, fixtures, federal and state
tax liens, pending suits, bankruptcy and judgments.
“Uniform Commercial Code” means the Uniform Commercial Code in effect in any
applicable jurisdiction.
A-15
EXHIBIT B
LEGAL DESCRIPTION
The following land located in the County of Pulaski, State of Arkansas and
described as follows:
Tract 1: (ATT TRACT)
Part of Lot 1, Park Avenue Addition, Little Rock, Pulaski County, Arkansas,
recorded as Document No. 2011004648, records of Pulaski County, Arkansas, being
more particularly described as follows:
Beginning at a found cotton picker spindle known as the northeast corner of Lot
1, Park Avenue Addition, City of Little Rock, Pulaski County, Arkansas; thence S
01° 24' 16" W along the west right-of-way line of University Avenue for a
distance of 126.67 feet to a found cotton picker spindle; thence departing said
west right-of-way line N 87° 09' 12" W for a distance of 162.45 feet to a found
cotton picker spindle;
thence N 02° 51' 53" E for a distance of 139.45 feet to a set point; thence S
86° 56' 56" E a distance of 53.93 feet to a set point; thence S 01° 29' 24" W a
distance of 12.40 feet to a set point; thence S 87° 01' 44" E a distance of
104.99 feet to the point of beginning.
Now platted as Lot 1, Strode Addition, an Addition to the City of Little Rock,
Pulaski County, Arkansas, as shown on plat of record as Instrument Number
2013051704, records of Pulaski County, Arkansas.
Tract 2: (OWNERS TRACT)
Commencing at a found cotton picker spindle on the west right-of-way line of
University Avenue known as the NE corner of Lot 1, Park Avenue Addition, Little
Rock, Pulaski County, Arkansas; thence along said west right-of-way line the
following courses: thence South 01° 24' 16" West for a distance of 126.67 feet;
thence South 01° 30' 36" West for a distance of 22.98 feet; thence South 01° 25'
14" West 38.04 feet; thence South 01° 22' 14" West for a distance of 234.30 feet
to the Point of Beginning; thence continue along said right-of-way South 01° 22'
14" West for a distance of 15.29 feet to a found nail; thence departing said
west right-of-way line North 87° 97' 44" West for a distance of 223.17 feet to a
set point; thence South 02° 50' 18" West a distance of 337.42 feet to a set
point on the north right-of-way of Saint Vincent Circle; thence along said north
right-of-way line North 87° 09' 38" West for a distance of 393.22 feet to a
found cotton picker spindle; thence departing said north right-of-way line North
02° 51' 26" East for a distance of 121.82 feet to a found chiseled "X"; thence
North 87° 06' 10" West for a distance of
B-1
71.43 feet to a found chiseled "X"; thence North 02° 48' 00" East for a distance
of 86.68 feet to a found chiseled "X"; thence North 86° 58' 45" West for a
distance of 30.00 feet to a set point; thence North 02° 52' 55" East for a
distance of 131.44 feet to a found chiseled "X"; thence North 77° 59' 05" West
for a distance of 50.58 feet to a found chiseled "X"; thence North 02° 50' 57"
East for a distance of 142.81 feet to a found chiseled "X"; thence South 87° 08'
56" East for a distance of 581.33 feet to a found chiseled "X"; thence South 02°
51' 00" West for a distance of 138.38 feet to a set point; thence South 87° 11'
23" East for a distance of 185.95 feet to the Point of Beginning.
Now platted as Lot 2, Strode Addition, an Addition to the City of Little Rock,
Tract 3: (CHEDDARS TRACT)
University Avenue known as the northeast corner of Lot 1, Park Avenue Addition,
City of Little Rock, Pulaski County, Arkansas; thence along said right-of-way
line the following courses: South 01° 24' 16" West for a distance of 126.67
feet; thence South 01° 30' 36" West for a distance of 22.98 feet; thence South
01° 25' 14" West for a distance of 38.04 feet; thence South 01° 22' 14" West for
a distance of 249.59 feet, to a found mag nail and the Point of Beginning;
thence continue along said west right-of-way South 01° 22' 56" West for a
distance of 316.91 feet to a found chiseled "X"; thence with a curve turning to
the right with an arc length of 31.89 feet, a radius of 20.00 feet, a chord
bearing of South 47° 07' 40" West and a chord length of 28.62 feet to a found
chiseled X" on the north right-of-way line of Saint Vincent Circle; thence along
said north right-of way line North 87° 09' 38" West for a distance of 211.24
feet to a set point; thence departing said north right-of-way line North 02° 50'
18" East for a distance of 337.42 feet to a set point; thence South 87° 07' 44"
East for a distance of 223.17 feet returning to the Point of Beginning.
Now platted as Lot 3, Strode Addition, an Addition to the City of Little Rock,
Tract 4: (PARKING DECK TRACT)
B-2
Rock, Pulaski County, Arkansas; thence North 87° 01' 44" West for a distance of
104.99 feet; thence North 01° 29' 24" East for a distance of 100.13 feet; thence
North 87° 01' 59" West for a distance of 204.60 feet to a found rebar and the
Point of Beginning; thence North 87° 09' 38" West for a distance of 15.81 feet
to a set point; thence South 02° 50' 22" West for a distance of 122.60 feet to a
set point; thence North 87° 09' 38" West for a distance of 706.36 feet; thence
North 02° 50' 22" East for a distance of 223.43 feet; thence South 86° 59' 32"
East for a distance of 412.27 feet; thence South 87° 12' 31" East for a distance
of 307.61 feet; thence South 01° 31' 28" West for a distance of 99.90 feet to
the Point of Beginning.
Now platted as Lot 4, Strode Addition, an Addition to the City of Little Rock,
Tract 5: (JAREDS TRACT)
City of Little Rock, Pulaski County, Arkansas; thence along said west
right-of-way line the following courses: South 01° 24' 16" West for a distance
of 126.67 feet; thence South 01° 30' 36" West for a distance of 22.98 feet;
thence South 01° 25' 14" West for a distance of 38.04 feet, to the Point of
Beginning at a found chiseled "X" on the west right-of-way of University Avenue;
thence along said right-of-way South 01° 22' 14" West 234.30 feet to a set
point; thence departing said west line North 87° 11' 23" West for a distance of
185.95 feet to a set point; thence North 02° 51' 00" East for a distance of
138.38 feet to found chiseled "X"; thence North 02° 51' 00" East for a distance
of 95.85 feet to a found chiseled "X"; thence South 87° 11' 20" East for a
distance of 179.90 feet to the Point of Beginning.
Now platted as Lot 5, Strode Addition, an Addition to the City of Little Rock,
Tract 6: (CONDO TRACT)
Retail Unit (First Floor) of SPC Park Avenue Horizontal Property Regime in the
City of Little Rock, Pulaski County, Arkansas, and any and all rights entitled
thereto into the common elements of said Horizontal Property Regime, as
established by Master Deed recorded as Instrument Number 2012084362, records of
Pulaski County, Arkansas.
B-3
Together with the rights of easements granted for the benefit of the insured
property (As to Tracts 1, 2, 3, 4, 5 and 6) as set forth in the following
instruments:
i.Access Easement as set out in a Release of Easement Deed and Access Agreement
dated July 27, 1990 by and between William L. Patton, Jr., Trustee, Southern
Real Estate and Financial Co., The Mall, Inc. and Union National Bank of Little
Rock, of record as Instrument Number 90-62294, records of Pulaski County,
Arkansas.
iiOperation and Easement Agreement dated (no date shown), executed by and
between TARGET CORPORATION and SPC PARK AVENUE LIMITED PARTNERSHIP, filed for
record September 8, 2009 as Instrument Number 2009061439; First Amendment to
Operation and Easement Agreement dated April 25, 2011, filed for record October
11, 2011 as Instrument Number 2011060113; Second Amendment to Operation and
Easement Agreement dated as of February 13, 2012, filed for record February 23,
2012 as Instrument Number 2012010431, records of Pulaski County, Arkansas.
iii.Master Operating Agreement for Common Area and Parking Garage dated November
23, 2011, executed by and between SPC PARK AVENUE LIMITED PARTNERSHIP, a
Delaware limited partnership, and PARK AVENUE APARTMENTS, LLC, a Texas limited
liability company, filed for record December 21, 2011 as Instrument Number
2011075207; First Amendment to Master Operating Agreement for Common Area and
Parking Garage dated January 18, 2012, filed for record January 25, 2012 as
Instrument Number 2012004672; Second Amendment to Master Operating Agreement for
Common Area and Parking Garage dated January 4, 2013, filed for record January
9, 2013 as Instrument Number 2013002409, records of Pulaski County, Arkansas.
iv.Master Deed to SPC Park Avenue Horizontal Property Regime recorded as
Instrument Number 2012084362, records of Pulaski County, Arkansas.
Property Addresses:
410 South University Avenue, Little Rock, Arkansas 72205
416 South University Avenue, Little Rock, Arkansas 72205
400 South University Avenue, Little Rock, Arkansas 72205
310 South University Avenue, Little Rock, Arkansas 72205
300 South University Avenue, Little Rock, Arkansas 72205
314 South University Avenue, Little Rock, Arkansas 72205
All of which are commonly known as The Park Avenue Shopping Center.
B-4
EXHIBIT C
(List of Required Items)
(a) Appraisal. FIRREA compliant valuation appraisal satisfactory to
Lender prepared by an appraiser(s) who is a member of the American Institute of
Real Estate Appraisers and who is approved by Lender.
(b) Lender’s Title Insurance Policy. The Lender’s Title Insurance
Policy (or marked binder thereof in form and substance satisfactory to Lender),
together with evidence that the premium in respect of the issuance of such
Lender’s Title Insurance Policy has been paid in full or will be paid on the
Closing Date.
(c) Recorded Documents. Legible copies of all Permitted Exceptions.
(d) Title Clearance. GAP Affidavit, ALTA Statement, utility letters
and such other certificates and title indemnities in favor of Title Company as
shall be required to issue the Lender’s Title Insurance Policies.
(e) The Survey. The Survey.
(f) UCC Searches. UCC Searches dated not later than thirty (30) days
(g) Disbursement Statement. Detailed disbursement statement prepared
by Lender and signed by Borrower, describing the disbursement of the Loan.
(h) Closing Instruction Letter. Disbursement instructions or escrow
letter, signed by the authorized representative of Borrower, Lender and Title
Company, irrevocably instructing Lender to fund the proceeds of the Loan being
advanced on the Closing Date in accordance with said instructions.
(i) Zoning. Evidence of compliance with zoning of each Property on
the Closing Date including (i) a copy of the applicable zoning ordinance, zoning
map, and any special use, variance, PUD, site plan, or other ordinances specific
to each Property, and (ii) copy of any applicable subdivision plat.
(j) Insurance Policies. The insurance policies or certified copies
thereof satisfying the requirements of this Agreement or the Loan Documents, and
evidence that the premiums in respect of such insurance policies are fully paid,
together with endorsements thereto showing Lender as an additional insured and
loss payee as set forth in this Agreement.
(k) Financial Statements. Financial Statements for Borrower and the
Guarantor.
(l) Borrower’s and Guarantor’s Counsel Opinions. Borrower’s and
Guarantor’s Counsel Opinions.
C-1
(m) Tenant Estoppel Certificate. Tenant Estoppel Certificates, in a
form acceptable to Lender for those tenants at the Property as provided in
Section 8.2(b) herein.
(n) Subordination, Non-Disturbance and Attornment Agreement.
Subordination, Non-Disturbance and Attornment Agreements, in a form acceptable
to Lender, from the tenants listed in Section 8.2(c) herein.
(o) Leases. Copies of the executed Leases for all tenants of the
Property.
(p) Rent Roll. A Rent Roll as of the Closing Date, in a form
acceptable to Lender for all of the Leases at the Property.
(q) Organizational Documents. (A) for each corporate Loan Party: (1)
good standing certification from the state of incorporation and the state where
the Property is located (if different); (2) certified copy of articles of
incorporation and bylaws; (3) certified copy of resolutions authorizing the
transaction; and (4) certificate of incumbency; and (B) for Borrower that is a
limited liability company or limited partnership; (1) good standing certificate
(or equivalent) from the state of formation and the state where the applicable
Property is located (if different), (2) certified copy of operating agreement or
partnership agreement; (3) articles of organization (or equivalent) certified by
the Secretary of State of the State of formation; (4) certificate of limited
partnership for Borrower that is a limited partnership; and (5) certified copy
of resolutions authorizing the transaction.
(r) Purchase Agreement. A copy of the Purchase Agreement.
C-2
SCHEDULE 1.16
Borrower’s Pro Forma Rent Figures
For The Vacant Space Subject To The Seller Earnout
|
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13G (Rule 13d-102) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO §240.13d-1(b), (c) AND (d) AND AMENDMENTS THERETO FILED PURSUANT §240.13d-2 (Amendment No.) GREENSHIFT CORPORATION (Name of Issuer) COMMON STOCK, $.0 (Title of Class of Securities) 39571U407 (CUSIP Number) APRIL 21, 2015 (Date of Event Which Requires Filing of This Statement) Check the appropriate box to designate the rule pursuant to which this Schedule is filed: a. Rule 13d-1(b) b. ■ Rule 13d-1(c) c. Rule 13d-1(d) * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP No. 39571U407 Page 2of 5 1.Name of Reporting Person MINORITY INTEREST FUND (II), LLC. 2.Check The Appropriate Box if a Member of a Group (a)[ ] (b)[ ] 3.SEC Use Only 4.Citizenship or Place of Organization New Jersey Number of Shares 5.Sole Voting Power Beneficially Owned By Each 115,102,571 Reporting Person With 6.Shared Voting Power None 7.Sole Dispositive Power 8.Shared Dispositive Power None 9. Aggregate Amount Beneficially Owned By Each Reporting Person 10. Check Box if the Aggregate Amount in Row (9) Excludes Certain Shares [ ] 11. Percent of Class Represented By Amount in Row (9) 9.9% 12. Type of Reporting Person OO CUSIP No. 39571U407 Page3 of 5 1.Name of Reporting Person Lawrence Kreisler 2.Check The Appropriate Box if a Member of a Group (a)[ ] (b)[ ] 3.SEC Use Only 4.Citizenship or Place of Organization U.S.A. Number of Shares 5.Sole Voting Power Beneficially Owned By Each Reporting Person With 6.Shared Voting Power None 7.Sole Dispositive Power 8.Shared Dispositive Power None 9. Aggregate Amount Beneficially Owned By Each Reporting Person 10. Check Box if the Aggregate Amount in Row (9) Excludes Certain Shares [ ] 11. Percent of Class Represented By Amount in Row (9) 9.9% 12. Type of Reporting Person IN CUSIP No. 39571U407 Page4 of 5 ITEM1(a) NAME OF ISSUER: GreenShift Corporation. 1(b) ADDRESS OF ISSUER’S PRINCIPAL EXECUTIVE OFFICES: 5950 Shiloh Road East, Suite N, Alpharetta, Georgia ITEM2(a) NAME OF PERSON FILING: Minority Interest Fund (II), LLC Lawrence Kreisler, Manager & Sole Member of Minority Interest Fund (II), LLC 2(b) ADDRESS OF PRINCIPAL OFFICE OR, IF NONE, RESIDENCE: The address of the principal business office of each reporting person is: 221 Charming Forge Road, Womelsdorf, PA 19567 2(c) CITIZENSHIP: Minority Interest Fund (II), LLC. is a New Jersey limited liability company. Lawrence Kreisler is a citizen of the United States. 2(d)TITLE OF CLASS OF SECURITIES: Common Stock, $.0001 par value 2(e)CUSIP NUMBER: 39571U407 ITEM3 IF THIS STATEMENT IS FILED PURSUANT TO §§240.13d-1(b) OR 240.13d-2(b) OR (c), CHECK WHETHER THE PERSON FILING IS A: (a) Broker or dealer registered under section 15 of the Act (15 U.S.C. 78o). (b) Bank as defined in section 3(a)(6) of the Act (15 U.S.C. 78c). (c) Insurance company as defined in section 3(a)(19) of the Act (15 U.S.C. 78c) (d) Investment company registered under section 8 of the Investment Company Act of 1940 (15 U.S.C. 80a-8). (e) An investment advisor in accordance with §240.13d-1(b)(1)(ii)(E); (f) An employee benefit plan or endowment fund in accordance with §240.13d-1(b)(1)(ii)(F); (g) A parent holding company or control person in accordance with §240.13d-1(b)(1)(ii)(G); (h) A savings association as defined in Section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813); (i) A church plan that is excluded from the definition of an investment company under section 3(c)(14) of the Investment Company Act of 1940 (15 U.S.C. 80a-3); (j) A non-U.S. institution in accordance with §240.13d-1(b)(1)(ii)(J). (k) Group, in accordance with §240.13d-1(b)(1)(ii)(J). CUSIP No. 39571U407 Page5 of 5 ITEM 4.OWNERSHIP. The responses to Items 5 through 11 on the cover page of this filing are incorporated by reference. ITEM 5.OWNERSHIP OF FIVE PERCENT OR LESS OF A CLASS. Not Applicable. ITEM 6.OWNERSHIP OF MORE THAN FIVE PERCENT ON BEHALF OF ANOTHER PERSON. Not Applicable. ITEM 7. IDENTIFICATION AND CLASSIFICATION OF THE SUBSIDIARY WHICH ACQUIRED THE SECURITY BEING REPORTED ON BY THE PARENT HOLDING COMPANY. Not Applicable. ITEM 8.IDENTIFICATION AND CLASSIFICATION OF MEMBERS OF THE GROUP. Not Applicable. ITEM 9.NOTICE OF DISSOLUTION OF GROUP. Not Applicable. ITEM 10.CERTIFICATION By signing below I certify that, to the best of my knowledge and belief, the securities referred to above were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participation in any transaction having that purpose or effect, other than activities solely in connection with a nomination under §240.14a-11. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: April 21, 2015 Minority Interest Fund (II), LLC By: /s/ Lawrence Kreisler Lawrence Kreisler, Manager & Sole Member /s/ Lawrence Kreisler Lawrence Kreisler
|
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C.20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported):May 11, 2015 Banner Corporation (Exact name of registrant as specified in its charter) Washington 0-26584 (State or other jurisdiction (Commission File (I.R.S. Employer of incorporation)
|
Name: COMMISSION REGULATION (EC) No 470/98 of 27 February 1998 concerning tenders submitted in response to the invitation to tender for the export to certain third countries of wholly milled round grain rice issued in Regulation (EC) No 2098/97
Type: Regulation
Subject Matter: trade policy; plant product; cooperation policy
Date Published: nan
EN Official Journal of the European Communities28. 2. 98 L 60/33 COMMISSION REGULATION (EC) No 470/98 of 27 February 1998 concerning tenders submitted in response to the invitation to tender for the export to certain third countries of wholly milled round grain rice issued in Regulation (EC) No 2098/97 THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, Having regard to Council Regulation (EC) No 3072/95 of 22 December 1995 on the common organisation of the market in rice (1), as amended by Regulation (EC) No 192/98 (2), and in particular Article 13 (3) thereof, Whereas an invitation to tender for the export refund on rice was issued under Commission Regulation (EC) No 2098/97 (3); Whereas Article 5 of Commission Regulation (EEC) No 584/75 (4), as last amended by Regulation (EC) No 299/ 95 (5), allows the Commission to decide, in accordance with the procedure laid down in Article 22 of Regulation (EC) No 3072/95 and on the basis of the tenders submitted, to make no award; Whereas on the basis of the criteria laid down in Article 13 of Regulation (EC) No 3072/95 a maximum refund should not be fixed; Whereas the measures provided for in this Regulation are in accordance with the opinion of the Management Committee for Cereals, HAS ADOPTED THIS REGULATION: Article 1 No action shall be taken on the tenders submitted from 23 to 26 February 1998 in response to the invitation to tender for the export refund on wholly milled round grain rice to certain third countries issued in Regulation (EC) No 2098/97. Article 2 This Regulation shall enter into force on 28 February 1998. This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 27 February 1998. For the Commission Franz FISCHLER Member of the Commission (1) OJ L 329, 30. 12. 1995, p. 18. (2) OJ L 20, 27. 1. 1998, p. 16. (3) OJ L 292, 25. 10. 1997, p. 25. (4) OJ L 61, 7. 3. 1975, p. 25. (5) OJ L 35, 15. 2. 1995, p. 8. |
Exhibit 10.4
AMENDMENT NO. 8 TO THE
AIR PRODUCTS AND CHEMICALS, INC.
RETIREMENT SAVINGS PLAN
WHEREAS, Air Products and Chemicals, Inc. (the “Company”) is the Plan Sponsor of
the Air Products and Chemicals, Inc. Retirement Savings Plan (the “Plan”); and
WHEREAS, pursuant to Plan Section 7.01 the Plan may be amended at anytime; and
WHEREAS, the Company desires to amend the Plan to update Exhibit I to include
twelve new eligible hourly locations.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Exhibit I is amended as attached hereto to include twelve new locations
effective as June 1, 2013:
Adams, NE
Beatrice, NE
Brookhaven, MS
Claremont, MN
Malta Bend, MO
Marion, IN
Medina, NY
Milton (CO2), WI
Monroe, WI
Nevada, IA
Union City, IN
York, NE
2. In all other respects the Plan shall remain in full force and effect.
IN WITNESS WHEREOF, the Company has caused its Senior Vice President, General
Counsel and Chief Administrative Officer to execute this Eighth Amendment to the
Plan on this day of June 2013.
AIR PRODUCTS AND CHEMICALS, INC. By:
Senior Vice President, General Counsel and Chief Administrative Officer
Exhibit 10.4
EXHIBIT I
ELIGIBLE NONUNION HOURLY LOCATIONS DESIGNATED
BY VICE PRESIDENT - HUMAN RESOURCES
EFFECTIVE AS OF June 1, 2013:
Designated Terminal
For 125% of Base Salary
ADAMS, NE YES ASHLAND, KY YES BEATRICE, NE YES BETHLEHEM, PA YES
BOUNTIFUL, UT YES BOZRAH, CT YES BROOKHAVEN, MS YES BURNS HARBOR, IN
NO BUTLER, IN YES BUTLER, PA YES CAMDEN, SC YES
CARTERSVILLE, GA
CHANDLER, AZ
YES
YES
CLAREMONT, MN YES CONVENT, LA NO CONVENT, LA (Drivers) YES CONYERS, GA
YES CREIGHTON, PA YES DECATUR, AL YES DEER PARK, TX NO EAGAN, MN
YES GLENMONT, NY YES GRAY, TN YES LANCASTER, PA YES LANCASTER, PA
(Express Services) NO LAPORTE, TX YES LASALLE, IL YES LIBERAL, KS
YES LONG BEACH, CA YES MALTA BEND, MO YES MANALAPAN, NJ NO MARION, IN
YES MCINTOSH, AL YES MEDINA, NY YES MEMPHIS, TN YES MIDLOTHIAN, TX
YES MILTON (CO2), WI YES MONROE, WI YES
MOORELAND, OK YES NEVADA, IA YES NEW MARTINSVILLE, WV YES NIAGARA
FALLS, NY YES OAK CREEK, WI YES ORLANDO, FL YES PACE, FL YES
PARKERSBURG, WV YES PRYOR, OK YES PUYALLUP, WA YES REIDSVILLE, NC
YES SHAKOPEE, MN YES SMITHVILLE, MO YES SPARROWS POINT, MD (Drivers)
YES SUFFIELD, CT YES UNION CITY, IN YES YORK, NE YES |
Name: Commission Regulation (EC) No 201/94 of 31 January 1994 fixing the rate of the aid for dried fodder
Type: Regulation
Date Published: nan
No L 27/12 Official Journal of the European Communities 1 . 2. 94 COMMISSION REGULATION (EC) No 201/94 of 31 January 1994 fixing the rate of the aid for dried fodder amended by Regulation (EEC) No 1110/89 (10), the average world market price for the products described in the first and third indents of Article 1 (b) of Regulation (EEC) No 1117/78 is to be determined on the basis of the most favourable actual purchase possibilities excepting those which cannot be considered representative of the real market trend ; whereas offers and quotations recorded during the first 25 days of the month in question for quantities that can be delivered during the following calendar month are to be used ; whereas the average world market price thus determined is used to fix the aid rate applicable on the following month ; Whereas the necessary adjustments must be made in the case of offers and quotations not of the type referred to above ; whereas these adjustments were defined in Article 3 of Commission Regulation (EEC) No 1528/78 of 30 June 1978 laying down detailed rules for the application of the system of aid for dried fodder (u), as last amended by Regulation (EEC) No 1069/93 (12) ; THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, Having regard to Council Regulation (EEC) No 1117/78 of 22 May 1978 on the common organization of the market in dried fodder ('), as last amended by Regulation (EC) No 3496/93 (2), and in particular Article 5 (3) thereof, Whereas, under Article 5 ( 1 ) of Regulation (EEC) No 1117/78 , when the guide price is higher than the average world market price, aid is granted for dried fodder as described under Article 1 (b) and (c) of that Regulation and obtained from fodder plants harvested in the Community ; whereas that aid takes account of a percentage of the difference between these two prices ; Whereas the guide price in the dried fodder sector was fixed by Council Regulation (EEC) No 1288/93 (3); Whereas Commission Regulation (EEC) No 3824/92 (4), as last amended by Regulation (EEC) No 1 663/93 (*), lays down the list of prices and amounts fixed in ecus to be amended as a result of the monetary alignments and which are reduced from the beginning of the 1993/94 marketing year by a factor of fixed by Commission Regu lation (EEC) No 537/93 (*), as amended by Regulation (EEC) No 1331 /93 (^ as part of the automatic disman tling system of the negative monetary gaps ; whereas this factor must be taken into account when calculating the aid from the beginning of the aforementioned marketing year ; Whereas Council Regulation (EEC) No 2065/92 (8), as amended by Regulation (EEC) No 1288/93, sets the percentage referred to in Article 5 of Regulation (EEC) No 1117/78 for the 1993/94 marketing year at 70% ; Whereas the average world market price is determined for a bulk pelleted product, delivered to Rotterdam, of the standard quality for which the guide price has been fixed ; Whereas, under Council Regulation (EEC) No 1417/78 of 19 June 1978 on the aid system for dried fodder (9), as last Whereas, in accordance with Article 3 of Regulation (EEC) No 1417/78, when no offer or quotation can be used to determine the average world market price, that price is determined on the basis of the sum of the value of competing products ; whereas those products are defined in Article 3 (3) of Regulation (EEC) No 1528/78 ; Whereas, pursuant to Article 11 of Regulation (EEC) No 1417/78, when forward prices differ from that applying in the month when the application is lodged, the aid rate is adjusted by a correcting amount calculated from the trend of forward prices ; Whereas, where the average world market price is deter mined in accordance with Article 3 of Regulation (EEC) No 1417/78, the corrective amount must be equal to the difference between the average world market price and the average forward world market price determined by applying the criteria laid down in Article 3 (3) of Regula tion (EEC) No 1528/78 and valid for delivery during a month other than that in which the aid is introduced, adjusted by the percentage fixed under Article 5 (2) of ( ) OJ No L 142, 30. 5. 1978, p. 1 . (2) OJ No L 319, 21 . 12. 1993, p . 17. 0 OJ No L 132, 29. 5. 1993, p. 1 . 0 OJ No L 387, 31 . 12. 1992, p. 29. 0 OJ No L 158, 30. 6. 1993, p. 18 . « OJ No L 57, 10. 3 . 1993, p. 18 . 0 OJ No L 132, 29. 5. 1993, p . 114. (8) OJ No L 215, 30. 7. 1992, p. 48 . 0 OJ No L 171 , 28. 6. 1978, p. 1 . ( I0) OJ No L 118, 29. 4. 1989, p. 1 . (") OJ No L 179, 1 , 7. 1978, p . 10 . H OJ No L 108 , 1 . 5 . 1993, p. 114. 1 . 2. 94 Official Journal of the European Communities No L 27/13 Commission has recorded, the rate of the additional aid for dried fodder must be fixed as indicated in the table annexed to this Regulation, HAS ADOPTED THIS REGULATION : Regulation (EEC) No 1 1 17/78 ; whereas where the average forward world market price for one or more months cannot be determined by applying the criteria laid down in Article 3(3) of Regulation (EEC) No 1528/78 , the corrective amount must be fixed for the month or months in question at a level such that the aid is equal to zero ; Whereas the representative market rates defined in Article 1 of Council Regulation (EEC) No 3813/92 0, as amended by Regulation (EC) No 3528/93 (2), are used to convert amounts expressed in third country currencies and are used as the basis for determining the agricultural conversion rates of the Member States' currencies ; whereas detailed rules on the application and determina tion of these conversions were set by Commission Regu lation (EEC) No 1068/93 (3); Whereas the rate of the additional aid must be fixed once per month so as to ensure application of the aid from the first day of the month following the date of its fixing ; Whereas, as the result of the applications of all these provisions to the offers and quotations which the Article 1 The rate of the aid referred to in Article 5 (3) of Regula tion (EEC) No 1117/78 is fixed in the Annex to this Regulation . Article 2 This Regulation shall enter into force on 1 February 1994. This Regulation shall be binding in its entirety and directly applicable in all Member States . Done at Brussels, 31 January 1994. For the Commission Rene STEICHEN Member of the Commission (>) OJ No L 387, 31 . 12. 1992, p. 1 . (2) OJ No L 320, 22. 12. 1993, p . 32. (3) OJ No L 108, 1 . 5 . 1993, p. 106. No L 27/14 Official Journal of the European Communities 1 . 2. 94 ANNEX to the Commission Regulation of 31 January 1994 fixing the rate of the aid for dried fodder Aid applicable from 1 February 1994 to dried fodder : (ECU/tonne) Fodder dehydrated by artificial heat drying Fodder otherwise dried Protein concentrates February 1994 61,414 36,724 Aid in case of advance fixing for the month of : (ECU/tonne) March 1994 61,438 36,748 April 1994 61,606 36,916 |
Exhibit 10.2
EXECUTION VERSION
TERM LOAN CREDIT AGREEMENT
dated as of
December 19, 2014
among
SOUTHWESTERN ENERGY COMPANY
The Lenders Party Hereto
as Administrative Agent
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
as Sole Lead Arranger and Sole Bookrunner
TABLE OF CONTENTS
PAGE
ARTICLE I Definitions
1
SECTION 1.01. Defined Terms
1
SECTION 1.02. Classification of Loans and Borrowings
17
SECTION 1.03. Terms Generally
17
SECTION 1.04. Accounting Terms; GAAP
17
ARTICLE II The Credits
18
SECTION 2.01. Commitments
18
SECTION 2.02. Loans and Borrowings
18
SECTION 2.03. Requests for Borrowing
18
SECTION 2.04. [Intentionally Omitted]
19
SECTION 2.05. [Intentionally Omitted]
19
SECTION 2.06. [Intentionally Omitted]
19
SECTION 2.07. Funding of Borrowings
19
SECTION 2.08. Interest Elections
20
SECTION 2.09. Termination and Reduction of Commitments
21
SECTION 2.10. Repayment of Loans; Evidence of Debt
21
SECTION 2.11. Prepayment of Loans
22
SECTION 2.12. Fees
24
SECTION 2.13. Interest
24
SECTION 2.14. Alternate Rate of Interest; Illegality
25
SECTION 2.15. Increased Costs
26
SECTION 2.16. Break Funding Payments
27
SECTION 2.17. Taxes
27
SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs
31
SECTION 2.19. Mitigation Obligations; Replacement of Lenders
32
ARTICLE III Representations and Warranties
33
SECTION 3.01. Organization; Powers
33
SECTION 3.02. Authorization and Validity
33
SECTION 3.03. Financial Condition
33
SECTION 3.04. ERISA
34
SECTION 3.05. Defaults
34
SECTION 3.06. Accuracy of Information
34
SECTION 3.07. Regulation U
34
SECTION 3.08. Taxes
35
SECTION 3.09. Liens
35
SECTION 3.10. Litigation
35
SECTION 3.11. No Conflict
35
SECTION 3.12. Approvals
35
SECTION 3.13. Investment Company Status
35
SECTION 3.14. Compliance with Laws and Orders
35
SECTION 3.15. Anti-Terrorism Laws
36
SECTION 3.16. Anti-Corruption Laws and Sanctions
36
SECTION 3.17. Solvency
36
SECTION 3.18. Use of Proceeds
36
SECTION 3.19. Change of Control
36
Table of Contents
(continued)
Page
ARTICLE IV Conditions
36
SECTION 4.01. Conditions Precedent to Effectiveness
36
SECTION 4.02. Conditions Precedent to Closing
37
ARTICLE V Affirmative Covenants
39
SECTION 5.01. Financial Statements and Other Information
39
SECTION 5.02. Books and Records; Inspection Rights
41
SECTION 5.03. Conduct of Business; Existence
42
SECTION 5.04. Maintenance of Insurance
42
SECTION 5.05. Payment of Taxes and Other Obligations
42
SECTION 5.06. Compliance with Laws
42
SECTION 5.07. Maintenance of Properties
43
SECTION 5.08. Use of Proceeds
43
SECTION 5.09. Designation of Unrestricted Subsidiaries; Redesignation of
Unrestricted Subsidiaries as Restricted Subsidiaries
43
ARTICLE VI Negative Covenants
44
SECTION 6.01. Fundamental Changes
44
SECTION 6.02. Liens
44
SECTION 6.03. Indebtedness of Subsidiaries
47
SECTION 6.04. Anti-Corruption Laws and Sanctions
48
SECTION 6.05. Financial Covenant
48
SECTION 6.06. Investments in Unrestricted Subsidiaries
48
ARTICLE VII Events of Default
48
SECTION 7.01. Events of Default
48
SECTION 7.02. Acceleration
50
ARTICLE VIII The Administrative Agent
50
ARTICLE IX Miscellaneous
53
SECTION 9.01. Notices
53
SECTION 9.02. Waivers; Amendments
54
SECTION 9.03. Expenses; Indemnity; Damage Waiver
55
SECTION 9.04. Successors and Assigns
57
SECTION 9.05. Survival
61
SECTION 9.06. Counterparts; Integration; Effectiveness; Electronic Execution
61
SECTION 9.07. Severability
62
SECTION 9.08. Right of Setoff
62
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process
62
SECTION 9.10. WAIVER OF JURY TRIAL
63
SECTION 9.11. Headings
63
SECTION 9.12. Confidentiality
63
SECTION 9.13. Electronic Execution of Assignments and Certain Other Documents
64
SECTION 9.14. USA PATRIOT Act
64
SECTION 9.15. Subsidiary Guarantors
64
SECTION 9.16. Interest Rate Limitation
65
SECTION 9.17. No Advisory or Fiduciary Responsibility
65
ii
Table of Contents
(continued)
Page SCHEDULES:
Schedule 1.01A – Commitments
Schedule 1.01B – Pricing Schedule Schedule 6.02 – Existing Liens
Schedule 6.03 – Existing Subsidiary Indebtedness EXHIBITS:
Exhibit A – Form of Assignment and Assumption Exhibit B – Form of
Subsidiary Guaranty Exhibit C-1 – Form of U.S. Tax Certificate
(Foreign Lenders That Are Not Partnerships) Exhibit C-2 – Form of U.S. Tax
Certificate (Foreign Participants That Are Not Partnerships) Exhibit C-3 –
Form of U.S. Tax Certificate (Foreign Participants That Are Partnerships)
Exhibit C-4 – Form of U.S. Tax Certificate (Foreign Lenders That Are
Partnerships) Exhibit D-1 – Form of Borrowing Request Exhibit D-2 –
Form of Interest Election Request Exhibit E – Form of Note Exhibit F
– Form of Compliance Certificate Exhibit G – Form of Solvency Certificate
iii
TERM LOAN CREDIT AGREEMENT (this “Agreement”) dated as of December 19, 2014
among SOUTHWESTERN ENERGY COMPANY, a Delaware corporation (the “Borrower”), the
LENDERS from time to time party hereto and BANK OF AMERICA, N.A., as
Administrative Agent.
RECITALS:
1. Pursuant to that certain purchase and sale agreement dated as of October 14,
2014 (together with the schedules, annexes and exhibits thereto, and as amended,
restated, amended and restated, supplemented or otherwise modified, the
“Purchase and Sale Agreement”) between SWN Production Company, LLC, a Texas
limited liability company formerly known as Southwestern Energy Production
Company, a Texas corporation (the “Buyer”), and Chesapeake Appalachia L.L.C., an
Oklahoma limited liability company (the “Seller”), the Buyer agreed to purchase
all of the Seller’s right, title and interest in and to certain oil, gas and
mineral properties and related assets as described in the Purchase and Sale
Agreement (such properties and assets, the “Acquired Assets”) for the aggregate
cash consideration set forth in the Purchase and Sale Agreement (the
“Acquisition Consideration”, and such transaction, the “Acquisition”).
2. To consummate the transactions contemplated by the Purchase and Sale
Agreement, and in order to fund a portion of the Acquisition Consideration, the
Borrower (i) expects to (A) issue (x) senior unsecured notes issued by the
Borrower or a Subsidiary through a public offering or private placement and/or
(y) equity or equity-linked securities in a public offering or private placement
(clauses (x) and (y) together, a “Permanent Financing”) and/or (B) borrow senior
unsecured loans under a bridge facility (the “Bridge Facility”) as provided in
that certain commitment letter dated as of October 14, 2014 among the Borrower,
Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated and
other parties thereto from time to time, in an aggregate principal amount of up
to $5,000,000,000 (as such amount may be reduced from time to time in accordance
with the terms thereof, including upon the effectiveness of this Agreement, as
more fully set forth herein) and (ii) has requested that the Lenders commit to
provide a senior unsecured term loan facility in an aggregate principal amount
of $500,000,000, as such amount may be reduced in accordance with the terms of
this Agreement.
3. The Lenders are willing to provide the term loan facility described in clause
(ii) above on the terms and subject to the conditions set forth in this
Agreement.
4. The parties hereto therefore agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have
the meanings specified below:
“ABR”, when used in reference to any Loan or Borrowing, refers to a Loan, or the
Loans comprising such Borrowing, bearing interest at a rate determined by
reference to the Alternate Base Rate.
“Acquired Assets” has the meaning assigned to such term in the Recitals hereto.
“Acquisition” has the meaning assigned to such term in the Recitals hereto.
“Acquisition Consideration” has the meaning assigned to such term in the
Recitals hereto.
“Administrative Agent” means Bank of America, N.A., in its capacity as
administrative agent for the Lenders hereunder, and any successor in such
capacity pursuant to Article VIII.
“Administrative Questionnaire” means an administrative questionnaire in a form
“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
“Agent Party” has the meaning assigned to such term in Section 9.01(d).
“Aggregate Commitment” means the aggregate of the Commitments of all of the
Lenders, as reduced from time to time pursuant to the terms and conditions
hereof. As of the Effective Date, the Aggregate Commitment is $500,000,000.
Rate in effect on such day plus 1⁄2 of 1% and (c) the LIBO Rate for a one month
Interest Period on such day (or if such day is not a Business Day, the
immediately preceding Business Day) plus 1%. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the
LIBO Rate shall be effective from and including the effective date of such
change in the Prime Rate, the Federal Funds Effective Rate or the LIBO Rate,
respectively.
“Annual Audited Financial Statements” has the meaning assigned to such term in
Section 3.03(a).
“Anti-Corruption Laws” means any Requirement of Law applicable to the Borrower
or its Subsidiaries from time to time concerning or relating to bribery or
corruption.
“Anti-Terrorism Laws” means any Requirement of Law related to terrorism
financing or money laundering, including the Patriot Act, The Currency and
Foreign Transactions Reporting Act (also known as the “Bank Secrecy Act”, 31
U.S.C. §§ 5311-5330 and 12 U.S.C. §§ 1818(s), 1820(b) and 1951-1959) and
Executive Order 13224 (effective September 24, 2001).
“Applicable Percentage” means, with respect to any Lender at any time, a
percentage represented by (i) if the Borrowing has not occurred (or the
Aggregate Commitment has terminated without a Borrowing), such Lender’s
Commitment over the Aggregate Commitment (or in effect at the time of
termination, as applicable) and (ii) if the Borrowing has occurred, the
outstanding principal amount of such Lender’s Loan over the aggregate
outstanding principal amount of all Lenders’ Loans at such time (or if the Loans
have been repaid in full, the respective amounts in effect immediately before
such repayment).
“Applicable Rate” means, for any day, (a) with respect to ABR Loans, the per
annum rate set forth in Schedule 1.01B under the heading “ABR Margin” and
(b) with respect to Eurodollar Loans, the per annum rate set forth in Schedule
1.01B under the heading “Eurodollar Margin”, in each case based upon the Moody’s
Rating and the S&P Rating (each as defined in Schedule 1.01B) applicable on such
day.
2
“Approved Fund” has the meaning assigned to such term in Section 9.04(b).
“Assignment and Assumption” means an assignment and assumption agreement entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.
“Authorized Officer” means any of the following officers of the Borrower: the
Chief Executive Officer, the President, the Chief Financial Officer, the
Treasurer, or any Executive Vice President, Senior Vice President or General
Manager and, solely for purposes of notices given pursuant to Article II, any
other officer or employee of the Borrower so designated by any of the foregoing
officers in a notice to the Administrative Agent or any other officer or
employee of the Borrower designated in or pursuant to an agreement between the
Borrower and the Administrative Agent.
States of America.
“Borrower” has the meaning assigned to such term in the Recitals hereto.
“Borrowing” means (i) initially, the borrowing of Loans pursuant to Section 2.01
and (ii) at any time from and after such borrowing, a group of Loans or portions
thereof (pro rata among all Lenders) of the same Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect.
“Borrowing Request” means a request by a Borrower for a Borrowing in accordance
with Section 2.03 which, if in writing, is substantially in the form attached
hereto as Exhibit D-1 or such other form as may be approved by the
Administrative Agent (including any form on an electronic platform or electronic
transmission system as shall be approved by the Administrative Agent),
appropriately completed and signed by an Authorized Officer.
“Bridge Facility” has the meaning assigned to such term in the Recitals hereto.
which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a Eurodollar Loan,
the term “Business Day” shall also exclude any day on which banks are not open
for dealings in Dollars in the London interbank market.
“Capital Lease” of a Person means any lease of Property, except oil and gas
leases, by such Person as lessee that would be capitalized on a balance sheet of
such Person prepared in accordance with GAAP; provided that any lease that was
treated as an operating lease under GAAP at the time it was entered into that
later becomes a capital lease as a result of a change in GAAP during the life of
such lease, including any renewals, shall be treated as an operating lease for
all purposes under this Agreement.
“Capital Lease Obligations” of a Person means the amount of the obligations of
such Person under Capital Leases which would be shown as a liability on a
balance sheet of such Person prepared in accordance with GAAP.
3
“Change of Control” means that (a) any Person or group (within the meaning of
Rule 13d-5 under the Securities Exchange Act of 1934, as amended) shall
beneficially own, directly or indirectly, 25% or more of the common stock or
other voting securities of the Borrower; or (b) Continuing Directors shall fail
to constitute a majority of the Board of Directors of the Borrower. For purposes
of the foregoing, “Continuing Director” means an individual who (x) is a member
of the Board of Directors of the Borrower on the date of this Agreement or
(y) is nominated to be a member of such Board of Directors after the date hereof
by a majority of the Continuing Directors then in office.
“Change of Control Offer” has the meaning assigned to such term in
Section 2.11(c).
“Change of Control Payment” has the meaning assigned to such term in
“Change of Control Payment Date” has the meaning assigned to such term in
Section 2.11(c)(i)(B).
“Change in Law” means the occurrence, after the date of this Agreement (or with
respect to any Lender, if later, the date on which such Lender becomes a
Lender), of any of the following: (a) the adoption or taking effect of any law,
treaty or in the administration, interpretation, implementation or application
thereof by any Governmental Authority, or (c) the making or issuance of any
request, rule, guideline, requirement or directive (whether or not having the
force of law) by any Governmental Authority; provided however, that,
notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street
Reform and Consumer Protection Act and all requests, rules, guidelines,
requirements and directives thereunder, issued in connection therewith or in
implementation thereof, and (ii) all requests, rules, guidelines, requirements
and directives promulgated by the Bank for International Settlements, the Basel
United States or foreign regulatory authorities, in each case pursuant to Basel
III, shall in each case be deemed to be a “Change in Law” regardless of the date
enacted, adopted, issued or implemented.
“Closing Date” has the meaning assigned to such term in Section 4.02.
“Commitment” means, with respect to each Lender, the commitment of such Lender
to make a Loan hereunder. The initial amount of each Lender’s Commitment is set
forth on Schedule 1.01A, or in the Assignment and Assumption or other
documentation contemplated hereby pursuant to which such Lender shall have
assumed its Commitment, as applicable.
“Communications” has the meaning assigned to such term in Section 9.01(d).
branch profits Taxes.
“Consolidated Net Tangible Assets” means the total assets of the Borrower and
its Restricted Subsidiaries as of the most recent fiscal quarter end for which a
consolidated balance sheet of the Borrower and its Subsidiaries is available,
minus all current liabilities (excluding the current portion of any long-term
debt) of the Borrower and its Restricted Subsidiaries reflected on such balance
sheet and minus total goodwill and other intangible assets of the Borrower and
its Restricted Subsidiaries reflected on such balance sheet, all calculated on a
consolidated basis in accordance with GAAP but without giving effect to any
non-cash charge after the date hereof resulting from any write-down of the
Borrower’s oil and gas properties to the full cost ceiling limitations required
by the full cost method of accounting for such properties.
4
“Contingent Obligation” of a Person means any agreement, undertaking or
arrangement by which such Person (a) assumes, guarantees, endorses (other than
for collection in the ordinary course of business), contingently agrees to
purchase or provide funds for the payment of, or otherwise becomes or is
contingently liable upon, any Indebtedness of any other Person, (b) agrees to
maintain the net worth or working capital or other financial condition or
liquidity of any other Person so as to enable such other Person to pay any
Indebtedness, or (c) otherwise assures any creditor of any other Person against
loss with respect to Indebtedness of such other Person owing to such creditor,
including any obligation of any such Person as general partner of a partnership
with respect to the liabilities of the partnership, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
through the ability to exercise voting power, by contract or otherwise. The
terms “Controlling” and “Controlled” have meanings correlative thereto.
“Controlled Group” means all members of a controlled group of corporations or
other business entities and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any of
its Subsidiaries, are treated as a single employer under Section 414 of the
Code.
“Debt to Capitalization Ratio” means the ratio of (a) Total Debt to (b) the sum
of Total Debt plus Stockholders’ Equity.
any Person (or the granting of any option or other right to do any of the
foregoing), including any sale, assignment, transfer or other disposal, with or
associated therewith.
“Disqualified Lender” means any Person that is a competitor of the Borrower
identified in writing to the Administrative Agent by Borrower from time to time
by a notice thereof to the Administrative Agent and the Lenders setting forth
such Person or Persons (or the Person or Persons previously identified that are
to be no longer considered a “Disqualified Lender”).
“Dollars” or “$” refers to lawful money of the United States of America.
“Domestic Subsidiary” means a Subsidiary organized under the laws of a
jurisdiction located in the United States of America.
“Effective Date” has the meaning assigned to such term in Section 4.01.
“Electronic Signature” means an electronic sound, symbol, or process attached
to, or associated with, a contract or other record and adopted by a Person with
the intent to sign, authenticate or accept such contract or record.
5
“Electronic System” means any electronic system, including e-mail, e-fax,
Intralinks®, ClearPar® Debt Domain, Syndtrak, and any other Internet or
extranet-based site, whether such electronic system is owned, operated or hosted
by the Administrative Agent or any of its Related Parties or any other Person,
providing for access to data protected by passcodes or other security system.
“Environmental Laws” means all Requirements of Law relating in any way to the
environment, preservation or reclamation of natural resources, the management,
release or threatened release of any Hazardous Material.
penalties or indemnities), of the Borrower or any of its Subsidiaries directly
or indirectly resulting from or based upon (a) violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
“Eurodollar”, when used in reference to any Loan or Borrowing, means that such
Loan, or the Loans comprising such Borrowing, bears interest at a rate
determined by reference to the Adjusted LIBO Rate.
“Event of Default” has the meaning assigned to such term in Section 7.01.
to a law in effect on the date on which (i) such Lender acquires such interest
in the Loan or Commitment (other than pursuant to an assignment request by the
Borrower under Section 2.19(b)) or (ii) such Lender changes its Lending Office,
except in each case to the extent that, pursuant to Section 2.17, amounts with
respect to such Taxes were payable either to such Lender’s assignor immediately
before such Lender acquired the applicable interest in a Loan or Commitment or
to such Lender immediately before it changed its Lending Office, (c) Taxes
attributable to such Recipient’s failure to comply with Section 2.17(f) and
(d) any U.S. Federal withholding Taxes imposed under FATCA.
“Existing Credit Agreement” means that certain Credit Agreement dated as of
December 16, 2013, among the Borrower, JPMorgan Chase Bank, N.A., as
administrative agent, and the other lenders and agents party thereto from time
to time (as amended, restated, amended and restated, supplemented or otherwise
modified).
Agreement (or any amended or successor version that is substantively comparable
regulations or official interpretations thereof and any agreement entered into
pursuant to Section 1471(b)(1) of the Code.
6
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) charged to the Administrative Agent on such day on such
transactions as determined by the Administrative Agent.
“Financial Officer” means the Chief Financial Officer, Chief Accounting Officer,
Treasurer or Controller of the Borrower.
“Foreign Lender” means a Lender that is not a U.S. Person.
“Foreign Subsidiary” means any Subsidiary of the Borrower other than a Domestic
Subsidiary.
“GAAP” means generally accepted accounting principles in the United States of
America.
“Governmental Authority” means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government.
petroleum or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas and all other substances or wastes of any
nature regulated pursuant to any Environmental Law.
“Indebtedness” of a Person means, without duplication, such Person’s
(a) obligations for borrowed money, (b) obligations representing the deferred
purchase price of Property or services (excluding current trade and accounts
payable incurred in the ordinary course of business), (c) Indebtedness of
others, whether or not assumed, secured by Liens on Property now or hereafter
owned or acquired by such Person, limited, however to the lesser of (x) the
amount of its liability and (y) the book value of the Property, (d) obligations
which are evidenced by notes, bonds, debentures or other similar instruments,
(e) obligations of such Person under conditional sale or other title retention
agreements related to Property acquired by such Person, (f) Capital Lease
Obligations, (g) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit, (h) all obligations, contingent
or otherwise, of such Person in respect of bankers’ acceptances, (i) the
undischarged balance of any production payment created by such Person or for the
creation of which such Person directly or indirectly received payment, (j) any
other obligation for borrowed money or other financial accommodation which in
accordance with GAAP would be shown as a liability on the consolidated balance
sheet of such Person, and (k) Contingent Obligations with respect to
Indebtedness of others. The Indebtedness of any Person shall not include
endorsements of checks, bills of exchange and other instruments for deposit or
Borrower or any Subsidiary Guarantor under any Loan Document and (b) to the
extent not otherwise described in clause (a), Other Taxes.
“Indemnitee” has the meaning assigned to such term in Section 9.03(b).
7
“Ineligible Institution” has the meaning assigned to such term in
Section 9.04(b).
“Information” has the meaning assigned to such term in Section 9.12.
continue a Borrowing which, if in writing, is substantially in the form attached
hereto as Exhibit D-2 or such other form as may be approved by the
Business Day of each March, June, September and December and the Maturity Date
and (b) with respect to any Eurodollar Loan, the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part and, in the case of a
Eurodollar Borrowing with an Interest Period of more than three months’
duration, the respective dates that fall every three months after the beginning
of such Interest Period and the Maturity Date.
commencing on the date of such Borrowing and ending seven days thereafter or on
the date that is one, two, three or six months (or such other period that is
twelve months or less requested by the Borrower and consented to by all of the
Lenders from time to time) thereafter, as the Borrower may elect; provided that
(a) if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day, unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day and
(b) any Interest Period pertaining to a Eurodollar Borrowing that commences on
numerically corresponding day in the last calendar month of such Interest
Interest Period. For purposes hereof, the date of a Borrowing initially shall be
the date on which such Borrowing is made and thereafter shall be the effective
date of the most recent conversion or continuation of such Borrowing.
“Investment” means (a) any direct or indirect purchase or other acquisition by
the Borrower or any of its Restricted Subsidiaries of any equity interests in
any Unrestricted Subsidiary, (b) any direct or indirect loan, advance or capital
contribution by the Borrower or any of its Restricted Subsidiaries to any
Unrestricted Subsidiary, any assumption by the Borrower or any of its Restricted
Subsidiaries of Indebtedness of any Unrestricted Subsidiary, or any purchase or
other acquisition by the Borrower or any of its Restricted Subsidiaries of any
other Indebtedness or equity participation or interest in any Unrestricted
Subsidiary, and (c) any Contingent Obligation pursuant to which the Borrower or
any of its Restricted Subsidiaries assures a creditor against loss with respect
to any Indebtedness of any Unrestricted Subsidiary.
“Investment Grade Rating” means (a) a debt rating of BBB- (or better) by S&P or
(b) a debt rating of Baa3 (or better) by Moody’s.
“Knowledge” means, with respect to the Borrower, the actual knowledge of any
Authorized Officer.
8
“Lenders” means the Persons listed on Schedule 1.01A and any other Person that
shall have become a Lender hereunder pursuant to an Assignment and Assumption,
other than any such Person that ceases to be a party hereto pursuant to an
Assignment and Assumption.
described as such in such Lender’s Administrative Questionnaire provided to the
Administrative Agent, or such other office or offices as a Lender may from time
to time notify the Borrower and the Administrative Agent, which office may
include any Affiliate of such Lender or any domestic or foreign branch of such
Lender or such Affiliate. Unless the context otherwise requires each reference
to a Lender shall include its applicable Lending Office.
“LIBO Rate” means, (a) for any Interest Period with respect to a Eurodollar
Loan, the rate per annum equal to the London Interbank Offered Rate or a
comparable or successor rate, which rate is approved by the Administrative
Agent, as published on the applicable Bloomberg screen page (or such other
commercially available source providing such quotations as may be designated by
the Administrative Agent from time to time in its reasonable discretion)
(“LIBOR”) at approximately 11:00 a.m., London time, two Business Days prior to
the commencement of such Interest Period, for Dollar deposits (for delivery on
the first day of such Interest Period) with a term equivalent to such Interest
Period; provided, that if the LIBO Rate shall be less than zero, such rate shall
be deemed zero for purposes of this Agreement; and
(b) for any interest calculation with respect to an ABR Loan on any date, the
rate per annum equal to LIBOR, at or about 11:00 a.m., London time determined
two Business Days prior to such date for U.S. Dollar deposits with a term of one
month commencing that day;
provided that to the extent a comparable or successor rate is approved by the
Administrative Agent in connection herewith, the approved rate shall be applied
in a manner consistent with market practice; provided further that to the extent
such market practice is not administratively feasible for the Administrative
Agent, such approved rate shall be applied in a manner as otherwise reasonably
determined by the Administrative Agent.
“Lien” means any lien (statutory or other), mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance or other security arrangement
(including the interest of a vendor or lessor under any conditional sale,
Capital Lease or other title retention agreement).
“Loan” has the meaning assigned to such term in Section 2.01.
“Loan Documents” means this Agreement, the Notes (if any), each Subsidiary
Guaranty (if any), each agreement executed by the Borrower or any Subsidiary
Guarantor that expressly provides that it is a Loan Document, and all
amendments, restatements, waivers, supplements or other modifications to any of
the foregoing.
“Margin Stock” has the meaning given such term in Regulation U.
Property, financial condition or results of operations of the Borrower and its
Restricted Subsidiaries taken as a whole, (b) the ability of the Borrower to
fully and timely pay the Obligations when due or (c) the validity or
enforceability of any of the Loan Documents or the rights or remedies of the
Administrative Agent or the Lenders thereunder.
9
“Material Indebtedness” means Indebtedness (other than the Loans), or
obligations in respect of one or more Swap Agreements, of any one or more of the
Borrower and its Restricted Subsidiaries in an aggregate principal amount
exceeding $100,000,000. For purposes of determining Material Indebtedness, the
“principal amount” of the obligations of the Borrower or any Restricted
Subsidiary in respect of any Swap Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting agreements) that the Borrower or
such Restricted Subsidiary would be required to pay if such Swap Agreement were
terminated at such time.
“Material Subsidiary” means, as of any date of determination, each Restricted
Subsidiary of the Borrower that:
(a) has assets with a book value representing more than 10% of the book value of
the consolidated assets of the Borrower and its Restricted Subsidiaries as of
the end of the most recent fiscal quarter end for which a consolidated balance
sheet of the Borrower and its Subsidiaries is available immediately prior to
such date of determination; and
(b) is responsible for more than 10% of the consolidated revenues of the
Borrower and its Restricted Subsidiaries for the most recent period of four
consecutive fiscal quarters for which a consolidated income statement of the
Borrower and its Subsidiaries is available immediately preceding such date of
determination;
provided that each such determination of such assets or revenues shall be made
after deducting all intercompany transactions which, in accordance with GAAP,
would be eliminated in preparing consolidated financial statements for the
Borrower and its Restricted Subsidiaries.
“Maturity Date” means December 17, 2016.
“Maximum Rate” has the meaning assigned to such term in Section 9.16.
“Multiemployer Plan” means a Plan maintained pursuant to a collective bargaining
agreement or any other arrangement to which the Borrower or any member of the
Controlled Group is a party to which more than one employer is obligated to make
contributions.
“Net Cash Proceeds” means, with respect to any Prepayment Disposition by the
Borrower or any of its Subsidiaries, the excess, if any, of (i) the sum of cash
and cash equivalents received in connection with such Prepayment Disposition
(including any cash or cash equivalents received by way of deferred payment
pursuant to, or by monetization of, a note receivable or otherwise, but only as
and when so received) over (ii) the sum of (A) the principal amount of any
Indebtedness that is secured by the applicable Property and that is required to
be repaid in connection with such Prepayment Disposition (other than
Indebtedness under the Loan Documents or the Bridge Facility), (B) the
out-of-pocket expenses incurred by the Borrower or such Subsidiary in connection
with such Prepayment Disposition, (C) income taxes reasonably estimated to be
actually payable as a result of such Prepayment Disposition and after
recognizing the effect of any tax gain in connection with such Prepayment
Disposition, (D) all distributions and other payments required to be made to
holders of minority interests in Subsidiaries or joint ventures as a result of
such Prepayment Disposition; and (E) the deduction of appropriate amounts to be
provided by the seller as a reserve, in accordance with GAAP, or held in escrow,
in either case for adjustment in respect of the sale price or for any
liabilities associated with the Property disposed of in such Prepayment
Disposition and retained by the Borrower or any Subsidiary after such Prepayment
Disposition (provided that to the extent such amounts are released to the
Borrower or its Subsidiaries from such reserve or escrow, such amount shall
constitute Net Cash Proceeds).
10
“Non-Consenting Lender” has the meaning assigned to such term in
Section 9.02(d).
evidencing the Loan made by such Lender, substantially in the form of Exhibit E.
“Obligations” means all unpaid principal of and accrued and unpaid interest on
the Loans, all accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations (including interest and fees accruing during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) of
the Borrower or any Subsidiary Guarantor to any Credit Party or any indemnified
party, whether or not contingent, arising or incurred under this Agreement or
“OFAC” means the Office of Foreign Assets Control of the U.S. Department of
Treasury.
“Other Taxes” means all present or future stamp, court, documentary, intangible,
recording, filing or similar Taxes that arise from any payment made under, from
the execution, delivery, performance, enforcement or registration of, from the
receipt or perfection of a security interest under, or otherwise with respect
to, any Loan Document, except any such Taxes that are Other Connection Taxes
imposed with respect to an assignment (other than an assignment made pursuant to
Section 2.19).
“Participant” has the meaning assigned to such term in Section 9.04.
“Participant Register” has the meaning assigned to such term in Section 9.04(c).
“Patriot Act” means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)).
“PBGC” means the Pension Benefit Guaranty Corporation and any successor entity
performing similar functions.
“Permanent Financing” has the meaning assigned to such term in the Recitals
hereto.
“Permitted Assignee” has the meaning assigned to such term in Section 9.04(b).
“Permitted Liens” has the meaning assigned to such term in Section 6.02.
or other entity.
11
“Plan” means an employee pension benefit plan which is covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code
as to which the Borrower or any member of the Controlled Group may have any
liability.
“Prepayment Disposition” means any Disposition by the Borrower or any of its
Subsidiaries after the date hereof of any Property (including without limitation
Dispositions of capital stock of any Subsidiary or other Person and the issuance
of capital stock by any Subsidiary) other than (a) Dispositions among the
Borrower or any of its Subsidiaries or an issuance or sale of capital stock by a
Subsidiary of the Borrower to the Borrower or to another Subsidiary of the
Borrower, (b) Dispositions of obsolete or unused assets or Dispositions of
equipment or real property to the extent that (i) such property is exchanged for
credit against the purchase price of similar replacement property or (ii) the
proceeds of such Disposition are reasonably promptly applied to the purchase
price of such replacement property, (c) Dispositions in the ordinary course of
business, including, without limitation, sales of crude oil, natural gas and
other petroleum hydrocarbons and the sale or exchange of interests in oil and
gas leases, in each case, in the ordinary course of business, (d) rig sale and
leasebacks in accordance with past practices and (e) other Dispositions not
referred to in clauses (a) through (d) of Property with a fair market value for
all such Dispositions after the Closing Date not to exceed $100,000,000.
“Prime Rate” means the rate of interest in effect for such day as publicly
announced from time to time by Bank of America as its “prime rate”. The “prime
rate” is a rate set by Bank of America based upon various factors including Bank
of America’s costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate. Any change in such rate
announced by Bank of America shall take effect at the opening of business on the
day specified in the public announcement of such change.
“Principal Transmission Facility” means any transportation or distribution
facility, including pipelines, of the Borrower or any Restricted Subsidiary
located in the United States of America, other than (i) any such facility which
in the opinion of the Board of Directors of the Borrower is not of material
importance to the business conducted by the Borrower and its Restricted
Subsidiaries taken as a whole, or (ii) any such facility in which interests are
held by the Borrower or by one or more Restricted Subsidiaries or by the
Borrower and one or more Restricted Subsidiaries and by others and the aggregate
interest held by the Borrower and all Restricted Subsidiaries does not exceed
50%.
“Pro Forma Financial Statements” has the meaning assigned to such term in
Section 3.03(c).
“Productive Property” means any property interest owned by the Borrower or a
Restricted Subsidiary in land (including submerged land and rights in and to
oil, gas and mineral leases) located in the United States of America and
classified by the Borrower or such Restricted Subsidiary, as the case may be, as
productive of crude oil, natural gas or other petroleum hydrocarbons in paying
quantities; provided that such term shall not include any exploration or
production facilities on said land, including any drilling or producing
platform.
“Property” of a Person means any and all property, whether real, personal,
tangible, intangible or mixed, of such Person, or other assets owned or leased
by such Person.
“Public Debt Rating” shall have the meaning assigned to such term in Schedule
1.01B.
“Purchase and Sale Agreement” has the meaning assigned to such term in the
Recitals hereto.
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“Quarterly Unaudited Financial Statements” has the meaning assigned to such term
in Section 3.03(b)
“Recipient” means (a) the Administrative Agent and (b) any Lender, as
applicable.
“Register” has the meaning assigned to such term in Section 9.04.
“Regulation U” means Regulation U of the Board as from time to time in effect
and any successor or other regulation or official interpretation of the Board
relating to the extension of credit by banks for the purpose of purchasing or
carrying Margin Stock applicable to member banks of the Federal Reserve System.
Affiliates and the respective directors, officers, employees, agents, advisors
and representatives of such Person and such Person’s Affiliates.
“Reportable Event” means a reportable event as defined in Section 4043 of ERISA
and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided that a failure to meet the minimum
funding standard of Section 412 of the Code and of Section 302 of ERISA shall be
a Reportable Event regardless of the issuance of any such waiver of the notice
requirement in accordance with either Section 4043(a) of ERISA or Section 412(c)
of the Code.
“Required Lenders” means, at any time, Lenders having Commitments representing
more than 50% of the Aggregate Commitment at such time, and if the Aggregate
Commitments have terminated, Lenders having Loans representing more than 50% of
the aggregate outstanding principal amount of all Lenders’ Loans at such time.
“Requirement of Law” means as to any Person, any law, treaty, rule or regulation
or determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
“Restricted Subsidiary” means any Subsidiary of the Borrower that is not an
Unrestricted Subsidiary. For the avoidance of doubt each Subsidiary Guarantor
and each Subsidiary that is not a Specified Subsidiary shall be a Restricted
Subsidiary.
“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial
Services LLC business.
“Sanctioned Country” means, at any time, a country or territory which is the
subject or target of any Sanctions.
Sanctions-related list of designated Persons maintained by OFAC, the U.S.
Department of State or the United Nations Security Council, (b) any Person
operating, organized or resident in a Sanctioned Country or (c) any Person
which, to the Knowledge of the Borrower, is controlled by any Person specified
in clause (a) or (b).
“Sanctions” means economic or financial sanctions or trade embargoes imposed,
administered or enforced from time to time by (a) the U.S. government, including
those administered by OFAC or the U.S. Department of State, or (b) the United
Nations Security Council.
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“SEC” means the United States Securities and Exchange Commission.
“Seller” has the meaning assigned to such term in the Recitals hereto.
“Sole Lead Arranger” means Merrill Lynch, Pierce, Fenner & Smith Incorporated.
“Solvent” means, with respect to any Person on any date of determination, that
on such date (i) the amount at which the assets (both tangible and intangible),
in their entirety, of such Person and its Subsidiaries, taken as a whole, would
change hands between a willing buyer and a willing seller, within a commercially
reasonable period of time, each having reasonable knowledge of the relevant
facts, with neither being under any compulsion to act, exceeds such Person’s and
its Subsidiaries’ recorded liabilities (including contingent liabilities that
would be recorded in accordance with GAAP), taken as a whole, determined in
accordance with GAAP consistently applied; (ii) the amount that could be
obtained by an independent willing seller from an independent willing buyer if
the assets of such Person and its Subsidiaries, taken as a whole, are sold with
reasonable promptness in an arm’s-length transaction under present conditions
for the sale of comparable business enterprises, insofar as such conditions can
be reasonably evaluated, exceeds such Person’s and its Subsidiaries’ recorded
liabilities (including contingent liabilities that would be recorded in
accordance with GAAP), taken as a whole, and determined in accordance with GAAP
consistently applied; (iii) such Person and its Subsidiaries, taken as a whole,
is a going concern and has sufficient capital to reasonably ensure that it will
continue to be a going concern for the period from the Closing Date through the
Maturity Date; and (iv) such Person and its Subsidiaries taken as a whole will
be able to pay their recorded liabilities (including contingent liabilities that
accordance with GAAP consistently applied, as they mature.
“Specified Purchase and Sale Agreement Representations” means the
representations made by the Seller with respect to the Acquired Assets in the
Purchase and Sale Agreement that are material to the interest of the Lenders.
“Specified Representations” means the representations and warranties of the
Borrower set forth in Section 3.01, Section 3.02, Section 3.03(a)(i) and
(ii) and (b)(i) and (ii), Section 3.05 (with respect to Events of Defaults under
Section 7.01(b), Section 7.01(f) (but only to the extent the lenders or holders
under such Material Indebtedness have a right to accelerate such Indebtedness),
Section 7.01(g), Section 7.01(h)), Section 3.07, Section 3.11(a) and (b),
Section 3.13, Section 3.15, Section 3.16, Section 3.17, Section 3.18, and
Section 3.19.
“Specified Subsidiary” means (a) any Foreign Subsidiary or (b) any Subsidiary of
the Borrower that is (or, substantially concurrently with its designation as an
“Unrestricted Subsidiary” hereunder, will be) a master limited partnership or
limited liability company with partnership tax status that is engaged in
midstream activities, or any general partner, managing member or other entity
the substantial majority of the assets of which are equity interests in any of
the foregoing, but excluding any Subsidiary Guarantors.
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D of the Board. Eurodollar Loans shall be deemed to
constitute eurocurrency funding and to be subject to such reserve requirements
available from
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time to time to any Lender under such Regulation D of the Board or any
percentage.
“Stockholders’ Equity” means, as of any date of determination, the total
stockholders’ equity of the Borrower and its Restricted Subsidiaries, determined
on a consolidated basis in accordance with GAAP, but without giving effect to
(a) any non-cash charge after December 31, 2011 resulting from any write-down of
the Borrower’s oil and gas properties to the full cost ceiling limitations
required by the full cost method of accounting for such properties or (b) any
non-cash gain or loss on any hedging agreement resulting from the requirements
of Accounting Standards Codification 815 (or the successor to such standard or
any equivalent standard adopted after the date hereof) and any non-cash charge
on pension obligations recorded in stockholders’ equity resulting from the
requirements of Accounting Standards Codification 715 (or the successor to such
standard or any equivalent standard adopted after the date hereof).
“Subsidiary” of a Person means (a) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(b) any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a “Subsidiary”
shall mean a Subsidiary of the Borrower.
“Subsidiary Guarantor” means any Subsidiary that is a party to a Subsidiary
Guaranty as a guarantor. As of the Effective Date, there are no Subsidiary
Guarantors.
“Subsidiary Guaranty” means a guaranty of the Borrower’s obligations hereunder
in substantially the form of Exhibit B or any other form approved by the
“Swap Agreement” means (a) any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement involving, or
settled by reference to, one or more rates, currencies, commodities, equity or
debt instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions, whether or not any such
transaction is governed by or subject to any master agreement, and (b) any and
all transactions of any kind, and the related confirmations, which are subject
to the terms and conditions of, or governed by, any form of master agreement
International Foreign Exchange Master Agreement, or any other master agreement,
including any such obligations or liabilities under any master agreement;
provided that no phantom stock or similar plan providing for payments only on
account of services provided by current or former directors, officers, employees
or consultants of the Borrower or the Subsidiaries shall be a Swap Agreement.
“Total Debt” means all Indebtedness of the Borrower and its Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
15
“Transactions” means collectively, the Acquisition, any Permanent Financings,
the Bridge Facility, the entering into of this Agreement and the other Loan
Documents on the Effective Date and the funding of the Loans on the Closing Date
and the consummation of the other transactions contemplated by this Agreement
and the other Loan Documents, and the consummation of any other transactions to
occur on or about the Closing Date or otherwise in connection with, or
contemplated by, the Acquisition and the financing thereof.
“Transaction Costs” any fees or expenses incurred by the Borrower, any of its
Subsidiaries, or any of their Affiliates in connection with the Transactions.
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.
“Undrawn Fee” has the meaning assigned to such term in Section 2.12(b).
“Undrawn Fee Payment Date” has the meaning assigned to such term in
Section 2.12(b).
“Unrestricted Subsidiary” means (a) any Specified Subsidiary which the Borrower
has designated in writing to the Administrative Agent to be an Unrestricted
Subsidiary pursuant to Section 5.09 and (b) any direct or indirect Subsidiary of
any Specified Subsidiary described in clause (a), in each case that meets the
following requirements:
(i) such Specified Subsidiary shall have no Indebtedness with recourse to the
Borrower or any Restricted Subsidiary;
(ii) such Specified Subsidiary is not party to any agreement, contract,
arrangement or understanding with the Borrower or any Restricted Subsidiary
unless the terms of any such agreement, contract, arrangement or understanding
and related transactions are no less favorable to the Borrower or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Borrower; provided that the foregoing provision
shall not prohibit any agreements with respect to administrative and employee
services;
(iii) such Specified Subsidiary is a Person with respect to which neither the
Borrower nor any of its Restricted Subsidiaries has any direct or indirect
obligation (A) to subscribe for additional capital stock of such Person or
(B) to maintain or preserve such Person’s financial condition or to cause such
Person to achieve any specified levels of operating results (it being understood
that any contractual arrangements between the Borrower or any of its Restricted
Subsidiaries and such Specified Subsidiary pursuant to which such Specified
Subsidiary sells products or provides services to the Borrower or such
Restricted Subsidiary in the ordinary course of business are not included in
this clause (B));
(iv) such Specified Subsidiary does not, either individually or together with
other Specified Subsidiaries that are designated as Unrestricted Subsidiaries,
own or operate, directly or indirectly, all or substantially all of the assets
of the Borrower and its Subsidiaries; and
(v) such Specified Subsidiary does not hold any equity interest in, or any
Indebtedness of, the Borrower or any Restricted Subsidiary.
If at any time any Unrestricted Subsidiary fails to meet the preceding
requirements to be an Unrestricted Subsidiary, it shall thereafter be a
Restricted Subsidiary for purposes of this Agreement
16
and any Indebtedness of such Subsidiary shall be deemed to be incurred by a
Restricted Subsidiary as of such date and, if such Indebtedness is not permitted
to be incurred as of such date under Section 6.03 or 6.05, the Borrower shall be
in default of the applicable covenant.
“U.S. Person” means a “United States person” within the meaning of
Section 7701(a)(30) of the Code.
Section 2.17(f)(i)(B)(3).
“Wholly-Owned Subsidiary” means a Subsidiary of the Borrower of which all issued
and outstanding equity interests (excluding directors’ qualifying shares or
similar jurisdictional requirements) is directly or indirectly owned by the
Borrower.
SECTION 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Type (e.g., a “Eurodollar
Loan”). Borrowings also may be classified and referred to by Type (e.g., a
“Eurodollar Borrowing” is a Borrowing consisting of Eurodollar Loans).
SECTION 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”.
Unless the context requires otherwise, (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
restated, supplemented or otherwise modified (subject to any restrictions on
such amendments, restatements, supplements or modifications set forth herein),
(b) any definition of or reference to any statute, rule or regulation shall be
construed as referring thereto as from time to time amended, supplemented or
otherwise modified (including by succession of comparable successor laws),
(c) any reference herein to any Person shall be construed to include such
Person’s successors and assigns (subject to any restrictions on assignment set
forth herein) and, in the case of any Governmental Authority, any other
Governmental Authority that shall have succeeded to any or all functions
thereof, (d) the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (e) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (f) with respect
to the determination of any period of time, the word “from” means “from and
including” and the word “to” means “to but excluding”.
SECTION 1.04. Accounting Terms; GAAP. All references to GAAP and terms of an
accounting or financial nature shall be construed in accordance with GAAP, as in
effect from time to time; provided that, if the Borrower notifies the
Administrative Agent that the Borrower requests an amendment to any provision
hereof to eliminate the effect of any change occurring after the date hereof in
GAAP or in the application thereof on the operation of such provision (or if the
Administrative Agent notifies the Borrower that the Required Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in the application
thereof, then such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance herewith. Notwithstanding any other provision contained herein, all
terms of an accounting or financial nature used herein shall be construed, and
all computations of amounts and ratios referred to herein shall be made
(i) without giving effect to any election under
17
Accounting Standards Codification 825-10-25 (or any other Accounting Standards
Codification or Financial Accounting Standard having a similar result or effect)
to value any Indebtedness or other liabilities of the Borrower or any Subsidiary
at “fair value”, as defined therein, and (ii) without giving effect to any
treatment of Indebtedness in respect of convertible debt instruments under
Accounting Standards Codification 470-20 (or any other Accounting Standards
to value any such Indebtedness in a reduced or bifurcated manner as described
therein, and such Indebtedness shall at all times be valued at the full stated
principal amount thereof.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions set forth herein,
each Lender (severally and not jointly) agrees to make a loan to the Borrower
(each a “Loan” and collectively the “Loans”) on the Closing Date in an amount
equal to its Applicable Percentage of the aggregate amount specified in the
Borrowing Request, provided that each Lender’s Loan shall not exceed such
Lender’s Commitment. Amounts borrowed under this Section 2.01 and repaid or
prepaid may not be reborrowed. Loans may be ABR Loans or Eurodollar Loans as
further provided herein.
SECTION 2.02. Loans and Borrowings. (a) Each Loan shall be made as part of a
Borrowing made by the Lenders ratably in accordance with their respective
Commitments. Notwithstanding the foregoing, the failure of any Lender to make
any Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Commitments of the Lenders are several
and no Lender shall be responsible for any other Lender’s failure to make Loans
as required.
(b) Subject to Section 2.14, each Borrowing shall be comprised entirely of ABR
Loans or Eurodollar Loans as the applicable Borrower may request in accordance
herewith.
(c) At the commencement of each Interest Period for any Eurodollar Borrowing,
such Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $10,000,000. At the time that each ABR Borrowing is
made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $10,000,000. Borrowings of more than
one Type may be outstanding at the same time; provided that there shall not at
any time be more than a total of 5 Eurodollar Borrowings at any time
outstanding.
(d) Notwithstanding any other provision of this Agreement, the Borrower shall
not be entitled to elect to convert or continue any Borrowing if the Interest
Period requested with respect thereto would end after the Maturity Date.
SECTION 2.03. Requests for Borrowing. To request the Borrowing, the Borrower
shall notify the Administrative Agent of such request by telephone, facsimile
transmission or electronic mail (a) in the case of a Eurodollar Borrowing, not
later than 1:00 p.m., New York City time, three (3) Business Days before the
date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later
than 1:00 p.m., New York City time, on the date of the proposed Borrowing;
provided, however, that if the Borrower wishes to request Eurodollar Loans
having an Interest Period other than seven days, one, two, three or six months
in duration as provided in the definition of “Interest Period,” the applicable
notice must be received by the Administrative Agent not later than 11:00 a.m.
four Business Days prior to the requested date of such Borrowing, conversion or
continuation, whereupon the
18
Administrative Agent shall give prompt notice to the Lenders of such request and
determine whether the requested Interest Period is acceptable to all of them.
Not later than 11:00 a.m., three Business Days before the requested date of
Borrowing or of such conversion or continuation, the Administrative Agent shall
requested Interest Period has been consented to by all the Lenders. Each such
Borrowing Request shall be irrevocable and, in the case of a telephonic
Borrowing Request, shall be confirmed promptly by hand delivery, facsimile
transmission or electronic mail to the Administrative Agent of a written
Borrowing Request signed by the applicable Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.02:
(ii) the date of the Borrowing, which shall be a Business Day;
(iii) whether the Borrowing is to consist of ABR Loans or Eurodollar Loans;
(iv) in the case the Borrowing consists of Eurodollar Loans, the initial
Interest Period to be applicable thereto, which shall be a period contemplated
by the definition of the term “Interest Period”; and
(v) the location and number of the applicable Borrower’s account to which funds
are to be disbursed, which shall comply with the requirements of Section 2.07.
to have selected an Interest Period of one month’s duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender’s Loan to be made as part of the requested Borrowing.
SECTION 2.07. Funding of Borrowings. (a) Each Lender shall make each Loan to be
made by it hereunder on the proposed date of Borrowing by wire transfer of
immediately available funds by 3:00 p.m., New York City time, to the account of
the Administrative Agent designated by it for such purpose by notice to the
Lenders. Upon satisfaction of the conditions set forth in Section 4.02, the
Administrative Agent will make such Loans available to the Borrower by promptly
remitting the amounts so received, in like funds, to an account of the Borrower
designated by the Borrower in the Borrowing Request.
(b) Unless the Administrative Agent shall have received notice from a Lender
prior to the proposed time of Borrowing that such Lender will not make available
to the Administrative Agent such Lender’s share of the Borrowing, the
on such date in accordance with this paragraph (a) and may, in reliance upon
such assumption, make available to the Borrower a corresponding amount. In such
event, if a Lender has not in fact made its share of the Borrowing available to
the Administrative Agent, then the applicable Lender and the Borrower severally
agree to pay to the Administrative Agent forthwith on demand such
19
corresponding amount with interest thereon, for each day from and including the
date such amount is made available to the Borrower to but excluding the date of
payment to the Administrative Agent, at (i) in the case of such Lender, the
greater of the Federal Funds Effective Rate and a rate determined by the
compensation or (ii) in the case of the Borrower, the interest rate applicable
to the Loans comprising the Borrowing. If the Borrower and such Lender shall pay
such interest to the Administrative Agent for the same or an overlapping period,
the Administrative Agent shall promptly remit to the Borrower the amount of such
interest paid by the Borrower for such period. If such Lender pays its share of
the Borrowing to the Administrative Agent, then the amount so paid shall
constitute such Lender’s Loan included in the Borrowing. Any payment by a
Borrower shall be without prejudice to any claim the Borrower may have against a
Lender that shall have failed to make such payment to the Administrative Agent.
SECTION 2.08. Interest Elections. (a) The Borrowing initially shall be of the
Type specified in the Borrowing Request and, in the case of a Eurodollar
Borrowing, shall have an initial Interest Period as specified in the Borrowing
Request. Thereafter, the Borrower may elect to continue or convert the Loans, or
a ratable portion of Loans, to Loans of a different Type or, in the case of
Eurodollar Loans, may elect Interest Periods therefor, all as provided in this
Section. The Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such Borrowing,
and the Loans comprising each such portion shall be considered a separate
Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall notify the
Administrative Agent of such election by telephone, facsimile transmission or
electronic mail by the time that a Borrowing Request would be required under
from such election to be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and shall be confirmed
promptly by hand delivery, facsimile transmission or electronic mail to the
Administrative Agent of a written Interest Election Request signed by the
Borrower. Notwithstanding any contrary provision herein, this Section shall not
be construed to permit the Borrower to elect an Interest Period for Eurodollar
Loans that does not comply with Section 2.02(d).
(c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof,
the portions thereof to be allocated to each resulting Borrowing (in which case
the information to be specified pursuant to clauses (iii) and (iv) below shall
be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to comprise ABR Loans or Eurodollar
Loans; and
(iv) if any Borrowing is to comprise Eurodollar Loans, the Interest Period to be
applicable thereto after giving effect to such election, which Interest Period
If any such Election Request requests a Eurodollar Borrowing but does not
specify an Interest Period, then the Borrower shall be deemed to have selected
an Interest Period of one month’s duration.
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(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender’s portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election Request with
respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period the group of Loans comprising such Borrowing
hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies the
Borrower, then, so long as an Event of Default is continuing (i) no Loans or
portions thereof may be converted to or continued as a Eurodollar Borrowing and
(ii) unless repaid, each Eurodollar Loan shall be converted to an ABR Loan at
the end of the Interest Period applicable thereto.
SECTION 2.09. Termination and Reduction of Commitments. (a) Unless previously
terminated pursuant to Section 2.09(b), the Aggregate Commitment shall be
automatically terminated and permanently reduced to zero upon the earlier to
occur of (i) 5:00 p.m., New York City time, on March 15, 2015, (ii) the date of
termination of the Purchase and Sale Agreement and (iii) the Borrowing on the
Closing Date.
(b) The Borrower may at any time prior to the Closing Date terminate, or from
time to time reduce, the Commitments; provided that each reduction of the
Commitments shall be in an amount that is an integral multiple of $10,000,000.
(c) The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Commitments under paragraph (b) of this Section at least
three (3) Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant
to this Section shall be irrevocable; provided that a notice of termination of
the Commitments delivered by the Borrower may state that such notice is
conditioned upon the effectiveness of other credit facilities or other
transactions specified therein, in which case such notice may be revoked by the
Borrower (by notice to the Administrative Agent on or prior to the specified
effective date) if such condition is not satisfied. Any termination or reduction
of the Commitments shall be permanent. Each reduction of the Commitments shall
be made ratably among the Lenders in accordance with their respective
Commitments.
(d) On any date on which a Change of Control occurs, if the Commitments are then
in effect, the Aggregate Commitment shall be automatically and immediately
reduced to zero.
SECTION 2.10. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Lender the then unpaid principal amount of each Loan made to the Borrower
on the Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice an account
or accounts evidencing the indebtedness of the Borrower to such Lender resulting
from the Loan made by such Lender to the Borrower, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall record
(i) the amount of each Loan made hereunder, the Type thereof and the Interest
Period applicable thereto, (ii) the
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amount of any principal or interest due and payable or to become due and payable
from the Borrower to each Lender hereunder and (iii) the amount of any sum
received by the Administrative Agent hereunder for the account of the Lenders
and each Lender’s share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (b) or
(c) of this Section shall be prima facie evidence of the existence and amounts
of the obligations recorded therein; provided that the failure of any Lender or
the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the Obligations.
(e) Any Lender may request that the Loan made by it be evidenced by a Note. In
such event, the Borrower shall prepare, execute and deliver to such Lender a
Note, payable to the order of such Lender (or, if requested by such Lender, to
such Lender and its registered assigns). Thereafter, the Loan evidenced by such
Note and interest thereon shall at all times (including after assignment
pursuant to Section 9.04) be represented by one or more promissory notes in such
form payable to the order of the payee named therein (or, if such promissory
note is a registered note, to such payee and its registered assigns).
SECTION 2.11. Prepayment of Loans. (a) The Borrower shall have the right at any
time and from time to time to optionally prepay the Loans in whole or in part,
without premium or penalty, subject to prior notice in accordance with the
provisions of this Section 2.11(a). The Borrower shall notify the Administrative
Agent by telephonic notice (promptly confirmed by hand delivery, facsimile
transmission or electronic mail of such request) of any prepayment hereunder
this clause (a) (i) in the case of prepayment of a Borrowing of Eurodollar
Loans, not later than 1:00 p.m., New York City time, three (3) Business Days
before the date of prepayment or (ii) in the case of prepayment of a Borrowing
of ABR Loans, not later than 1:00 p.m., New York City time, on the date of
prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of the Loans to be prepaid; provided
that, a notice of prepayment is given in connection with a conditional notice of
termination of the Aggregate Commitments as contemplated by Section 2.09, then
such notice of prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.09. Promptly following receipt of any such
notice relating to a Borrowing, the Administrative Agent shall advise the
Lenders of the contents thereof. Each partial prepayment of any Borrowing shall
be in an amount that would be permitted in the case of a Borrowing of the same
Type as provided in Section 2.02.
(b) Within three Business Days after the receipt of any Net Cash Proceeds from a
Prepayment Disposition, the Borrower shall prepay an aggregate principal amount
of Loans equal to 100% of such Net Cash Proceeds; provided, however, that the
Borrower shall not be required to prepay Loans with such Net Cash Proceeds as
otherwise provided in this clause (b) to the extent (and only to the extent)
that such Net Cash Proceeds are required by the terms of the Bridge Facility to
be, and are, applied to (i) reduce the commitments under the Bridge Facility or
(ii) prepay loans outstanding under the Bridge Facility. The Borrower shall
notify the Administrative Agent of the occurrence of any Prepayment Disposition
at least one (1) Business Day prior to the consummation of such Prepayment
Disposition and such notice shall be accompanied by a reasonably detailed
calculation of the anticipated Net Cash Proceeds thereof. Promptly following
receipt of such notice, the Administrative Agent shall advise the Lenders of the
occurrence of the Prepayment Disposition and the anticipated Net Cash Proceeds
thereof.
(c) On any date on which a Change of Control occurs, if Loans are outstanding,
the Borrower shall offer to the Lenders to prepay all Loans then outstanding
pursuant to the offer described below (the “Change of Control Offer”) at a price
in cash (the “Change of Control Payment”) equal to 100.0% of the aggregate
principal amount thereof plus accrued and unpaid interest to the date of the
prepayment.
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(i) Within 30 days following any Change of Control, the Borrower will send
notice of such Change of Control Offer to the Administrative Agent, and the
Administrative Agent shall promptly mail such notice to each Lender at the
address specified for notices in Section 9.01 and in accordance with
Section 9.01, with the following information:
(A) that a Change of Control has occurred or will occur (together with the
identification of the transaction or transactions that constitute such Change of
Control), that a Change of Control Offer is being made pursuant to this
Section 2.11(c) and that all Loans properly tendered pursuant to such Change of
Control Offer will be accepted for payment by the Borrower;
(B) the prepayment price and date of prepayment, which will be no earlier than
30 days nor later than 60 days from the date such notice is mailed or otherwise
delivered (the “Change of Control Payment Date”);
(C) that any Loans not properly accepted for prepayment pursuant to this
Section 2.11(c) will remain outstanding and continue to accrue interest;
(D) that unless the Borrower defaults in the payment of the Change of Control
Payment, all Loans accepted for prepayment pursuant to the Change of Control
Offer will cease to accrue interest on the Change of Control Payment Date;
(E) that Lenders electing to tender Loans pursuant to the Change of Control
Offer will be required to notify the Administrative Agent thereof prior to the
close of business on the third Business Day preceding the Change of Control
Payment Date;
(F) that the Lenders will be entitled to withdraw their election to require the
Borrower to prepay such Loans, provided that the Administrative Agent receives,
not later than the close of business on the 5th Business Day preceding the date
of the Change of Control Offer notice, a written notice setting forth the name
of the Lender, the principal amount of Loans accepted for prepayment, and a
statement that such Lender is withdrawing its election to have such Loans
prepaid; and
(G) if such notice is delivered prior to the occurrence of a Change of Control,
stating that the Change or Control Offer is conditional on the occurrence of
such Change of Control.
(ii) On the Change of Control Payment Date, the Borrower will:
(A) prepay all Loans, or portions thereof, accepted for prepayment in accordance
with this Section 2.11(c) pursuant to the Change of Control Offer by depositing
with the Administrative Agent an amount equal to the aggregate Change of Control
Payment in respect of all Loans or portions thereof so accreted for prepayment,
and
(B) deliver, or cause to be delivered, to the Administrative Agent an officer’s
certificate stating that such Loans or portions thereof have been prepaid.
Notwithstanding the foregoing, the Borrower shall not be required to make a
Change of Control Offer following a Change of Control if (I) a third party makes
the Change of Control Offer in the manner,
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at the times and otherwise in compliance with the requirements of this
Section 2.11(c) and prepays all Loans validly accepted for prepayment under such
Change of Control Offer or (II) a notice of prepayment with respect to the Loans
has been given pursuant to this Agreement and the prepayment date specified in
such notice is the date on which such Change of Control is consummated, unless
and until there is a default in such prepayment. Notwithstanding anything to the
contrary herein, a Change of Control Offer may be made in advance of a Change of
Control, conditional upon such Change of Control, if a definitive agreement is
in place for the Change of Control at the time of making of the Change of
Control Offer.
(d) Each prepayment of a Borrowing shall be applied ratably to the Loans
included in the prepaid Borrowing, or, in the case of a prepayment in accordance
with clause (c) above, pro rata in accordance with the aggregate principal
amount of Loans accepted for prepayment. Prepayments shall be accompanied by
(i) accrued interest to the extent required by Section 2.13 and (ii) break
funding payments pursuant to Section 2.16.
SECTION 2.12. Fees. (a) The Borrower agrees to pay to the Administrative Agent,
for its own account, fees payable in the amounts and at the times separately
agreed upon between the Borrower and the Administrative Agent.
(b) The Borrower will pay to the Administrative Agent, for the ratable benefit
of the Lenders, a fee (the “Undrawn Fee”)in an amount equal to 0.20% of the
Aggregate Commitment, payable upon the earlier of (i) termination or expiration
of the Aggregate Commitments in accordance with the terms hereof and (ii) the
Closing Date (the “Undrawn Fee Payment Date”), calculated based on the number of
days (if any) elapsed in a 360-day year, from and including the date of this
Agreement to but excluding the Undrawn Fee Payment Date.
(c) All fees payable hereunder shall be paid on the dates due, in immediately
Undrawn Fees, to the Lenders. Fees paid shall not be refundable under any
circumstances.
SECTION 2.13. Interest. (a) The Loans or any portion thereof comprising ABR
Loans at any time shall bear interest at the Alternate Base Rate plus the
Applicable Rate.
(b) The Loans or any portion thereof comprising Eurodollar Loans at any time
for such Borrowing plus the Applicable Rate.
(c) [Intentionally Omitted]
(d) Notwithstanding the foregoing, during the occurrence and continuance of an
Event of Default, the Required Lenders may, at their option, by notice to the
Borrower (which notice may be revoked at the option of the Required Lenders
notwithstanding any provision of Section 9.02 requiring the consent of “each
Lender directly affected thereby” for reductions in interest rates), declare
that (i) all Loans shall bear interest at 2% plus the rate otherwise applicable
to such Loans as provided in the preceding paragraphs of this Section or (ii) in
the case of any other amount outstanding hereunder, such amount shall accrue at
2% plus the rate applicable to such fee or other obligation as provided
hereunder; provided that, during the existence of any Event of Default described
in Section 7.01(g) or 7.01(h), the interest rates set forth in clauses (i) and
(ii) shall be applicable to all Loans and other amounts outstanding hereunder
without any election or action on the part of the Administrative Agent or any
Lender.
(e) Accrued interest on each Loan shall be payable in arrears on each Interest
Payment Date for such Loan and upon the Maturity Date; provided that (i) in the
event of any repayment
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or prepayment of any Loan, accrued interest on the principal amount repaid or
prepaid shall be payable on the date of such repayment or prepayment and (ii) in
the event of any conversion of any Eurodollar Loan prior to the end of the
current Interest Period therefor, accrued interest on such Loan shall be payable
on the effective date of such conversion.
(f) All interest hereunder shall be computed on the basis of a year of 360 days,
except that interest computed by reference to the Alternate Base Rate at times
when the Alternate Base Rate is based on the Prime Rate shall be computed on the
be payable for the actual number of days elapsed (including the first day but
determination shall be conclusive absent manifest error.
SECTION 2.14. Alternate Rate of Interest; Illegality.
(a) If prior to the commencement of any Interest Period for a Eurodollar
Borrowing:
(i) the Administrative Agent determines (which determination shall be conclusive
and binding absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(ii) the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders of making or maintaining their Loans included
in such Borrowing for such Interest Period;
Lenders by telephone or facsimile transmission as promptly as practicable
thereafter and, until the Administrative Agent notifies the Borrower and the
Lenders that the circumstances giving rise to such notice no longer exist,
(i) any Interest Election Request that requests the conversion of any Borrowing
ineffective and any such Eurodollar Borrowing shall be repaid on the last day of
the then current Interest Period applicable thereto and (ii) if any Borrowing
Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR
Borrowing.
(b) If any Lender determines that any Requirement of Law has made it unlawful,
or that any Governmental Authority has asserted that it is unlawful, for any
Lender or its applicable Lending Office to make, maintain or fund Loans whose
interest is determined by reference to the LIBO Rate, or to determine or charge
interest rates based upon the LIBO Rate, or any Governmental Authority has
imposed material restrictions on the authority of such Lender to purchase or
sell, or to take deposits of, Dollars in the London interbank market, then, on
notice thereof by such Lender to the Borrower through the Administrative Agent,
(i) any obligation of such Lender to make or continue Eurodollar Loans or to
convert ABR Loans to Eurodollar Loans shall be suspended, and (ii) if such
notice asserts the illegality of such Lender making or maintaining ABR Loans the
interest rate on which is determined by reference to the LIBO Rate component of
the Alternate Base Rate, the interest rate on which ABR Loans of such Lender
shall, if necessary to avoid such illegality, be determined by the
Administrative Agent without reference to the LIBO Rate component of the
Alternate Base Rate, in each case until such Lender notifies the Administrative
Agent and the Borrower that the circumstances giving rise to such determination
no longer exist. Upon receipt of such notice, (x) the Borrower shall, upon
demand from such Lender (with a copy to the Administrative Agent), prepay or, if
applicable, convert all Eurodollar Loans of such Lender to ABR Loans (the
interest rate on which ABR Loans of such Lender shall, if necessary to avoid
such illegality, be determined by the Administrative Agent without reference to
the LIBO Rate component of
25
the Alternate Base Rate), either on the last day of the Interest Period
therefor, if such Lender may lawfully continue to maintain such Eurodollar Loans
to such day, or immediately, if such Lender may not lawfully continue to
maintain such Eurodollar Loans and (y) if such notice asserts the illegality of
such Lender determining or charging interest rates based upon the LIBO Rate, the
Administrative Agent shall during the period of such suspension compute the
Alternate Base Rate applicable to such Lender without reference to the LIBO Rate
component thereof until the Administrative Agent is advised in writing by such
Lender that it is no longer illegal for such Lender to determine or charge
interest rates based upon the LIBO Rate. Upon any such prepayment or conversion,
the Borrower shall also pay accrued interest on the amount so prepaid or
converted.
SECTION 2.15. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, liquidity or
similar requirement (including any compulsory loan requirement, insurance charge
or other assessment) against assets of, deposits with or for the account of, or
the Adjusted LIBO Rate);
cost or expense (other than Taxes) affecting this Agreement or Loans made by
such Lender; or
(iii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes,
(B) Taxes described in clauses (b) through (d) of the definition of Excluded
Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of
credit, commitments, or other obligations, or its deposits, reserves, other
liabilities or capital attributable thereto;
Lender or such other Recipient of making, continuing, converting into or
maintaining any Loan or of maintaining its obligation to make any such Loan or
to reduce the amount of any sum received or receivable by such Lender or such
other Recipient hereunder, whether of principal, interest or otherwise, then the
Borrower will pay to such Lender or such other Recipient, as the case may be,
such additional amount or amounts as will compensate such Lender or such other
Recipient, as the case may be, for such additional costs incurred or reduction
suffered.
(b) If any Lender determines in good faith that any Change in Law regarding
capital or liquidity requirements has or would have the effect of reducing the
rate of return on such Lender’s capital or on the capital of such Lender’s
holding company, if any, as a consequence of this Agreement or the Loans made by
such Lender to a level below that which such Lender or such Lender’s holding
company could have achieved but for such Change in Law (taking into
the Borrower will pay to such Lender, as the case may be, such additional amount
or amounts as will compensate such Lender or such Lender’s holding company for
any such reduction suffered; provided that such Lender is generally seeking, or
intends generally to seek, compensation from similarly situated borrowers under
similar credit facilities (to the extent such Lender has the right under such
similar credit facilities to do so) with respect to such Change in Law regarding
capital or liquidity requirements.
(c) A certificate of a Lender setting forth the amount or amounts necessary to
compensate such Lender or its holding company, as the case may be, as specified
in paragraph (a) or (b) of this Section, setting forth in reasonable detail the
calculation of such amount or amounts, shall be delivered to the Borrower and
shall be rebuttable presumptive evidence of such amount or amounts. The Borrower
shall pay such Lender, as the case may be, the amount shown as due on any such
certificate within 15 days after receipt thereof.
26
(d) Failure or delay on the part of any Lender to demand compensation pursuant
to this Section shall not constitute a waiver of such Lender’s right to demand
such compensation; provided that the Borrower shall not be required to
compensate a Lender pursuant to this Section for any increased costs or
reductions incurred more than 270 days prior to the date that such Lender, as
the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s intention to claim
compensation therefor; provided further that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the 270-day period
thereof.
SECTION 2.16. Break Funding Payments. In the event of (a) the payment of any
Period applicable thereto (including as a result of an Event of Default or as a
result of any prepayment pursuant to Section 2.11), (b) the conversion of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar
Loan on the date specified in any notice delivered pursuant hereto (regardless
of whether such notice may be revoked under Section 2.11 and is revoked in
accordance therewith) or (d) the assignment of any Eurodollar Loan other than on
the last day of the Interest Period applicable thereto as a result of a request
by the Borrower pursuant to Section 2.19, then, in any such event, the Borrower
shall compensate each Lender for the loss, cost and expense attributable to such
event. Such loss, cost or expense to any Lender shall be deemed to include an
amount determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for deposits in Dollars
of a comparable amount and period from other banks in the eurodollar market. A
is entitled to receive pursuant to this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 15 days after
receipt thereof.
SECTION 2.17. Taxes. (a) Payments Free of Taxes. Any and all payments by or on
account of any obligation of the Borrower or any Subsidiary Guarantor under any
Loan Document shall be made without deduction or withholding for any Taxes,
except as required by applicable Requirements of Law. If any applicable
Requirements of Law (as determined in the good faith discretion of an applicable
withholding agent) requires the deduction or withholding of any Tax from any
such payment by a withholding agent, then the applicable withholding agent shall
be entitled to make such deduction or withholding and shall timely pay the full
amount deducted or withheld to the relevant Governmental Authority in accordance
with applicable Requirements of Law and, if such Tax is an Indemnified Tax, then
the sum payable by the Borrower or any Subsidiary Guarantor shall be increased
as necessary so that after such deduction or withholding has been made
(including such deductions and withholdings applicable to additional sums
payable under this Section 2.17) the applicable Recipient receives an amount
equal to the sum it would have received had no such deduction or withholding
been made.
(b) Payment of Other Taxes by the Borrower. The Borrower shall timely pay to the
relevant Governmental Authority in accordance with applicable Requirements of
Law, or at the option of the Administrative Agent timely reimburse it for, Other
Taxes.
27
(c) Evidence of Payments. As soon as practicable after any payment of Taxes by
the Borrower or any Subsidiary Guarantor to a Governmental Authority pursuant to
this Section 2.17, the Borrower or any Subsidiary Guarantor shall deliver to the
(d) Indemnification by the Borrower. The Borrower shall indemnify each
Recipient, within 10 days after demand therefor, for the full amount of any
Indemnified Taxes (including Indemnified Taxes imposed or asserted on or
attributable to amounts payable under this Section) payable or paid by such
Recipient or required to be withheld or deducted from a payment to such
Recipient and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by a Lender (with a copy
to the Administrative Agent), or by the Administrative Agent on its own behalf
or on behalf of a Lender, shall be conclusive absent manifest error.
Borrower or any Subsidiary Guarantor has not already indemnified the
Administrative Agent for such Indemnified Taxes and without limiting the
obligation of the Borrower to do so), (ii) any Taxes attributable to such
Lender’s failure to comply with the provisions of Section 9.04(c) relating to
paragraph (e).
(f) Status of Lenders. (i) Any Lender that is entitled to an exemption from or
reduction of withholding Tax with respect to payments made under any Loan
Document shall deliver to the Borrower and the Administrative Agent, at the time
or times reasonably requested by the Borrower or the Administrative Agent, such
properly completed and executed documentation reasonably requested by the
Borrower or the Administrative Agent as will permit such payments to be made
shall deliver such other documentation prescribed by applicable Requirements of
Law or reasonably requested by the Borrower or the Administrative Agent as will
enable the Borrower or the Administrative Agent to determine whether or not such
Lender is subject to backup withholding or information reporting requirements.
documentation set forth in Section 2.17(f)(i)(A), (i)(B) and (i)(D) below) shall
not be required if in the Lender’s reasonable judgment such completion,
execution or submission would subject such Lender to any material unreimbursed
cost or expense or would materially prejudice the legal or commercial position
of such Lender.
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(i) Without limiting the generality of the foregoing:
reasonable request of the Borrower or the Administrative Agent), executed
U.S. Federal backup withholding tax;
(1) in the case of a Foreign Lender claiming the benefits of an income tax
interest under any Loan Document, executed originals of IRS Form W-8BEN
establishing an exemption from, or reduction of, U.S. Federal withholding Tax
pursuant to the “interest” article of such tax treaty and (y) with respect to
any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS
withholding Tax pursuant to the “business profits” or “other income” article of
such tax treaty;
(2) executed originals of IRS Form W-8ECI;
(3) in the case of a Foreign Lender claiming the benefits of the exemption for
substantially in the form of Exhibit C-1 to the effect that such Foreign Lender
percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B)
of the Code, or a “controlled foreign corporation” described in
Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and
(y) executed originals of IRS Form W-8BEN or IRS Form W-8BEN-E; or
(4) to the extent a Foreign Lender is not the beneficial owner, executed
originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or
IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form
of Exhibit C-2 or Exhibit C-3, IRS Form W-9, and/or other certification
documents from each beneficial owner, as applicable; provided that if the
Foreign Lender is a partnership and one or more direct or indirect partners of
such Foreign Lender are claiming the portfolio interest exemption, such Foreign
Lender may provide a U.S. Tax Compliance Certificate substantially in the form
of Exhibit C-4 on behalf of each such direct and indirect partner;
Agent), executed originals of any other form prescribed by applicable
Requirements of Law as a basis for claiming
29
exemption from or a reduction in U.S. Federal withholding Tax, duly completed,
together with such supplementary documentation as may be prescribed by
applicable Requirements of Law to permit the Borrower or the Administrative
Agent to determine the withholding or deduction required to be made; and
U.S. Federal withholding Tax imposed by FATCA if such Lender were to fail to
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to the Borrower and the Administrative Agent at the time or times
prescribed by applicable Requirements of Law and at such time or times
documentation prescribed by applicable Requirements of Law (including as
documentation reasonably requested by the Borrower or the Administrative Agent
as may be necessary for the Borrower and the Administrative Agent to comply with
their obligations under FATCA and to determine that such Lender has complied
with such Lender’s obligations under FATCA or to determine the amount to deduct
and withhold from such payment. Solely for purposes of this clause (D), “FATCA”
(g) Treatment of Certain Refunds. If any party determines, in its sole
as to which it has been indemnified pursuant to this Section 2.17 (including by
the payment of additional amounts pursuant to this Section 2.17), it shall pay
to the indemnifying party an amount equal to such refund (but only to the extent
of indemnity payments made under this Section 2.17 with respect to the Taxes
of such indemnified party and without interest (other than any interest paid by
the relevant Governmental Authority with respect to such refund). Such
indemnifying party, upon the request of such indemnified party, shall repay to
such indemnified party the amount paid over pursuant to this paragraph (g) (plus
any penalties, interest or other charges imposed by the relevant Governmental
in this paragraph (g), in no event will the indemnified party be required to pay
any amount to an indemnifying party pursuant to this paragraph (g) the payment
of which would place the indemnified party in a less favorable net after-Tax
respect to such Tax had never been paid. This paragraph shall not be construed
(h) Survival. Each party’s obligations under this Section 2.17 shall survive the
Document.
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(i) Defined Terms. For purposes of this Section 2.17, the term “applicable
Requirements of Law” includes FATCA.
SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) All payments to be made by the Borrower shall be made free and clear of and
without condition or deduction for any counterclaim, defense, recoupment or
setoff. The Borrower shall make each payment required to be made by it hereunder
(whether of principal, interest, fees or of amounts payable under Section 2.15,
2.16 or 2.17, or otherwise) prior to 1:00 p.m., New York City time, on the date
when due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
shall be made to the Administrative Agent at its offices referred to in
Section 9.01, except that payments pursuant to Sections 2.15, 2.16, 2.17 and
9.03 shall be made directly to the Persons entitled thereto. The Administrative
Agent shall distribute any such payments received by it for the account of any
other Person to the appropriate recipient promptly following receipt thereof. If
any payment hereunder shall be due on a day that is not a Business Day, the date
for payment shall be extended to the next succeeding Business Day, and, in the
case of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments hereunder shall be made in Dollars.
(b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal interest and fees
then due hereunder, such funds shall be applied (i) first, towards payment of
interest and fees then due hereunder, ratably among the parties entitled thereto
in accordance with the amounts of interest and fees then due to such parties,
and (ii) second, towards payment of principal then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of principal then
due to such parties.
(c) The Borrower hereby irrevocably authorizes the Administrative Agent to
charge any deposit account of the Borrower maintained with the Administrative
Agent for each payment of principal, interest and fees as it becomes due
hereunder.
(d) If any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
the Obligations due and payable to such Lender hereunder and under the other
Loan Documents resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of the Obligations due and payable to such
Lender hereunder and under the other Loan Documents and accrued interest thereon
than the proportion received by any other Lender, then the Lender receiving such
greater proportion shall purchase (for cash at face value) participations in the
Loans of other Lenders to the extent necessary so that the benefit of all such
amount of principal of and accrued interest on their respective Loans; provided
that (i) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be rescinded
and the purchase price restored to the extent of such recovery, without
interest, and (ii) the provisions of this paragraph shall not be construed to
apply to any payment made by the Borrower pursuant to and in accordance with the
express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans to any assignee or participant, other than to the Borrower or any
Subsidiary or Affiliate thereof (as to which the provisions of this paragraph
shall apply). The Borrower consents to the foregoing and agrees, to the extent
it may effectively do so under applicable Requirements of Law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.
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(e) Unless the Administrative Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Administrative Agent for
the account of the Lenders hereunder that the Borrower will not make such
assumption, distribute to the Lenders the amount due. In such event, if the
Borrower has not in fact made such payment, then each of the Lenders severally
agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
with banking industry rules on interbank compensation.
(f) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.07(b), 2.18(e) or 9.03(c), then the Administrative Agent
may, in its discretion (notwithstanding any contrary provision hereof),
(i) apply any amounts thereafter received by the Administrative Agent for the
account of such Lender and for the benefit of the Administrative Agent to
satisfy such Lender’s obligations to it under such Section until all such
unsatisfied obligations are fully paid and/or (ii) hold any such amounts in a
segregated account over which the Administrative Agent shall have exclusive
control as cash collateral for, and application to, any future funding
obligations of such Lender under any such Section; in the case of each of
clauses (i) and (ii) above, in any order as determined by the Administrative
Agent in its discretion.
SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) If any Lender
requests compensation under Section 2.15, or the Borrower is required to pay any
Indemnified Taxes or additional amounts to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then such
Lender shall use reasonable efforts to designate a different Lending Office for
funding or booking its Loans hereunder or to assign its rights and obligations
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
(a) If (i) any Lender requests compensation under Section 2.15, (ii) the
Borrower is required to pay any Indemnified Taxes or additional amounts to any
Section 2.17 or (iii) any Lender is a Non-Consenting Lender, then the Borrower
Section 9.04), all its interests, rights (other than its existing rights to
payments pursuant to Section 2.15 or 2.17) and obligations under the Loan
Documents to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment), provided that (i) the
Borrower shall have received the prior written consent of the Administrative
Agent, which consent shall not unreasonably be withheld, conditioned or delayed,
(ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts), (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.15 or payments required
to be made pursuant to Section 2.17, such assignment will result in a reduction
in such compensation or payments, (iv) such assignment does not conflict with
applicable Requirements of Law, and (v) in the case of an assignment resulting
from a Lender becoming a Non-Consenting Lender, the applicable assignee shall
have consented to the applicable amendment, waiver or
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consent. A Lender shall not be required to make any such assignment and
and delegation cease to apply. An assignment and delegation required pursuant to
this paragraph may be effected pursuant to an Assignment and Assumption executed
by the Borrower, the Administrative Agent and the assignee, and the Lender
required to make such assignment and delegation need not be a party thereto (it
being understood and agreed that such Lender shall not be deemed to make the
representations and warranties in such Assignment and Assumption if such Lender
has not executed such Assignment and Assumption).
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Lenders on and as of (i) the
Effective Date (except for the representations and warranties in Sections
3.03(c), 3.17, 3.18 and 3.19) and (ii) on the Closing Date that:
SECTION 3.01. Organization; Powers. The Borrower and each of its Restricted
Subsidiaries are duly organized or validly formed, validly existing and in good
standing under the laws of the jurisdictions of their organization or formation
and have all requisite authority to conduct their respective businesses in each
jurisdiction in which the failure to have such authority, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect. The
Borrower and each of its Restricted Subsidiaries have full power and authority
to carry on their business as now conducted.
SECTION 3.02. Authorization and Validity. The Borrower and each Subsidiary
Guarantor has the power and authority and legal right to execute and deliver the
Loan Documents to which it is a party and to perform its obligations thereunder.
The execution and delivery by the Borrower and each Subsidiary Guarantor of the
Loan Documents to which it is a party have been duly authorized by proper
organizational proceedings, and the Loan Documents to which the Borrower is a
party constitute the legal, valid and binding obligations of the Borrower,
enforceable against the Borrower or such Subsidiary Guarantor in accordance with
their terms, except as enforceability may be limited by bankruptcy, insolvency
or similar laws affecting the enforcement of creditors’ rights and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or law, and obligations of good faith and fair dealing.
SECTION 3.03. Financial Condition. (a) The audited consolidated balance sheets
and related statements of income, stockholders’ equity and cash flows of the
Borrower and its consolidated Subsidiaries as of December 31, 2011, December 31,
2012 and December 31, 2013 (collectively, the “Annual Audited Financial
Statements”) (which were heretofore delivered to the Administrative Agent and
the Lenders), in each case, (i) were prepared in accordance with GAAP in effect
on the date such statements were prepared, (ii) fairly present in all material
respects the financial position of the Borrower and its consolidated
Subsidiaries at such dates and the consolidated results of their operations and
their consolidated cash flows for the periods then ended and (iii) meet the
requirements of Regulation S-X under the Securities Act of 1933, as amended, and
all other accounting rules and regulations of the SEC promulgated thereunder
applicable to a registration statement under the Securities Act of 1933 on Form
S-1.
(b) The unaudited consolidated balance sheets and related statements of income,
stockholders’ equity and cash flows of the Borrower and its consolidated
Subsidiaries as of March 31, 2014, June 30, 2014 and September 30, 2014
(collectively, the “Quarterly Unaudited Financial
33
on the date such statements were prepared (subject to normal year end audit
adjustments and the absence of footnotes), (ii) fairly present in all material
respects the financial condition of the Borrower and its consolidated
Subsidiaries, at such dates and the consolidated results of operations for the
periods then ended, and (iii) meet the requirements of Regulation S-X under the
Securities Act of 1933, as amended, and all other accounting rules and
regulations of the SEC promulgated thereunder applicable to a registration
statement under the Securities Act of 1933 on Form S-1.
(c) The pro forma consolidated balance sheet and related pro forma consolidated
statement of income of the Borrower, in each case, as of December 31, 2013 and
for the most recent fiscal quarter periods for which financial statements have
been delivered pursuant to Section 3.03(b) above, prepared after giving effect
to the Transactions as if the Transactions had occurred as of such date (in the
case of such balance sheet) or at the beginning of such period (in the case of
the income statement) (collectively, the “Pro Forma Financial Statements”), meet
the requirements of Regulation S-X under the Securities Act of 1933, as amended,
(including giving effect to the time periods prescribed by Rule 3-05(b)
thereunder, other than with respect to the Transactions), and all other
accounting rules and regulations of the SEC promulgated thereunder applicable to
a registration statement under the Securities Act of 1933 on Form S-1.
(d) Since December 31, 2013, no material adverse effect on the business,
Restricted Subsidiaries taken as a whole has occurred.
SECTION 3.04. ERISA. Each Plan is in material compliance with, and has been
administered in material compliance with, all applicable provisions of ERISA,
the Code and any other applicable federal or state law, except where the failure
to so comply would not (individually or in the aggregate) reasonably be expected
to have a Material Adverse Effect, and no event or condition has occurred and is
continuing as to which the Borrower is under an obligation to furnish a report
to the Administrative Agent and the Lenders under Section 5.01(c) and which
would reasonably be expected (individually or in the aggregate) to have a
Material Adverse Effect.
SECTION 3.05. Defaults. No Default or Event of Default has occurred and is
continuing.
SECTION 3.06. Accuracy of Information. (a) No written information, exhibit or
report (other than projections and information of a general economic or
industry-specific nature) furnished by the Borrower or any Subsidiary to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or delivered hereunder or under any other Loan Document, when taken as
a whole, contains any material misstatement of fact or omits to state a material
fact necessary to make the statements contained therein not misleading in light
of the circumstances under which such statements are made and (b) all
projections furnished by the Borrower or any Subsidiary to the Administrative
Agent or any Lender in connection with the negotiation of this Agreement or
delivered hereunder or under any other Loan Document, when taken as a whole,
have been or will be prepared in good faith based upon reasonable assumptions at
the time such projections were so furnished.
SECTION 3.07. Regulation U. Neither the Borrower nor any Subsidiary is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying Margin Stock. Margin Stock
constitutes less than 25% of the consolidated assets of the Borrower and its
Subsidiaries which are subject to any limitation on sale or pledge or any other
restriction hereunder. No part of the proceeds of any Loan will be used to
purchase or carry any Margin Stock in violation of Regulation U or for any other
purpose that entails a violation of Regulation U.
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SECTION 3.08. Taxes. The Borrower and its Subsidiaries have filed all United
States federal tax returns and all other material tax returns which, to the
Knowledge of the Borrower, are required to be filed and have paid all taxes due
pursuant to said returns and all taxes due pursuant to any assessment received
by the Borrower or any Subsidiary, except (a) for such taxes, if any, as are
provided in accordance with GAAP and (b) to the extent that the failure to pay
such taxes would not reasonably be expected to result in a Material Adverse
Effect.
SECTION 3.09. Liens. There are no Liens on any of the properties or assets of
the Borrower or any Restricted Subsidiary except (i) Permitted Liens and
(ii) with respect to properties and assets other than Productive Properties,
Principal Transmission Facilities and the stock of any Subsidiary, Liens that
Material Adverse Effect. All easements, rights of way, licenses and other real
property rights required for operation of the businesses of the Borrower and its
Restricted Subsidiaries are owned free and clear of any Lien, other than
Permitted Liens and Liens that could not, individually or in the aggregate,
SECTION 3.10. Litigation. Except as disclosed in the Borrower’s filings with the
SEC, in the Borrower’s judgment, there are no actions at law or in equity
pending or, to the Knowledge of the Borrower, threatened involving the
likelihood of any judgment or liability against the Borrower or any Subsidiary
which would reasonably be expected to have a Material Adverse Effect.
SECTION 3.11. No Conflict. Neither the execution and delivery by the Borrower or
any Subsidiary Guarantor of the Loan Documents to which it is a party, nor the
consummation of the transactions therein contemplated, nor compliance with the
provisions thereof will conflict with or result in the breach of any of the
terms, conditions or provisions of, or constitute a default under (a) the
charter or bylaws of the Borrower or its Subsidiaries, (b) any material
indenture, loan agreement or other agreement or instrument to which the Borrower
or any of its Subsidiaries is a party or by which it may be bound, or (c) result
in creation of any Lien on any property of the Borrower or any of its
Subsidiaries.
SECTION 3.12. Approvals. No consent or authorization of, filing with, or any
other act by or in respect of any Person is required in connection with the
enforceability, execution, delivery, performance or validity of this Agreement
or the transactions contemplated hereby, except such as have been obtained or
made and are in full force and effect and such matters relating to performance
as would ordinarily be done in the ordinary course of business after the
Effective Date.
SECTION 3.13. Investment Company Status. None of the Borrower nor any Subsidiary
Guarantor is an “investment company” or “controlled” by an “investment company”,
SECTION 3.14. Compliance with Laws and Orders. The Borrower and its Restricted
Subsidiaries have all franchises, licenses and permits necessary for the conduct
of their respective businesses, and are in compliance with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
they or their respective properties are subject, except to the extent that
failure to have, maintain or comply with any of the foregoing, individually and
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
35
SECTION 3.15. Anti-Terrorism Laws. Each of the Borrower and its Subsidiaries is
in compliance in all material respects with all Anti-Terrorism Laws applicable
to it or its properties.
SECTION 3.16. Anti-Corruption Laws and Sanctions. The Borrower has implemented
and maintains in effect policies and procedures designed to ensure compliance by
the Borrower, its Subsidiaries and their respective directors, officers,
employees and agents with Anti-Corruption Laws and applicable Sanctions, and the
Borrower and its Subsidiaries and, to the Knowledge of the Borrower, their
respective officers, employees, directors and agents, are in compliance with
Anti-Corruption Laws and applicable Sanctions in all material respects. None of
(a) the Borrower or any Subsidiary, or (b) to the Knowledge of the Borrower, any
of the directors, officers, employees or agents of the Borrower or any
Subsidiary that will act in any capacity in connection with or benefit from the
credit facility established hereby, is a Sanctioned Person. No Borrowing
Extension, use of proceeds or other transaction contemplated by this Agreement
will violate Anti-Corruption Laws or applicable Sanctions.
SECTION 3.17. Solvency. Immediately after the consummation of the Transactions
to occur on the Closing Date and immediately following the making of the initial
Borrowing and after giving effect to the application of the proceeds of initial
Borrowing on the Closing Date, the Borrower and its Subsidiaries are, on a
consolidated basis, Solvent.
SECTION 3.18. Use of Proceeds. The proceeds of the initial Borrowing shall be
used on the Closing Date solely to fund, in part, (i) the Acquisition
Consideration and (ii) the Transaction Costs.
SECTION 3.19. Change of Control. As of the Closing Date, no Change of Control
has occurred.
ARTICLE IV
Conditions
SECTION 4.01. Conditions Precedent to Effectiveness. This Agreement shall become
effective on and as of the first date on which each of the following conditions
is satisfied (or waived in accordance with Section 9.02) (such date, the
“Effective Date”):
(a) The Administrative Agent (or its counsel) shall have received from each
party hereto either (i) a counterpart of this Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the Administrative Agent (which
may include facsimile or electronic transmission of a signed signature page of
this Agreement) that such party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a favorable written opinion
(addressed to the Administrative Agent and the Lenders and dated the Effective
Date) of Latham & Watkins LLP, counsel for the Borrower, covering such matters
relating to the Borrower, the Loan Documents and the transactions contemplated
hereby as the Administrative Agent shall reasonably request. The Borrower hereby
requests such counsel to deliver such opinion.
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(c) The Administrative Agent shall have received a certificate of the secretary
or assistant secretary of the Borrower, dated the Effective Date, certifying:
(i) that attached to such certificate are (A) a true and complete copy of the
certificate of incorporation and bylaws of the Borrower, as in full force and
effect on the Effective Date, and (B) a true and complete copy of a certificate
from the appropriate Governmental Authority of the jurisdiction of incorporation
of the Borrower certifying that the Borrower is validly existing and in good
standing in such jurisdiction, dated a recent date prior to the Effective Date;
(ii) that attached to such certificate is a true and complete copy of
resolutions duly adopted by the board of directors of the Borrower authorizing
the execution, delivery and performance of the Loan Documents to which the
Borrower is or is intended to be a party and the obtaining of extensions of
credit under this Agreement; and
(iii) as to the incumbency and specimen signature of each officer of the
Borrower executing the Loan Documents to which the Borrower is or is intended to
be a party;
(d) The Administrative Agent shall have received a certificate of an Authorized
Officer of the Borrower dated the Effective Date, certifying that the
representations and warranties of the Borrower contained in Article 3 (except
for the representations and warranties in Sections 3.03(c), 3.17, 3.18 and 3.19)
shall be true and correct in all material respects on and as of the Effective
Date, except to the extent that such representations and warranties specifically
refer to an earlier date, in which case they shall be true and correct in all
material respects as of such earlier date.
(e) To the extent reasonably requested by the Administrative Agent or any
Lender, in writing, at least 10 Business Days prior to the Effective Date, the
Administrative Agent or such Lender shall have received, at least five
(5) Business Days prior to the Effective Date, all documentation and other
information required by regulatory authorities or as may be required by the
internal policies of the Administrative Agent or such Lender with respect to the
Borrower under applicable “know your customer” and anti-money laundering rules
and regulations, including, without limitation the Patriot Act.
(f) The Administrative Agent, the Sole Lead Arranger and the Lenders shall have
received all fees, in an amount and at times separately agreed in writing, and
other amounts due and payable to them on or prior to the Effective Date,
including, to the extent invoiced at least three Business Days prior to the
Effective Date (or such later date as the Borrower may reasonably agree),
or paid by the Borrower hereunder or under any other Loan Document (including
the reasonable fees, disbursements and other charges of one primary counsel to
the Administrative Agent).
SECTION 4.02. Conditions Precedent to Closing. The obligations of the Lenders to
make Loans hereunder shall not become effective until the date on which each of
the following conditions is satisfied (or waived in accordance with
Section 9.02) (such date, the “Closing Date”):
(a) The Administrative Agent (or its counsel) shall have received Notes executed
by the Borrower and payable to each Lender requesting (at least one Business Day
prior to the Closing Date) a Note, duly completed and dated the Closing Date.
(b) The Specified Representations shall be true and correct in all material
respects on and as of the Closing Date, both before and after giving effect to
the Borrowing to occur on such date. The Specified Purchase and Sale Agreement
Representations shall be true and correct on and as of the Closing Date, except
to the extent that any such failure to be true and correct would not provide the
Buyer a right to terminate its obligations under the Purchase and Sale Agreement
or decline to consummate the Acquisition as a result of the breach of such
Specified Purchase and Sale Agreement Representations.
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(c) The Administrative Agent shall have received a certificate of an Authorized
Officer of the Borrower dated the Closing Date, certifying:
(i) as to the accuracy of the matters referred to in clause (b) above; and
(ii) as to the matter described in clause (h) below (and setting forth
reasonably detailed calculations of such compliance).
(d) The Administrative Agent, the Sole Lead Arranger and the Lenders shall have
other amounts due and payable to them on or prior to the Closing Date,
Closing Date (or such later date as the Borrower may reasonably agree),
(e) The Administrative Agent shall have received the (i) Annual Audited
Financial Statements, (ii) Quarterly Unaudited Financial Statements, (it being
agreed that the filing of such financial statements or reports with the SEC on
Form 10-Q or Form 10-K, as applicable, by the Borrower shall satisfy the
delivery requirement under this Section 4.02(e)(i) and (ii)) and (iii) the Pro
Forma Financial Statements.
(f) The Administrative Agent shall have received a solvency certificate from the
Chief Financial Officer of the Borrower, in the form of Exhibit G, certifying
that the Borrower and its Subsidiaries, taken as a whole, after giving effect to
the Transactions are Solvent.
(g) The Borrower shall have in effect a Public Debt Rating from each of S&P and
Moody’s.
(h) The Borrower shall be in pro forma compliance with Section 6.05 after giving
pro forma effect to the Transactions as of the end of the most recent fiscal
quarter for which financial statements are available.
(i) The Acquisition and the other Transactions shall be consummated
substantially concurrently with the Borrowing on the Closing Date, in all
material respects in accordance with the Purchase and Sale Agreement, and the
Purchase and Sale Agreement shall not have been amended or modified, and no
condition shall have been waived or consent granted, in any respect that is
materially adverse to the Lenders or the Sole Lead Arranger without the Sole
Lead Arranger’s prior written consent; it being understood and agreed that
(w) any decrease in the Acquisition Consideration in excess of 10% that is not
accompanied by a dollar-for-dollar reduction in the Aggregate Commitment (but
only after giving effect to any required reduction of commitments under the
Bridge Facility), (x) any increase in Acquisition Consideration (other than any
such increase made pursuant to the terms of the Purchase and Sale Agreement in
excess of 10%), (y) any amendment or modification to, waiver of or consent under
Sections 5.10, 5.14, 6.4 (except for modifications to Exhibit G of the Purchase
and Sale Agreement contemplated by clause (z) below), 6.5 or 6.6 (as it relates
to the obligations under Sections 5.10 and 5.14 of the Purchase and Sale
Agreement only) of the Purchase and Sale Agreement or (z) any modification to
Exhibit G of the Purchase and Sale Agreement, or any consent letter
countersigned by Statoil USA Onshore Properties Inc. pursuant to Section 6.4(a)
of the Purchase and Sale Agreement, that contemplates the Buyer not seeking, or
relinquishing operatorships so that it would not hold, operatorship of
substantially all of the Acquired Assets, shall in each case be deemed to be a
modification that is materially adverse to the Lenders.
38
(j) Substantially concurrently with the Borrowing on the Closing Date, the
Borrower shall have received not less than $4,500,000,000 in gross proceeds from
(i) loans made pursuant to the Bridge Facility, (ii) any Permanent Financings
and (iii) Prepayment Dispositions (to the extent such proceeds from Prepayment
Dispositions have been applied by the Borrower to reduce the commitments under
the Bridge Facility).
ARTICLE V
Affirmative Covenants
Until the Aggregate Commitment has expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been paid
in full (other than indemnities and other contingent obligations not then due
and payable and as to which no claim has been made), the Borrower covenants and
agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. The Borrower will
furnish to the Administrative Agent for distribution to each Lender:
(a) As soon as available, but in any event in accordance with then-applicable
Requirements of Law and not later than 90 days after the close of each of its
fiscal years, audited consolidated financial statements of the Borrower and its
Subsidiaries for such fiscal year, including its consolidated balance sheet as
at the end of such fiscal year and related consolidated statements of income,
stockholders’ equity and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for (or, in the case of the balance sheet,
as of the end of) the previous fiscal year, and prepared in accordance with GAAP
and accompanied by an unqualified (as to going concern or the scope of the
audit) opinion of independent certified public accountants of recognized
standing, which opinion shall state that such audit was conducted in accordance
with generally accepted auditing standards and said financial statements fairly
present, in all material respects, the financial condition and results of
operation of the Borrower and its consolidated Subsidiaries on a consolidated
basis as at the end of, and for, such fiscal year in accordance with GAAP
consistently applied.
(b) As soon as available, but in any event in accordance with then-applicable
Requirements of Law and not later than 45 days after the close of each of the
first three fiscal quarters of each of its fiscal years, unaudited consolidated
financial statements of the Borrower and its Subsidiaries for such fiscal
quarter, including its consolidated unaudited balance sheets as at the end of
such fiscal quarter and related consolidated unaudited statements of income,
stockholders’ equity and cash flows for such fiscal quarter and the then-elapsed
portion of the fiscal year, setting forth in each case in comparative form the
figures for the corresponding period or periods of (or, in the case of the
balance sheet, as of the end of) the previous fiscal year, all certified by the
chief financial officer or chief accounting officer of the Borrower as
presenting fairly in all material respects the financial condition and results
of operations of the Borrower and its Subsidiaries on a consolidated basis as at
the end of, and for, the period covered thereby in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes.
(c) Simultaneously with the delivery of each set of financial statements
referred to in Sections 5.01(a) and 5.01(b), a certificate of the chief
financial officer or chief accounting officer of the Borrower in the form of
Exhibit F (i) setting forth in reasonable detail the calculations required to
39
establish whether the Borrower was in compliance with the requirements of
Section 6.05 as of the date of such financial statements and (ii) stating
whether there exists on the date of such certificate any Default or Event of
Default and, if any Default or Event of Default then exists, setting forth the
details thereof and the action which the Borrower is taking or proposes to take
with respect thereto.
(d) If, as of the last day of any fiscal period of the Borrower, (i) any of the
consolidated Subsidiaries of the Borrower have been designated as Unrestricted
Subsidiaries, then concurrently with any delivery of financial statements under
Section 5.01(a) or 5.01(b), as applicable, a certificate of a Financial Officer
setting forth consolidating spreadsheets that show all consolidated Unrestricted
Subsidiaries and the eliminating entries, and (ii) the Borrower does not have an
Investment Grade Rating, then concurrently with any delivery of financial
statements under Section 5.01(a) or 5.01(b), as applicable, a certificate of a
Financial Officer certifying that, except as disclosed in the Borrower’s filings
with the SEC, in the Borrower’s judgment, there are no actions at law or in
equity pending or, to the Knowledge of the Borrower, threatened involving the
(e) As soon as possible and in any event within ten (10) Business Days after the
Borrower has Knowledge that any of the events or conditions specified below has
occurred or exists with respect to any Plan or Multiemployer Plan, a statement,
signed by a Financial Officer, describing said event or condition and the action
which the Borrower or applicable member of the Controlled Group proposes to take
with respect thereto (and a copy of any report or notice required to be filed
with or given to the PBGC by the Borrower or applicable member of the Controlled
Group with respect to such event or condition):
(i) the occurrence of any Reportable Event with respect to any Plan, or any
waiver shall be requested under Section 412(c) of the Code for any Plan,
(ii) the distribution under Section 4041(c) of ERISA of a notice of intent to
terminate any Plan, or any action taken by the Borrower or any member of the
Controlled Group to terminate any Plan under Section 4041(c) of ERISA,
(iii) the institution by PBGC of proceedings under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by the Borrower or any member of the Controlled Group of a notice from
any Multiemployer Plan that such action has been taken by PBGC with respect to
such Multiemployer Plan,
(iv) the complete or partial withdrawal from a Multiemployer Plan by the
Borrower or any member of the Controlled Group that could reasonably be expected
to result in liability of the Borrower or such member under Section 4201 or 4204
of ERISA (including the obligation to satisfy secondary liability as a result of
a purchaser default) having a Material Adverse Effect, or the receipt by the
Borrower or any member of the Controlled Group of notice from a Multiemployer
Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245
of ERISA or that it intends to terminate or has terminated under Section 4041A
of ERISA,
(v) the institution of a proceeding by a fiduciary of any Multiemployer Plan
against the Borrower or any member of the Controlled Group to enforce
Section 515 of ERISA, which proceeding is not dismissed within 30 days, or
(vi) the adoption of an amendment to any Plan that would result in the loss of
tax exempt status of the trust of which such Plan is a part if the Borrower or
any member of the Controlled Group fails to timely provide security to the Plan
in accordance with the provisions of said Sections.
40
(f) Promptly upon the filing thereof, copies of all registration statements
(other than Form S-8 or any similar form) and annual (other than Form 11-K or
any similar form), quarterly, monthly or other regular reports which the
Borrower or any of its Subsidiaries files with the SEC.
(g) Promptly upon the furnishing thereof to all shareholders of the Borrower
generally, copies of all financial statements, reports and proxy statements so
furnished.
(h) Promptly upon receipt thereof, one copy of each written audit report
submitted to the Borrower or any Subsidiary by independent accountants resulting
from (i) any annual or interim audit submitted after the occurrence and during
the continuance of a Default or Event of Default and (ii) any special audit
submitted at any time, in each case, made by them of the books of the Borrower
or any Subsidiary.
(i) As soon as available and in any event not later than April 30 of each
calendar year, an audit report of the producing properties of the Borrower and
its Subsidiaries prepared by an independent firm of petroleum engineers (or
prepared internally by the Borrower and audited by an independent firm of
petroleum engineers) and in form, substance and detail as required by the SEC.
(j) Promptly, and in any event within five (5) Business Days after an Authorized
Officer obtains Knowledge thereof, notice of the occurrence of a Default or
Event of Default, specifying the nature thereof and what action the Borrower
proposes to take with respect thereto.
(k) Promptly, and in any event within ten (10) Business Days, after an
Authorized Officer obtains Knowledge thereof, the commencement of any
litigation, arbitration or governmental proceeding against the Borrower or any
Subsidiary which, in the opinion of the Borrower’s management, if adversely
determined, would have or would reasonably be expected to have a Material
Adverse Effect.
(l) Such other information (including nonfinancial information) as the
Administrative Agent or any Lender may from time to time reasonably request.
Documents or information required to be delivered or provided pursuant to
Section 5.01(a), (b), (e), (f) and (g) (to the extent any such documents or
information are included in materials otherwise filed with the SEC) may be
delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which the Borrower posts the materials containing
such documents or information, or provides a link thereto, on the Borrower’s
website on the Internet; or (ii) on which such documents are posted on the
Borrower’s behalf on an Internet or intranet website, if any, to which each
Lender has access (whether a commercial, third-party website or whether
sponsored by the Administrative Agent). Notwithstanding anything contained
herein, in every instance the Borrower shall be required to provide to the
Administrative Agent (whether by hand delivery, facsimile transmission or
electronic mail) copies of the certificates of the Borrower’s chief financial
officer or chief accounting officer required by Sections 5.01(b) and (c).
SECTION 5.02. Books and Records; Inspection Rights. The Borrower will, and will
cause each Restricted Subsidiary to, keep proper books and records in good order
in accordance with sound business practice and prepare its financial statements
in accordance with GAAP and permit the Administrative Agent or any Lender, at
its own expense, by its representatives and agents, to inspect any of the
properties, books and financial records of the Borrower and each Restricted
Subsidiary, to examine and make copies of the books of accounts and other
financial records of the Borrower and each Restricted
41
Subsidiary, and to discuss the affairs, finances and accounts of the Borrower
and each Restricted Subsidiary with, and to be advised as to the same by, their
respective officers at such reasonable times and intervals during regular
business hours as the Administrative Agent or such Lender may designate;
provided that such inquiry shall be limited to the purpose of evaluating the
Borrower’s financial condition or compliance with this Agreement.
SECTION 5.03. Conduct of Business; Existence. (a) The Borrower will, and will
cause each Restricted Subsidiary to, maintain as their principal business, taken
as a whole, the exploration, production, transportation, distribution,
refinement, processing, storage, marketing and gathering of oil and other
hydrocarbons and petroleum, and natural, synthetic or other gas and such
activities related, ancillary or incidental thereto.
(b) The Borrower will, and will cause each Restricted Subsidiary to, do or cause
to be done all things necessary to maintain, preserve and keep in full force and
effect (i) its existence and (ii) the rights, licenses, permits, privileges and
franchises necessary or desirable to the conduct of its business, except for any
failure to so maintain, preserve or keep in full force and effect the existence
of any Restricted Subsidiary or any item listed in clause (ii) that could not
foregoing shall not prohibit any merger, consolidation or sale of assets
permitted under Section 6.01.
SECTION 5.04. Maintenance of Insurance. The Borrower will, and will cause each
Subsidiary to, maintain insurance with reputable insurance companies or
associations in such forms and amounts and covering such risks as are customary
for companies of established reputation and similar size engaged in similar
businesses and owning and operating similar properties (including, without
limitation, by the maintenance of adequate self-insurance reserves to the extent
customary among such companies).
SECTION 5.05. Payment of Taxes and Other Obligations. The Borrower will, and
will cause each Subsidiary to, promptly pay and discharge all Taxes, assessments
and governmental charges or levies imposed upon the Borrower or such Subsidiary,
or upon or in respect of all or any part of the property and business of the
Borrower or such Subsidiary, and all due and payable claims for work, labor or
materials which, if unpaid, might become a Lien upon any property of the
Borrower or any Subsidiary (other than claims against any such Subsidiary in a
proceeding under any bankruptcy or similar law), except to the extent that
(a) the validity thereof shall concurrently be contested in good faith by
appropriate proceedings and the Borrower or such Subsidiary, as applicable,
shall have set aside on its books adequate reserves with respect thereto in
accordance with GAAP or (b) the failure to make such payment would not
SECTION 5.06. Compliance with Laws. The Borrower will, and will cause each
Restricted Subsidiary to, comply with (a) all Requirements of Law to which it
may be subject (other than those referred to in clause (b) below), including
(i) all provisions of ERISA which, if violated, might result in a Lien or charge
upon any property of the Borrower or any Restricted Subsidiary, (ii) all
material provisions of the Occupational Safety and Health Act of 1970 and the
rules and regulations thereunder and (iii) applicable Requirements of Law
relating to environmental standards or controls, except to the extent that
failure to maintain or comply with any of the foregoing, individually and in the
aggregate, could not reasonably be expected to have a Material Adverse Effect
and (b) the Patriot Act, Anti-Corruption Laws, Anti-Terrorism Laws and Sanctions
in all material respects. The Borrower will maintain in effect and enforce
policies and procedures designed to ensure compliance by the Borrower, its
Subsidiaries and their respective directors, officers, employees and agents with
Anti-Corruption Laws and applicable Sanctions.
42
SECTION 5.07. Maintenance of Properties. The Borrower will, and will cause each
Restricted Subsidiary to, do all things necessary to maintain, preserve, protect
and keep its properties (whether owned in fee or a leasehold interest) in good
repair, working order and condition (ordinary wear and tear excepted), and make
all necessary and proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at all times,
unless the Borrower determines in good faith that the continued maintenance of
any of its properties is no longer economically desirable or failure to so
maintain, preserve, protect or keep its properties could not reasonably be
SECTION 5.08. Use of Proceeds. The proceeds of the Loans will be used (i) to pay
a portion of the Acquisition Consideration and (ii) to pay the Transaction
Costs. No part of the proceeds of any Loan will be used, whether directly or
indirectly, for any purpose that entails a violation of any of the Regulations
of the Board, including Regulations T, U and X.
Unrestricted Subsidiaries as Restricted Subsidiaries.
(a) Unless designated as an Unrestricted Subsidiary pursuant to this
Section 5.09, each Specified Subsidiary shall be classified as a Restricted
Subsidiary.
(b) If the Borrower designates any Specified Subsidiary as an Unrestricted
Subsidiary pursuant to paragraph (c) below, the Borrower shall be deemed to have
made an Investment in such Unrestricted Subsidiary in an amount equal to the
fair market value as of the date of such designation of the consolidated assets
of such Subsidiary.
(c) The Borrower may designate, by written notice to the Administrative Agent,
any Specified Subsidiary to be an Unrestricted Subsidiary if (i) before and
after giving effect to such designation, no Default or Event of Default shall
exist, (ii) the Borrower shall be in pro forma compliance with the covenant
contained in Section 6.05 both before and after giving effect to such
designation, (iii) the deemed Investment by the Borrower in such Unrestricted
Subsidiary resulting from such designation would be permitted to be made at the
time of such designation under Section 6.06 and (iv) such Specified Subsidiary
otherwise meets the requirements set forth in the definition of “Unrestricted
Subsidiary”. Such written notice shall be accompanied by a certificate of a
Financial Officer, certifying as to the matters set forth in the preceding
sentence.
(d) The Borrower may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary if, after giving effect to such designation: (i) the representations
and warranties of the Borrower contained in each of the Loan Documents are true
representations and warranties that are qualified as to materiality in the text
thereof, such representations and warranties must be true and correct in all
respects) on and as of the date of such designation as if made on and as of the
date of such designation (or, if stated to have been made expressly as of an
earlier date, were true and correct in all material respects as of such date),
(ii) no Default or Event of Default would exist, (iii) any Indebtedness of such
Subsidiary (which shall be deemed to be incurred by a Restricted Subsidiary as
of the date of designation) is permitted to be incurred as of such date under
Section 6.03 and (iv) any Liens on Property of such Subsidiary (which shall be
deemed to be created or incurred by a Restricted Subsidiary as of the date of
designation) are permitted to be created or incurred as of such date under
Section 6.02.
(e) Notwithstanding the foregoing or anything to the contrary contained herein,
no Subsidiary Guarantor shall be an Unrestricted Subsidiary.
43
ARTICLE VI
Negative Covenants
of and interest on each Loan and all fees payable hereunder have been paid in
full (other than indemnities and other contingent obligations not then due and
SECTION 6.01. Fundamental Changes. The Borrower will not merge or consolidate
with or into any other Person, and the Borrower will not sell, convey, transfer,
lease or otherwise dispose of (whether in one transaction or a series of
transactions and whether directly or indirectly) all or substantially all of the
assets of the Borrower and its Restricted Subsidiaries on a consolidated basis;
provided that:
(a) the Borrower may merge or consolidate with any other Person so long as the
Borrower is the surviving entity in such merger or consolidation; and
(b) the Borrower may (x) merge or consolidate with any other solvent entity in a
transaction in which the Borrower is not the surviving entity or (y) sell,
convey, transfer, lease or otherwise dispose of all or substantially all of the
assets of the Borrower and its Restricted Subsidiaries on a consolidated basis
to any other solvent entity; provided that (i) the surviving, continuing,
resulting or transferee entity (the “Surviving Entity”) shall (A) expressly
assume by a written instrument reasonably satisfactory to the Administrative
Agent and the Lenders (which shall be provided with an opportunity to review and
comment upon such instrument prior to the consummation of any transaction) the
due and punctual payment of the principal of all Obligations and the due
performance and observance of all covenants, conditions and agreements on the
part of the Borrower under this Agreement, (B) deliver to the Administrative
Agent and the Lenders evidence of appropriate corporate authorization on the
part of the Surviving Entity with respect to such assumption and one or more
opinions of counsel, in form and substance reasonably satisfactory to the
Administrative Agent and the Lenders, to the effect that such written instrument
has been duly authorized, executed and delivered by such Surviving Entity and
constitutes a legal, valid and binding instrument enforceable against such
Surviving Entity in accordance with its terms, and covering such other matters
as the Administrative Agent and the Lenders may reasonably request, (C) have an
Investment Grade Rating from each of Moody’s and S&P and (D) be an entity
organized and existing under the laws of the United States of America or any
State thereof or the District of Columbia, and (ii) immediately after such
merger, consolidation, sale or other disposition, no Default or Event of Default
shall exist.
SECTION 6.02. Liens. The Borrower will not, and will not permit any Restricted
Subsidiary to, create, incur, assume or permit to exist any Lien on (a) any
Productive Property, (b) any Principal Transmission Facility or (c) any shares
of stock of any Subsidiary, except for the following (collectively, “Permitted
Liens”):
(a) Liens for taxes, assessments or governmental charges or levies on its
property if the same shall not at the time be delinquent or thereafter can be
paid without penalty or, provided the Borrower or any Restricted Subsidiary knew
or should have known of such Lien, are being actively contested in good faith
and by appropriate proceedings and for which adequate reserves shall have been
set aside on its books in accordance with GAAP;
44
(b) Liens imposed by law, such as carriers’, warehousemen’s, materialmen’s,
repairmen’s, operators’, royalty, surface damages and mechanics’ liens and other
similar liens, including Liens under operating agreements, joint venture
agreements, oil and gas partnership agreements, oil and gas leases, farm-out
agreements, division orders, contracts for the sale, transportation or exchange
of oil and natural gas, unitization and pooling declarations and agreements,
area of mutual interest agreements, overriding royalty agreements, gathering
agreements, marketing agreements, processing agreements, net profits agreements,
development agreements, gas balancing or deferred production agreements,
injection, repressuring and recycling agreements, salt water or other disposal
agreements, seismic or other geophysical permits or agreements, and other
agreements which are usual and customary in the oil and gas business, in each
case, arising in the ordinary course of business which secure payment of
obligations not more than 90 days past due or which are being contested in good
faith by appropriate proceedings;
(c) Liens incurred in the ordinary course of business (i) arising out of pledges
or deposits under workmen’s compensation laws, unemployment insurance, old age
pensions, or other social security or retirement benefits, or similar
legislation, (ii) to secure the performance of letters of credit, bids, tenders,
sales contracts, leases (including rent security deposits), statutory
obligations, surety, appeal and performance bonds, joint operating agreements or
other similar agreements and other similar obligations not incurred in
connection with the borrowing of money, the obtaining of advances or the payment
of the deferred purchase price of property or (iii) consisting of deposits which
secure public or statutory obligations of the Borrower or any Restricted
Subsidiary, or surety, custom or appeal bonds to which the Borrower or any
Restricted Subsidiary is a party, or the payment of contested taxes or import
duties of the Borrower or any Restricted Subsidiary;
(d) utility easements, building restrictions and such other encumbrances or
charges against real property as are of a nature generally existing with respect
to properties of a similar character and which do not in any material way affect
the marketability of the same or interfere with the use thereof in the business
of the Borrower or the Restricted Subsidiaries;
(e) Liens on drilling equipment and facilities in order to secure the financing
for the construction of such equipment and facilities not constructed as of the
date hereof; provided that such financing is not prohibited by Section 6.03;
(f) attachment, judgment and other similar Liens arising in connection with
court proceedings that would not constitute an Event of Default;
(g) Liens on property of a Restricted Subsidiary, provided such Liens secure
only obligations owing to the Borrower or a Wholly Owned Subsidiary;
(h) purchase money mortgages or other mortgages or other Liens on assets of the
Borrower or any Restricted Subsidiary securing Indebtedness hereafter incurred
by the Borrower or such Restricted Subsidiary for the acquisition of such
assets; provided that no such mortgage or other Lien shall extend to any other
property (unless such mortgage or Lien is permitted under another clause of this
Section 6.02) and the amount secured thereby shall not exceed the purchase price
of such asset plus interest, if any, accrued thereon and shall not be prohibited
by Section 6.03;
(i) Liens on property hereafter acquired (including shares of stock hereafter
acquired of any Person (including any Person in which the Borrower or any
Restricted Subsidiary already owns an interest)) existing at the time of
acquisition and liens assumed by the Borrower or a Restricted Subsidiary as a
result of a merger of another entity into the Borrower or a Restricted
Subsidiary or the acquisition by the Borrower or a Restricted Subsidiary of the
assets and liabilities of another entity, provided that in each case such Liens
shall not have been created in anticipation of such transaction;
45
(j) any right which any municipal or governmental body or agency may have by
virtue of any franchise, license, contract or statute to purchase, or designate
a purchaser of or order the sale of, any property of the Borrower or any
Restricted Subsidiary upon payment of reasonable compensation therefor or to
terminate any franchise, license or other rights or to regulate the property and
business of the Borrower or any Restricted Subsidiary;
(k) easements or reservations in respect of any property of the Borrower or any
Restricted Subsidiary for the purpose of rights-of-way and similar purposes,
reservations, restrictions, covenants, party wall agreements, conditions of
record and other encumbrances (other than to secure the payment of money) and
minor irregularities or deficiencies in the record and evidence of title, which
in the reasonable opinion of the Borrower (at the time of the acquisition of the
property affected or subsequently) will not interfere in any material way with
the proper operation and development of the property affected thereby;
(l) Liens existing on the date hereof and set forth on Schedule 6.02, and any
extensions, renewals and replacements thereof, so long as there is no increase
in the Indebtedness secured thereby (other than amounts incurred to pay costs of
renewal and replacement) and no additional property (other than accessions,
improvements and replacements in respect of such property) is subject to such
Lien;
(m) Liens on property to secure all or any part of the cost of construction,
alteration or repair of any building, equipment or other improvement on all or
any part of such property, including any pipeline, or to secure any Indebtedness
incurred prior to, at the time of, or within 360 days after, the completion of
such construction, alteration or repair to provide funds for the payment of all
or any part of such cost;
(n) rights of lessors under oil, gas or mineral leases arising in the ordinary
course of business;
(o) any extension, renewal or replacement (or successive extensions, renewals or
replacements), in whole or in part, of any Lien referred to in the foregoing
clauses; provided that the principal amount of Indebtedness secured thereby
shall not exceed the principal amount of Indebtedness so secured at the time of
such extension, renewal or replacement and such extension, renewal or
replacement Lien shall be limited to all or a part of the property which secured
the Lien so extended, renewed or replaced (plus improvements on such property);
(p) Liens which may hereafter be attached to undeveloped real estate not
containing oil or gas reserves presently owned by the Borrower in the ordinary
course of the Borrower’s real estate sales, development and rental activities;
(q) ground leases in respect of real property on which facilities owned or
leased by the Borrower or any of its Restricted Subsidiaries are located;
(r) any interest or title of a lessor under any lease entered into by the
Borrower or any Restricted Subsidiary in the ordinary course of its business and
covering only the assets so leased;
(s) Liens arising from precautionary UCC financing statements or similar filings
made in respect of operating leases;
46
(t) Liens encumbering reasonable customary initial deposits and margin deposits
and similar Liens attaching to commodity trading accounts or other brokerage
accounts incurred not for speculative purposes and in the ordinary course of
business;
(u) Liens on cash and cash equivalent in favor of, and letters of credit issued
for the benefit of, counterparties to Swap Agreements securing obligations under
such Swap Agreements;
(v) Liens (other than obligations for borrowed money) created pursuant to
construction, operating and maintenance agreements, transportation agreements
and other similar agreements and related documents entered in the ordinary
course of business;
(w) Liens that are contractual rights of set-off (i) relating to the
establishment of depository relations with banks not given in connection with
the issuance of Indebtedness, (ii) relating to pooled deposits or sweep accounts
to permit satisfaction of overdraft or similar obligations incurred in the
ordinary course of business or (iii) relating to purchase orders and other
agreements entered in the ordinary course of business;
(x) Liens not otherwise permitted by the foregoing clauses of this Section 6.02
securing Indebtedness of the Borrower or any of its Restricted Subsidiaries;
provided that, immediately after giving effect to the incurrence of any such
Liens, the sum of (i) the aggregate principal amount of all Indebtedness secured
by Liens permitted under this clause (x) and outstanding at such time, plus
(ii) the aggregate principal amount of all Indebtedness of Restricted
Subsidiaries incurred under Section 6.03(e) and outstanding at such time, shall
not exceed 15% of Consolidated Net Tangible Assets (measured at the time of
creation, incurrence or assumption of such Lien based upon the financial
statements most recently available prior to such date); and
(y) Liens not otherwise permitted by the foregoing clauses of this Section 6.02;
provided that at the time such Lien is created, the Obligations will be secured
pari passu with the Indebtedness or other obligations such Lien is securing
pursuant to documentation in form and substance satisfactory to the
Administrative Agent and the Lenders (drafts of which documentation shall be
furnished to the Administrative Agent and the Lenders sufficiently in advance to
provide the Administrative Agent and the Lenders with an opportunity to review
and comment thereon prior to the granting of any such Lien).
SECTION 6.03. Indebtedness of Subsidiaries. The Borrower will not permit any
Restricted Subsidiary to create, incur, assume or permit to exist any
Indebtedness, except:
(b) Indebtedness outstanding on the date hereof and set forth on Schedule 6.03
and renewals, extensions and refinancings thereof so long as the principal
amount of such Indebtedness is not increased (other than amounts incurred to pay
the costs of such extension, refinancing, renewal or replacement);
(c) Indebtedness owing to the Borrower or any Wholly-Owned Subsidiary;
(d) Indebtedness of any Subsidiary Guarantor; and
(e) other Indebtedness of any Restricted Subsidiary; provided that, immediately
after giving effect to the incurrence of any such Indebtedness pursuant to this
clause (e), the sum of (i) the
47
aggregate principal amount of all Indebtedness incurred pursuant to this clause
(e) and outstanding at such time, plus (ii) the aggregate principal amount of
all Indebtedness secured by Liens permitted under Section 6.02(x) and
outstanding at such time, shall not exceed 15% of Consolidated Net Tangible
Assets (measured as of the date of creation, incurrence or assumption thereof
based upon the financial statements most recently available prior to such date).
SECTION 6.04. Anti-Corruption Laws and Sanctions. The Borrower will not request
any Borrowing, and the Borrower shall not directly or indirectly use, and shall
procure that its Subsidiaries and its or their respective directors, officers,
employees and agents shall not directly or indirectly use, the proceeds of any
Borrowing (a) in furtherance of an offer, payment, promise to pay, or
authorization of the payment or giving of money, or anything else of value, to
any Person in violation of any Anti-Corruption Laws, (b) for the purpose of
funding, financing or facilitating any activities, business or transaction of or
with any Sanctioned Person, or in any Sanctioned Country, in violation of
applicable Sanctions at the time of such Borrowing, or (c) in any manner that
would result in the violation of any Sanctions at the time of such Borrowing.
SECTION 6.05. Financial Covenant. The Borrower will not permit the Debt to
Capitalization Ratio at any time to exceed 0.60 to 1.00.
SECTION 6.06. Investments in Unrestricted Subsidiaries. The Borrower will not,
and will not permit any Restricted Subsidiary to, make any Investment in any
Unrestricted Subsidiary unless (a) no Default or Event of Default shall have
occurred and be continuing before or after giving effect to such Investment,
(b) the Borrower shall be in pro forma compliance with the covenant set forth in
Section 6.05 both before and after giving effect to such Investment, and (c) the
amount of such Investment (measured as of the date such Investment is made based
upon the financial statements most recently available prior to such date),
together with the aggregate amount of all Investments made in Unrestricted
Subsidiaries since the Effective Date, shall not exceed an amount equal to 5% of
Consolidated Net Tangible Assets.
ARTICLE VII
Events of Default
SECTION 7.01. Events of Default. The occurrence of any of the following events
shall constitute an “Event of Default” under this Agreement and each of the
other Loan Documents:
(a) Representations and Warranties. Any representation or warranty made or
deemed made by or on behalf of the Borrower or any Subsidiary Guarantor to the
Administrative Agent or any Lender in this Agreement or any other Loan Document
or in any certificate, instrument or other document delivered in connection with
this Agreement or any other Loan Document shall prove to have been incorrect in
any material respect as of the date on which made or deemed made;
(b) Payment Default. The Borrower shall fail to pay (i) any principal of any
Loan payable by the Borrower when due or (ii) any interest, fee or other amount
(other than any amount referred to in clause (i) of this paragraph) payable by
the Borrower under this Agreement or any other Loan Document within five days
after the same becomes due;
(c) Breach of Certain Covenants. (i) The breach by the Borrower of any of the
terms or provisions of Section 5.01(j),
5.03(b) (with respect to the existence of the Borrower) or Article VI (other
than Section 6.02); or
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(ii) the breach by the Borrower of any of the terms or provisions of
Section 6.02 that is not remedied within 10 days after the earlier to occur of
(A) receipt by the Borrower of written notice of such breach from the
Administrative Agent and (B) an Authorized Officer otherwise becoming aware of
such breach;
(d) Other Breaches of the Loan Documents. The breach by the Borrower or any
Subsidiary Guarantor (other than a breach which constitutes an Event of Default
under clauses (a), (b) or (c) of this Article VII) of any term or provision of
this Agreement or any other Loan Document which is not remedied within 30 days
after the earlier to occur of (i) receipt by the Borrower of written notice of
such breach from the Administrative Agent and (ii) an Authorized Officer
otherwise becoming aware of such breach.
(e) ERISA. An event or condition specified in Section 5.01(e) shall occur or
exist with respect to any Plan or any Multiemployer Plan and, as a result of
such event or condition, together with all other such events or conditions then
outstanding, the Borrower or any member or the Controlled Group shall incur, or
shall be reasonably likely to incur, a liability that would have a Material
Adverse Effect;
(f) Cross-Default. Failure of the Borrower or any Restricted Subsidiary to pay
any Material Indebtedness when due (after giving effect to any period of grace
set forth in any agreement under which such Indebtedness was created or is
governed); or the default by the Borrower or any Restricted Subsidiary in the
performance of any other term, provision or condition contained in any agreement
under which any Material Indebtedness was created or is governed, the effect of
which is to cause, or to permit the holder or holders of such Material
Indebtedness to cause, such Indebtedness to become due prior to its stated
maturity; or any Material Indebtedness shall become due and payable or be
required to be prepaid (other than by a regularly scheduled payment) prior to
the stated maturity thereof;
(g) Voluntary Bankruptcy, etc. The Borrower or any Material Subsidiary shall
(i) not pay, or admit in writing its inability to pay, its debts generally as
they become due, (ii) make an assignment for the benefit of creditors,
(iii) apply for, seek, consent to, or acquiesce in, the appointment of a
receiver, custodian, trustee, examiner, liquidator or similar official for the
Borrower or such Material Subsidiary, (iv) institute any proceeding seeking an
order for relief under the Federal bankruptcy laws as now or hereafter in effect
or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or (v) take any action to authorize or
effect any of the foregoing actions set forth in this clause (g);
(h) Involuntary Bankruptcy, etc. Without the application, approval or consent of
the Borrower or the applicable Material Subsidiary, a receiver, trustee,
examiner, liquidator or similar official shall be appointed for the Borrower or
any Material Subsidiary, or a proceeding described in clause (g)(iv) above shall
be instituted against the Borrower or any Material Subsidiary and such
appointment continues undischarged or such proceeding continues undismissed or
unstayed for a period of 60 consecutive days;
(i) Judgments. The Borrower or any Material Subsidiary shall fail within 30 days
to pay, bond or otherwise discharge any final judgment or order for the payment
of money in excess of $100,000,000 (to the extent not covered by independent
third-party insurance as to which the applicable insurer has been notified of
such judgment and does not dispute coverage and is not subject to any insolvency
proceeding) which is not stayed on appeal, or any action shall be legally taken
by a judgment creditor to attach or levy upon any assets of the Borrower or such
Material Subsidiary to enforce any such judgment; and
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(j) Unenforceability of Certain Loan Documents. This Agreement, any Note or any
Subsidiary Guaranty shall fail to remain in full force or effect or any action
shall be taken to discontinue or to assert the invalidity or unenforceability
thereof, or the Borrower or any Subsidiary Guarantor that is a party to such
document shall deny that it has any further liability thereunder or shall give
notice to such effect, in each case other than as expressly permitted hereunder
or thereunder or upon satisfaction in full of all the Obligations.
SECTION 7.02. Acceleration. (a) If any Event of Default described in
Section 7.01(g) or (h) occurs with respect to the Borrower, the obligations of
the Lenders to make Loans hereunder shall automatically terminate, the
Obligations shall immediately become due and payable without any election or
action on the part of the Administrative Agent or any Lender. If any other Event
of Default occurs, the Required Lenders (or the Administrative Agent with the
consent of the Required Lenders) may terminate or suspend the obligations of the
Lenders to make Loans hereunder, or declare the Obligations to be due and
payable, or both, whereupon the Obligations shall become immediately due and
payable, without presentment, demand, protest or notice of any kind, all of
which the Borrower hereby expressly waives.
(b) If, within 30 days after acceleration of the maturity of the Obligations or
termination of the obligations of the Lenders to make Loans hereunder as a
result of any Event of Default (other than any Event of Default as described in
Section 7.01(g) or (h) with respect to the Borrower) and before any judgment or
decree for the payment of the Obligations due shall have been obtained or
entered, the Required Lenders (in their sole discretion) shall so direct, the
Administrative Agent shall, by notice to the Borrower, rescind and annul such
acceleration and/or termination.
ARTICLE VIII
The Administrative Agent
Each of the Lenders hereby irrevocably appoints the Administrative Agent as its
agent and authorizes the Administrative Agent to take such actions on its
behalf, including execution of the other Loan Documents, and to exercise such
powers as are delegated to the Administrative Agent by the terms of the Loan
Documents, together with such actions and powers as are reasonably incidental
thereto.
The bank serving as the Administrative Agent hereunder shall have the same
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to take
any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that the Administrative Agent is required to exercise in writing as directed by
the Required Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 9.02), (c) except as
expressly set forth in the Loan Documents, the Administrative Agent shall not
have any duty to disclose, and shall not be liable for the failure to disclose,
any information relating to the Borrower or any of its Subsidiaries that is
communicated to or obtained by the bank serving as Administrative Agent or any
of its Affiliates in any
50
capacity and (d) the Administrative Agent shall not be responsible or have any
liability for, or have any duty to ascertain, inquire into, monitor or enforce,
compliance with the provisions hereof relating to Disqualified Lenders; further,
without limiting the generality of the foregoing clause (d), the Administrative
Agent shall not (x) be obligated to ascertain, monitor or inquire as to whether
any Lender or Participant or prospective Lender or Participant is a Disqualified
Lender or (y) have any liability with respect to or arising out of any
assignment or participation of Loans, or disclosure of confidential information,
to any Disqualified Lender. The Administrative Agent shall not be liable for any
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 9.02) or in the absence
of its own gross negligence or willful misconduct. The Administrative Agent
shall be deemed not to have knowledge of any Default unless and until written
notice thereof is given to the Administrative Agent by the Borrower or a Lender,
and the Administrative Agent shall not be responsible for or have any duty to
or in connection with any Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or in connection with any Loan
Document, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth in any Loan Document, (iv) the
validity, enforceability, effectiveness or genuineness of any Loan Document or
any other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Article IV or elsewhere in any Loan Document, other than
to confirm receipt of items expressly required to be delivered to the
Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not incur any
relying thereon. The Administrative Agent may consult with legal counsel (who
The Administrative Agent may perform any and all its duties and exercise its
rights and powers by or through any one or more sub-agents appointed by the
perform any and all its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of the
The Administrative Agent may resign at any time by giving written notice thereof
to the Lenders and the Borrower, such resignation to be effective upon the
appointment of a successor Administrative Agent, or, if no successor
Administrative Agent has been appointed, 45 days after the retiring
Administrative Agent gives notice of its intention to resign. If the
Administrative Agent (i) has become the subject of a proceeding seeking an order
for relief under the Federal bankruptcy laws as now or hereafter in effect or
reorganization or relief of debtors, or (ii) has appointed for it, without the
application, approval or consent of the Administrative Agent, a receiver,
trustee, examiner, liquidator or similar official, or a proceeding described in
clause (i) above shall be instituted against the Administrative Agent, the
Administrative Agent may be removed by written notice received by the
Administrative Agent from the Required Lenders or the Borrower, such removal to
be effective on the date specified by the Required Lenders or the Borrower, as
applicable; provided that the Administrative
51
Agent may not be removed unless, on or prior to the date of such removal, the
Administrative Agent (in its individual capacity) acting as Lender is relieved
of all of its duties as Lender, pursuant to documentation reasonably
satisfactory to the Administrative Agent. Upon any resignation or removal of the
Administrative Agent, the Required Lenders shall have the right (with, so long
as no Event of Default under Section 7.01(b), Section 7.01(g) or Section 7.01(h)
exists, the consent of the Borrower, which shall not be unreasonably withheld)
to appoint, on behalf of the Borrower and the Lenders, a successor
appointed by the Required Lenders within 30 days after the resigning
Administrative Agent’s giving notice of its intention to resign, then the
resigning Administrative Agent may appoint, on behalf of the Borrower and the
Lenders, a successor Administrative Agent. Notwithstanding the previous
sentence, the Administrative Agent may at any time (without the consent of any
Lender but with, so long as no Event of Default under Section 7.01(b),
Section 7.01(g) or Section 7.01(h) exists, the consent of the Borrower, which
shall not be unreasonably withheld or delayed) appoint any of its Affiliates
which is a commercial bank as a successor Administrative Agent hereunder. If the
Administrative Agent has resigned or been removed and no successor
Administrative Agent has been appointed, the Lenders may perform all the duties
of the Administrative Agent hereunder and the Borrower shall make all payments
in respect of the Obligations to the applicable Lenders and for all other
purposes shall deal directly with the Lenders. No successor Administrative Agent
shall be deemed to be appointed hereunder until such Administrative Agent has
accepted the appointment. Any such successor Administrative Agent shall be a
commercial bank having capital and retained earnings of at least $100,000,000
and an office in New York, New York. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the resigning or removed
Administrative Agent. Upon the effectiveness of the resignation or removal of
the Administrative Agent, the resigning or removed Administrative Agent shall be
Documents. The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the Administrative Agent’s
resignation hereunder, the provisions of this Article and Section 9.03 shall
or omitted to be taken by any of them while it was acting as Administrative
Agent.
Each Lender acknowledges and agrees that the extensions of credit made hereunder
are commercial loans and not investments in a business enterprise or securities.
Each Lender further represents that it is engaged in making, acquiring or
holding commercial loans in the ordinary course of its business and has,
made its own credit analysis and decision to enter into this Agreement as a
Lender, and to make, acquire or hold Loans hereunder. Each Lender shall,
Lender and based on such documents and information (which may contain material,
non-public information within the meaning of the United States securities laws
concerning the Borrower and its Affiliates) as it shall from time to time deem
under or based upon this Agreement, any related agreement or any document
furnished hereunder or thereunder and in deciding whether or to the extent to
which it will continue as a lender or assign or otherwise transfer its rights,
interests and obligations hereunder.
The Lenders are not partners or co-venturers, and no Lender shall be liable for
the acts or omissions of, or (except as otherwise set forth herein in case of
the Administrative Agent) authorized to act for, any other Lender. The
Administrative Agent shall have the exclusive right on behalf of the Lenders to
enforce the payment of the principal of and interest on any Loan after the date
such principal or interest has become due and payable pursuant to the terms of
this Agreement.
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ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. (a) Except in the case of notices and other
communications expressly permitted to be given by telephone or electronic mail
(and subject to paragraph (b) below), all notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
facsimile, as follows:
(i) if to the Borrower, to it at 10000 Energy Drive, Spring, Texas 77389-4954,
Attention of the Chief Financial Officer (Facsimile No. (832) 796-4820;
Telephone No. (832) 796-6100);
(ii) if to the Administrative Agent, to Bank of America, N.A., 135 S. LaSalle
Street, Mail Code: IL4-135-09-61, Chicago, IL 60603, Attention of Gerund Gore
(Facsimile No. 312-453-3635; Telephone No. 312-992-8588), with a copy to Bank of
America, N.A., 700 Louisiana St., TX4-213-13-15, Houston, Texas, 77002-2700,
Attention of Raza Jafferi (Facsimile No. 713-247-7701) and Bank of America,
N.A., 101 N. Tryon Street, Charlotte, NC 28255, Attention of Libby Russell
(Facsimile No. 704-409-0004; Telephone No. 980-386-8451); and
(iii) if to any other Lender, to it at its address (or facsimile number) set
forth in its Administrative Questionnaire.
by facsimile shall be deemed to have been given when sent (except that, if not
recipient). Notices delivered through Electronic Systems, to the extent provided
in paragraph (b) below, shall be effective as provided in said paragraph (b).
(b) Notices and other communications to the Lenders hereunder may be delivered
or furnished by using Electronic Systems pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article II to any Lender if such Lender, has notified the
Administrative Agent that it is incapable of receiving notices under such
Article by electronic communication. The Administrative Agent or the Borrower
or communications.
written acknowledgement), and (ii) notices or communications posted to an
Internet or intranet website shall be deemed received upon the deemed receipt by
the intended recipient, at its e-mail address as described in the foregoing
clause (i), of notification that such notice or communication is available and
identifying the website address therefor; provided that, for both clauses
(i) and (ii) above, if such notice, email or other communication is not sent
during the normal business hours of the recipient, such notice or communication
shall be deemed to have been sent at the opening of business on the next
business day for the recipient.
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(c) Any party hereto may change its address, facsimile number or electronic mail
address for notices and other communications hereunder by notice to the other
parties hereto. All notices and other communications given to any party hereto
in accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.
(d) Electronic Systems.
(i) The Borrower agrees that the Administrative Agent may, but shall not be
obligated to, make Communications (as defined below) available to the Lenders by
posting the Communications on an Electronic System.
(ii) Any Electronic System used by the Administrative Agent is provided “as is”
and “as available.” The Agent Parties (as defined below) do not warrant the
adequacy of such Electronic Systems and expressly disclaim liability for errors
or omissions in the Communications. No warranty of any kind, express, implied or
statutory, including any warranty of merchantability, fitness for a particular
purpose, non-infringement of third-party rights or freedom from viruses or other
code defects, is made by any Agent Party in connection with the Communications
or any Electronic System. In no event shall the Administrative Agent or any of
its Related Parties (collectively, the “Agent Parties”) have any liability to
the Borrower or any Subsidiary Guarantor, any Lender or any other Person or
entity for damages of any kind, including direct or indirect, special,
incidental or consequential damages, losses or expenses (whether in tort,
contract or otherwise) arising out of the Borrower’s or the Administrative
Agent’s transmission of Communications through an Electronic System other than
to the extent such damages, losses or expenses are determined by a court of
the gross negligence or willful misconduct of such Agent Party. “Communications”
means, collectively, any notice, demand, communication, information, document or
other material provided by or on behalf of the Borrower or any Subsidiary
Guarantor pursuant to any Loan Document or the transactions contemplated therein
which is distributed by the Administrative Agent or any Lender by means of
electronic communications pursuant to this Section, including through an
Electronic System.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the Administrative
Agent or any Lender in exercising any right or power hereunder or under any
other Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent and the Lenders hereunder and under the
or any Subsidiary Guarantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) of this Section, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. Without limiting the generality of the foregoing, the making of
a Loan shall not be construed as a waiver of any Default, regardless of whether
the Administrative Agent or any Lender may have had notice or knowledge of such
Default at the time.
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reduce the rate of interest thereon, or reduce any fees payable hereunder,
without the written consent of each Lender directly affected thereby,
(excluding mandatory prepayments pursuant to Section 2.11(b) or
Section 2.11(c)), or any interest thereon, or any fees payable hereunder, or
reduce the amount of, waive or excuse any such payment, or postpone the
scheduled date of expiration of any Commitment, without the written consent of
each Lender directly affected thereby, (iv) change Section 2.18(b) or (d) in a
manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (v) change any of the provisions of
this Section or the definition of “Required Lenders” or any other provision
hereof specifying the number or percentage of Lenders required to waive, amend
or modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender, (vi) except as expressly
provided in Section 6.01(b), release the Borrower from its obligations as
Borrower under the Loan Documents without the written consent of each Lender,
(vii) except as provided in Section 9.15(b), release all or substantially all of
the Subsidiary Guarantors from their guarantee obligations under the Subsidiary
Guaranties or (viii) except to the extent expressly provided in Section 2.11(c),
amend, modify or waive any provision relating to a Change of Control Offer after
notice in respect of such Change of Control Offer has been delivered to the
Administrative Agent, without the written consent of each Lender; provided
further that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent hereunder without the prior written
consent of the Administrative Agent.
(c) Notwithstanding the foregoing, this Agreement and any other Loan Document
may be amended (or amended and restated) with the written consent of the
Required Lenders, the Administrative Agent and the Borrower (x) to add one or
more credit facilities to this Agreement and to permit extensions of credit from
time to time outstanding thereunder and the accrued interest and fees in respect
thereof to share ratably in the benefits of this Agreement and the other Loan
Documents with the Loans and the accrued interest and fees in respect thereof
and (y) to include appropriately the Lenders holding such credit facilities in
any determination of the Required Lenders and Lenders.
(d) If, in connection with any proposed amendment, waiver or consent requiring
the consent of “each Lender” or “each Lender directly affected thereby,” the
consent of the Required Lenders is obtained, but the consent of other necessary
Lenders is not obtained (any such Lender whose consent is necessary but not
obtained being referred to herein as a “Non-Consenting Lender”), then the
Borrower may elect to replace a Non-Consenting Lender as a Lender party to this
Agreement in accordance with Section 2.19(b).
(e) Notwithstanding anything to the contrary herein the Administrative Agent
may, with the consent of the Borrower only, amend, modify or supplement this
Agreement or any of the other Loan Documents to cure any ambiguity, omission,
mistake, defect or inconsistency.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay
(i) all reasonable out-of-pocket expenses incurred by the Administrative Agent
and the Sole Lead Arranger and their respective Affiliates (including the
reasonable fees, charges and disbursements of one primary counsel to the
Administrative Agent) in connection with the preparation, due diligence,
administration, syndication and distribution (including via an Electronic
System) of the credit facilities provided for herein, the preparation and
administration of this Agreement and the other Loan Documents or any amendments,
modifications or waivers of the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated) and (ii) all
out-of-pocket expenses incurred by the Administrative Agent or any Lender,
including the fees, charges and disbursements of any counsel for the
Administrative Agent or any Lender, in connection with the enforcement or
protection of its rights in connection with this Agreement and any other Loan
Document, including its rights under this Section, or in connection with the
Loans made hereunder, including all such out-of-pocket expenses incurred during
any workout, restructuring or negotiations in respect of such Loans.
55
(b) The Borrower shall indemnify the Administrative Agent, the Sole Lead
Arranger, each Lender, and each Related Party of any of the foregoing Persons
related expenses, including any reasonable legal expenses of one firm of counsel
for all Indemnitees, taken as a whole, and, if reasonably necessary, one firm of
local counsel in each appropriate jurisdiction and one firm of regulatory
counsel in each appropriate jurisdiction, in each case for the Indemnitees,
taken as a whole, and, in the case of an actual or perceived conflict of
interest (as reasonably determined by an indemnified party), one additional firm
of counsel in each relevant jurisdiction for the affected Indemnitees similarly
situated, taken as a whole, incurred by or asserted against any Indemnitee
delivery of any Loan Document or any agreement or instrument contemplated
thereby, the performance by the parties hereto of their respective obligations
thereunder or the consummation of the Transactions or any other transactions
contemplated hereby, (ii) any Loan or the use of the proceeds therefrom,
(iii) any actual or alleged presence or release of Hazardous Materials on or
from any property owned or operated by the Borrower or any of its Subsidiaries,
or any Environmental Liability related in any way to the Borrower or any of its
Subsidiaries, (iv) the Transactions or (v) any actual or prospective claim,
whether based on contract, tort or any other theory, whether brought by a third
party or by the Borrower or any of its Subsidiaries, and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from (x) the
gross negligence or willful misconduct of such Indemnitee, (y) any material
breach of the express obligations of such Indemnitee under the Loan Documents
pursuant to a claim initiated by the Borrower or any Subsidiary Guarantor or
(z) any dispute solely between or among Indemnitees (not arising as a result of
any act or omission by the Borrower or any of its Subsidiaries or Affiliates),
other than claims against any Lender in its capacity as, or in fulfilling its
role as, the Administrative Agent, Sole Lead Arranger or any similar role under
the Loan Documents. This Section 9.03(b) shall not apply with respect to Taxes
other than any Taxes that represent losses, claims or damages arising from any
non-Tax claim.
(c) To the extent that the Borrower fails to pay any amount required to be paid
by it to the Administrative Agent or any Lender, under paragraph (a) or (b) of
this Section, each Lender severally agrees to pay to the Administrative Agent
such Lender’s Applicable Percentage (determined as of the time that the
amount (it being understood that the Borrower’s failure to pay any such amount
shall not relieve the Borrower of any default in the payment thereof); provided
that the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against the
Administrative Agent or such Lender in its capacity as such.
(d) No Indemnitee shall be liable for any damages arising from the use by others
of information or other materials obtained through telecommunications,
electronic or other information transmission systems (including the Internet),
except to the extent that such damages have resulted from the willful
misconduct, bad faith or gross negligence of such Indemnitee (as determined by a
court of competent jurisdiction in a final, non-appealable judgment).
(e) To the extent permitted by applicable Requirements of Law, no party hereto
shall assert, or permit any of its Affiliates or Related Parties to assert, and
each party hereto hereby waives, any claim against each such other Person on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result
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of, this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby or thereby, the Transactions, any Loan or the use of the
proceeds thereof; provided that nothing contained in this paragraph (d) shall
limit the indemnification obligations of the Borrower set forth in paragraph
(b) of this Section 9.03, including the Borrower’s obligation to indemnify each
Indemnitee for special, indirect, consequential or punitive damages incurred by
or asserted against any Indemnitee arising out of, in connection with, or as a
result of the matters described in clauses (i), (ii) and (iii) of such paragraph
(b).
(f) All amounts due under this Section shall be payable not later than fifteen
(15) days after written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this Agreement shall
respective successors and assigns permitted hereby, except that (i) except as
expressly provided in Section 6.01, no Borrower may assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
each Lender (and, except as specified herein, any attempted assignment or
hereunder except in accordance with this Section. Nothing in this Agreement,
Participants (to the extent provided in paragraph (c) of this Section) and, to
the extent expressly contemplated hereby, the Related Parties of each of the
(b)(i) Subject to the conditions set forth in paragraph (b)(ii) below, (x) prior
to the Closing Date, any Lender may assign to one or more Persons (other than an
Ineligible Institution or a Disqualified Lender) no more than 49% (or such
greater amount as the Borrower shall approve in its sole and absolute
discretion) of its rights and obligations under this Agreement (including 49%
(or such greater amount) of its Commitments) and (y) after the Closing Date any
Lender may assign to one or more Persons (other than an Ineligible Institution
or a Disqualified Lender) all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Loans at the time owing to
it), in each case, with the prior written consent (such consent not to be
unreasonably withheld or delayed) of:
(A) the Borrower; provided that the Borrower shall be deemed to have consented
to any such assignment unless it shall object thereto by written notice to the
Administrative Agent within five (5) Business Days after having received notice
thereof; provided further that no consent of the Borrower shall be required if
an Event of Default under
Section 7.01(b), Section 7.01(g) or Section 7.01(h) has occurred and is
continuing; and
(B) the Administrative Agent;
provided that no consent of the parties above shall be required for an
assignment to an assignee that is a Lender, an Affiliate of a Lender, an
Approved Fund or a Permitted Assignee.
(ii) Assignments shall be subject to the following additional conditions:
(A) except in the case of an assignment to a Lender, an Affiliate of a Lender,
an Approved Fund or a Permitted Assignee or an assignment of the entire
remaining amount of the assigning Lender’s Commitment or Loans, the amount of
the Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such
57
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 unless each of the Borrower and the Administrative Agent otherwise
consent, provided that no such consent of the Borrower shall be required if an
Event of Default has occurred and is continuing;
(B) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement;
(C) the parties to each assignment shall execute and deliver to the
and recordation fee of $3,500, such fee to be paid by either the assigning
Lender or the assignee Lender or shared between such Lenders;
(D) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire in which the assignee
designates one or more credit contacts to whom all syndicate-level information
(which may contain material non-public information about the Borrower and its
affiliates and their Related Parties or their respective securities) will be
made available and who may receive such information in accordance with the
assignee’s compliance procedures and applicable Requirements of Law, including
Federal and state securities laws; and
(E) no assignment shall be permitted if, as of the date thereof, any event or
circumstance exists which would result in the Borrower being obligated to pay
any greater amount hereunder to the assignee than the Borrower is obligated to
pay to the assigning Lender.
For the purposes of this Section 9.04(b), the terms “Approved Fund”, “Ineligible
Institution” and “Permitted Assignee” have the following meanings:
“Approved Fund” means any Person (other than a natural person) that is engaged
in making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.
“Ineligible Institution” means (a) a natural person or (b) the Borrower, any of
its Subsidiaries or any of its Affiliates.
“Permitted Assignee” means those financial institutions party to the Existing
Credit Agreement on November 21, 2014 and such other financial institutions as
shall have been approved by the Borrower on or prior to such date.
(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv)
of this Section, from and after the effective date specified in each Assignment
and Assumption the assignee thereunder shall be a party hereto and, to the
extent of the interest assigned by such Assignment and Assumption, have the
rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of
Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a Lender of
rights or obligations
58
under this Agreement that does not comply with this Section 9.04 shall be
participation in such rights and obligations in accordance with paragraph (c) of
this Section.
(iv) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices a copy of each Assignment and
addresses of the Lenders, and the Commitment of, and principal amount (and
stated interest) of the Loans owing to, each Lender pursuant to the terms hereof
from time to time (the “Register”). The entries in the Register shall be
conclusive absent manifest error, and the Borrower, the Administrative Agent and
the Lenders shall treat each Person whose name is recorded in the Register
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register; provided that if
either the assigning Lender or the assignee shall have failed to make any
payment required to be made by it pursuant to Section 2.07(b), 2.18(e) or
9.03(c), the Administrative Agent shall have no obligation to accept such
Assignment and Assumption and record the information therein in the Register
unless and until such payment shall have been made in full, together with all
accrued interest thereon. No assignment shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
paragraph.
(c) Any Lender may, without the consent of the Borrower or the Administrative
Agent, sell participations to one or more banks or other entities (a
“Participant”), other than an Ineligible Institution or a Disqualified Lender,
in all or a portion of such Lender’s rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided that (A) such Lender’s obligations under this Agreement shall remain
unchanged; (B) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations; and (C) the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
described in the first proviso to Section 9.02(b) that affects such Participant.
The Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.15, 2.16 and 2.17 (subject to the requirements and limitations
therein, including the requirements under Section 2.17(f) (it being understood
that the documentation required under Section 2.17(f) shall be delivered to the
participating Lender)) to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section;
provided that such Participant (A) agrees to be subject to the provisions of
Sections 2.18 and 2.19 as if it were an assignee under paragraph (b) of this
Section; and (B) shall not be entitled to receive any greater payment under
Section 2.15 or 2.17, with respect to any participation, than its participating
Lender would have been entitled to receive, except to the extent such
entitlement to receive a greater payment results from a Change in Law that
occurs after the Participant acquired the applicable participation. To the
extent permitted by law, each Participant also shall be entitled to the
59
benefits of Section 9.08 as though it were a Lender, provided such Participant
agrees to be subject to Section 2.18(d) as though it were a Lender. Each Lender
that sells a participation shall, acting solely for this purpose as a
non-fiduciary agent of the Borrower, maintain a register on which it enters the
name and address of each Participant and the principal amounts (and stated
interest) of each Participant’s interest in the Loans or other obligations under
the Loan Documents (the “Participant Register”); provided that no Lender shall
have any obligation to disclose all or any portion of the Participant Register
(including the identity of any Participant or any information relating to a
Participant’s interest in any Commitments, Loans or its other obligations under
any Loan Document) to any Person except to the extent that such disclosure is
necessary to establish that such Commitment, Loan or other obligation is in
registered form under Section 5f.103-1(c) of the United States Treasury
Regulations. The entries in the Participant Register shall be conclusive absent
manifest error, and such Lender shall treat each Person whose name is recorded
(d) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to the Federal
Reserve Bank or other central banking authority, and this Section shall not
apply to any such pledge or assignment of a security interest; provided that no
such pledge or assignment of a security interest shall release a Lender from any
of its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
(e) Disqualified Lenders. (i) No assignment shall be made to any Person that was
a Disqualified Lender as of the date (the “Trade Date”) on which the assigning
Lender entered into a binding agreement to sell and assign all or a portion of
its rights and obligations under this Agreement to such Person (unless the
Borrower has consented to such assignment in its sole and absolute discretion in
which case such Person will not be considered a Disqualified Lender for the
purpose of such assignment). For the avoidance of doubt, with respect to any
assignee that becomes a Disqualified Lender after the applicable Trade Date
(including as a result of the delivery of a notice pursuant to the definition of
“Disqualified Lender”), (x) such assignee shall not retroactively be
disqualified from becoming a Lender and (y) the execution by the Borrower of an
Assignment and Assumption with respect to such assignee will not by itself
result in such assignee no longer being considered a Disqualified Lender. Any
assignment in violation of this clause (e)(i) shall not be void, but the other
provisions of this clause (e) shall apply.
(ii) If any assignment is made to any Disqualified Lender without the Borrower’s
prior consent in violation of clause (i) above, or if any Person becomes a
Disqualified Lender after the applicable Trade Date, the Borrower may, at its
sole expense and effort, upon notice to the applicable Disqualified Lender and
the Administrative Agent, (A) prepay outstanding Loans held by such Disqualified
Lender by paying the lesser of (x) the principal amount thereof and (y) the
amount that such Disqualified Lender paid to acquire such Loans, in each case
plus accrued interest, accrued fees and all other amounts (other than principal
amounts) payable to it hereunder and/or (B) require such Disqualified Lender to
assign, without recourse (in accordance with and subject to the restrictions
contained in this Section 9.04), all of its interest, rights and obligations
under this Agreement to one or more Persons at the lesser of (x) the principal
amount thereof and (y) the amount that such Disqualified Lender paid to acquire
such interests, rights and obligations, in each case plus accrued interest,
accrued fees and all other amounts (other than principal amounts) payable to it
hereunder.
(iii) Notwithstanding anything to the contrary contained in this Agreement,
Disqualified Lenders (A) will not (x) have the right to receive information,
reports or other materials provided to Lenders by the Borrower, the
Administrative Agent or any other Lender, (y) attend or
60
participate in meetings attended by the Lenders and the Administrative Agent, or
(z) access any electronic site established for the Lenders or confidential
communications from counsel to or financial advisors of the Administrative Agent
or the Lenders and (B) (x) for purposes of any consent to any amendment, waiver
or modification of, or any action under, and for the purpose of any direction to
the Administrative Agent or any Lender to undertake any action (or refrain from
taking any action) under this Agreement or any other Loan Document, each
Disqualified Lender will be deemed to have consented in the same proportion as
the Lenders that are not Disqualified Lenders consented to such matter, and
(y) for purposes of voting on any plan of reorganization or plan of liquidation
pursuant to any bankruptcy, insolvency or similar laws (a “Plan”), each
Disqualified Lender party hereto hereby agrees (1) not to vote on such Plan,
(2) if such Disqualified Institution does vote on such Plan notwithstanding the
restriction in the foregoing clause (1), such vote will be deemed not to be in
good faith and shall be “designated” pursuant to Section 1126(e) of the
Bankruptcy Code (or any similar provision in any other bankruptcy, insolvency or
similar laws), and such vote shall not be counted in determining whether the
applicable class has accepted or rejected such Plan in accordance with
Section 1126(c) of the Bankruptcy Code (or any similar provision in any other
bankruptcy, insolvency or similar laws) and (3) not to contest any request by
any party for a determination by the Bankruptcy Court (or other applicable court
of competent jurisdiction) effectuating the foregoing clause (2).
(iv) The Administrative Agent shall have the right, and the Borrower hereby
expressly authorizes the Administrative Agent, to (A) post the list of
Disqualified Lenders provided by the Borrower and any updates thereto from time
to time (collectively, the “DQ List”) on an Electronic System, including that
portion of the Electronic System that is designated for “public side” Lenders
and/or (B) provide the DQ List to each Lender requesting the same.
SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Borrower in the Loan Documents and in the certificates or
other instruments delivered in connection with or pursuant to this Agreement or
any other Loan Document shall be considered to have been relied upon by the
other parties hereto and shall survive the execution and delivery of the Loan
Documents and the making of any Loans, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
unpaid and so long as the Commitments have not expired or terminated. The
provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive
and remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Commitments or the termination of this Agreement or any other
SECTION 9.06. Counterparts; Integration; Effectiveness; Electronic Execution.
This Agreement may be executed in counterparts (and by different parties hereto
on different counterparts), each of which shall constitute an original, but all
of which when taken together shall constitute a single contract. This Agreement,
the other Loan Documents and any separate letter agreements with respect to fees
payable to the Administrative Agent constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
61
counterpart of a signature page of this Agreement by facsimile, e-mailed .pdf or
of this Agreement.
SECTION 9.07. Severability. Any provision of any Loan Document held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions thereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final and in whatever currency denominated) at any time held and other
obligations at any time owing by such Lender or Affiliate to or for the credit
or the account of the Borrower or any Subsidiary Guarantor against any of and
all of the Obligations held by such Lender, irrespective of whether or not such
Lender shall have made any demand under the Loan Documents and although such
obligations may be unmatured. Each Lender agrees to promptly notify the Borrower
and the Administrative Agent after any such setoff and application, provided
setoff and application. The rights of each Lender under this Section are in
addition to other rights and remedies (including other rights of setoff) which
such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the law
(b) The Borrower irrevocably and unconditionally agrees that it will not
commence any action, litigation or proceeding of any kind or description,
whether in law or equity, whether in contract or in tort or otherwise, against
any Credit Party or any Related Party of any Credit Party in any way relating to
this Agreement or any other Loan Document or the Transactions, in any forum
other than the Supreme Court of the State of New York sitting in New York
County, Borough of Manhattan, or the United States District Court for the
Southern District of New York, and any appellate court from any thereof, and any
appellate court from any thereof, and each of the parties hereto irrevocably and
unconditionally submits to the jurisdiction of such courts and agrees that all
claims in respect of any such action, litigation or proceeding may be heard and
determined in such New York State court or, to the extent permitted by
applicable law, in such Federal court. Each of the parties hereto agrees that a
final judgment in any such action, litigation or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law. Nothing in this Agreement or in any other Loan
Document shall affect any right that any Credit Party may otherwise have to
bring any action or proceeding relating to this Agreement or any other Loan
Document against the Borrower or any Subsidiary Guarantor or their properties in
the courts of any jurisdiction.
(c) Each party hereto hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any other Loan Document in any
court referred to in paragraph (b) of this Section. Each of the parties hereto
such court.
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(d) Each party hereto irrevocably consents to service of process in the manner
provided for notices in Section 9.01. Nothing in this Agreement or any other
Loan Document will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. (a) Each of the Administrative Agent and the
below), except that Information may be disclosed (i) to its and its Affiliates’
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (ii) to the extent requested
by any regulatory authority (including any self-regulatory authority, such as
the National Association of Insurance Commissioners) or as may be required by
applicable Requirements of Law or by any subpoena or similar legal process, in
which case such Person shall, except with respect to any audit or examination
conducted by bank accountants or any governmental or bank regulatory authority
exercising examination or regulatory authority, to the extent practicable and
not prohibited by applicable Requirements of Law, promptly notify the Borrower
in advance of such disclosure, (iii) to any other party to this Agreement,
(iv) in connection with the exercise of any remedies under this Agreement or any
other Loan Document or any suit, action or proceeding relating to this Agreement
or any other Loan Document or the enforcement of rights hereunder or thereunder,
(v) subject to an agreement containing provisions substantially the same as
those of this Section, to (A) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (B) any actual or prospective counterparty (or its
advisors) to any swap, derivative or securitization transaction relating to the
Borrower and its obligations, (vi) with the consent of the Borrower or (vii) to
the extent such Information (A) becomes publicly available other than as a
result of a breach of this Section or (B) becomes available to the
Administrative Agent or any Lender on a nonconfidential basis from a source
other than the Borrower. For the purposes of this Section, “Information” means
all information received from the Borrower relating to the Borrower, any
Subsidiary or any of their respective businesses, other than any such
information that is available to the Administrative Agent or any Lender on a
nonconfidential basis prior to disclosure by the Borrower; provided that, in the
case of information received from the Borrower after the date hereof, such
information is clearly identified at the time of delivery as confidential;
provided further that (notwithstanding the foregoing) no such nonpublic
information which contains projections or forecasts with respect to the Borrower
or any of its Affiliates shall be disclosed, disseminated or otherwise made
available pursuant to clause (vii) above. Any Person required to maintain the
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(b) ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY
THE BORROWER, ITS SUBSIDIARIES OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN
THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION,
WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER AND ITS
RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER
REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED
IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION
THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH APPLICABLE
REQUIREMENTS OF LAW.
SECTION 9.13. Electronic Execution of Assignments and Certain Other Documents.
The words “execution,” “execute”, “signed,” “signature,” and words of like
import in or related to any document to be signed in connection with this
Agreement and the transactions contemplated hereby (including without limitation
Assignment and Assumptions, amendments, Borrowing Requests or waivers and
consents) shall be deemed to include Electronic Signatures, the electronic
matching of assignment terms and contract formations on Electronic Systems
approved by the Administrative Agent, or the keeping of records in electronic
Act; provided that notwithstanding anything contained herein to the contrary the
Administrative Agent is under no obligation to agree to accept electronic
signatures in any form or in any format unless expressly agreed to by the
Administrative Agent pursuant to procedures approved by it.
SECTION 9.14. USA PATRIOT Act. Each Lender that is subject to the requirements
of the Patriot Act hereby notifies the Borrower and each Subsidiary Guarantor
that pursuant to the requirements of the Patriot Act, it is required to obtain,
verify and record information that identifies the Borrower and each Subsidiary
Guarantor, which information includes the name and address of the Borrower and
each Subsidiary Guarantor and other information that will allow such Lender to
identify the Borrower and each Subsidiary Guarantor in accordance with the
Patriot Act.
SECTION 9.15. Subsidiary Guarantors.
(a) The Borrower may, but is not required to, at any time upon five (5) Business
Days’ written notice to the Administrative Agent, cause any of its Restricted
Subsidiaries to become a Subsidiary Guarantor by causing such Restricted
Subsidiary to execute and deliver to the Administrative Agent a Subsidiary
Guaranty.
(b) So long as no Default or Event of Default has occurred and is continuing
under the Loan Documents (or would result from such release), (i) if all of the
capital stock of a Subsidiary Guarantor that is owned by the Borrower or a
Subsidiary is sold or otherwise disposed of in a transaction or transactions
permitted by this Agreement or (ii) in the event that, immediately after giving
effect to the release of any Subsidiary Guarantor’s Subsidiary Guaranty, all of
the Indebtedness of the Subsidiaries is permitted under Section 6.03 (assuming
for this purpose that all such Indebtedness is incurred at such time), then, in
each case, promptly following the Borrower’s request, the Administrative Agent
shall execute a release of such Subsidiary Guarantor from its Subsidiary
Guaranty. In connection with any
64
release pursuant to this Section, the Administrative Agent shall (and is hereby
irrevocably authorized by each Lender to) execute and deliver to the Borrower,
at the Borrower’s expense, all documents that the Borrower shall reasonably
request to evidence such termination or release. Any execution and delivery of
documents pursuant to this Section shall be without recourse to or warranty by
the Administrative Agent.
SECTION 9.16. Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts which are treated as interest on such Loan
under applicable Requirements of Law (collectively the “Charges”), shall exceed
the maximum lawful rate (the “Maximum Rate”) which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable Requirements of Law, the rate of interest payable in
respect of such Loan hereunder, together with all Charges payable in respect
thereof, shall be limited to the Maximum Rate and, to the extent lawful, the
interest and Charges that would have been payable in respect of such Loan but
were not payable as a result of the operation of this Section shall be cumulated
and the interest and Charges payable to such Lender in respect of other Loans or
periods shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Effective
Rate to the date of repayment, shall have been received by such Lender.
SECTION 9.17. No Advisory or Fiduciary Responsibility. In connection with all
aspects of each transaction contemplated hereby (including in connection with
any amendment, waiver or other modification hereof or of any other Loan
Document), the Borrower acknowledges and agrees that: (i) (A) the arranging and
other services regarding this Agreement provided by the Lenders are arm’s-length
commercial transactions between the Borrower and its Affiliates, on the one
hand, and the Lenders and their Affiliates, on the other hand, (B) the Borrower
has consulted its own legal, accounting, regulatory and tax advisors to the
extent it has deemed appropriate, and (C) the Borrower is capable of evaluating,
and understands and accepts, the terms, risks and conditions of the transactions
contemplated hereby and by the other Loan Documents; (ii) (A) each of the
Lenders and their Affiliates is and has been acting solely as a principal and,
not, and will not be acting as an advisor, agent or fiduciary for the Borrower
or any of its Affiliates, or any other Person and (B) no Lender or any of its
Affiliates has any obligation to the Borrower or any of its Affiliates with
respect to the transactions contemplated hereby except, in the case of a Lender,
those obligations expressly set forth herein and in the other Loan Documents;
and (iii) each of the Lenders and their respective Affiliates may be engaged in
the Borrower and its Affiliates, and no Lender or any of its Affiliates has any
obligation to disclose any of such interests to the Borrower or its Affiliates.
To the fullest extent permitted by law, the Borrower hereby waives and releases
any claims that it may have against each of the Lenders and their Affiliates
with respect to any breach or alleged breach of agency or fiduciary duty in
connection with any aspect of any transaction contemplated hereby.
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above written.
SOUTHWESTERN ENERGY COMPANY, as Borrower By
/s/ R. Craig Owen
Name: R. Craig Owen Title: Senior Vice President and Chief
Financial Officer
SIGNATURE PAGE TO TERM LOAN CREDIT AGREEMENT
BANK OF AMERICA, N.A., as Administrative Agent By
/s/ Denise Jones
Name: Denise Jones Title: Assistant Vice President
BANK OF AMERICA, N.A., as a Lender By
/s/ Raza Jafferi
Name: Raza Jafferi Title: Vice President
JPMORGAN CHASE BANK, N.A., as a Lender By
/s/ Muhammad Hasan
Name: Muhammad Hasan Title: Vice President
WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender By
/s/ Charles Randall
Name: Charles Randall Title: Managing Director
THE ROYAL BANK OF SCOTLAND PLC, as a Lender By
/s/ L. O’Connell
Name: L. O’Connell Title: Director By
/s/ R. Neville
Name: R. Neville Title: Director
CITIBANK, N.A., as a Lender By
/s/ Ivan Davey
Name: Ivan Davey Title: Vice President
BANK OF MONTREAL, as a Lender By
/s/ Melissa Guzmann
Name: Melissa Guzmann Title: Vice President
BANK OF TOKYO-MITSUBISHI UFJ, LTD.,
as a Lender
By
/s/ Mark Oberreuter
Name: Mark Oberreuter Title: Vice President
BNP PARIBAS, as a Lender By
/s/ Nicolas Rabier
Name: Nicolas Rabier Title: Managing Director By
/s/ Ade Adedeji
Name: Ade Adedeji Title: Vice President
MIZUHO BANK, LTD., as a Lender By
/s/ Leon Mo
Name: Leon Mo Title: Authorized Signatory
SUMITOMO MITSUI BANKING CORPORATION, as a Lender By
/s/ James D. Weinstein
Name: James D. Weinstein Title: Managing Director
COMPASS BANK, as a Lender By
/s/ Rhianna Disch
Name: Rhianna Disch Title: Vice President
CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK, as a Lender By
/s/ Dixon Schultz
Name: Dixon Schultz Title: Managing Director By
/s/ Michael Willis
Name: Michael Willis Title: Managing Director
ROYAL BANK OF CANADA, as a Lender By
/s/ Kristan Spivey
Name: Kristan Spivey Title: Authorized Signatory
BRANCH BANKING AND TRUST COMPANY,
as a Lender
By
/s/ DeVon J. Lang
Name: DeVon J. Lang Title: Vice President
CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK BRANCH, as a Lender By
/s/ Daria Mahoney
Name: Daria Mahoney Title: Authorized Signatory By
/s/ William M. Reid
Name: William M. Reid Title: Authorized Signatory
COMERICA BANK, as a Lender By
/s/ Devin S. Eaton
Name: Devin S. Eaton Title: Relationship Manager
DNB CAPITAL LLC, as a Lender By
/s/ Joe Hykle
Name: Joe Hykle Title: Senior Vice President By
/s/ Asulv Tveit
Name: Asulv Tveit Title: Vice President
FIFTH THIRD BANK, as a Lender By
/s/ Larry Hayes
Name: Larry Hayes Title: Director – Energy Finance
HSBC BANK USA, N.A., as a Lender By
/s/ Jay Fort
Name: Jay Fort Title: Senior Vice President
as a Lender
By
/s/ Tom Byargeon
Name: Tom Byargeon Title: Managing Director
US BANK National Association, as a Lender By
/s/ Patrick Jeffrey
Name: Patrick Jeffrey Title: Vice President
KEYBANK NATIONAL ASSOCIATION,
as a Lender
By
/s/ John Dravenstott
Name: John Dravenstott Title: Vice President
SOCIÉTÉ GÉNÉRALE, as a Lender By
/s/ Alexandre Huet
Name: Alexandre Huet Title: Managing Director
SCHEDULE 1.01A
COMMITMENTS
LENDER
COMMITMENT
$ 45,000,000
$ 40,000,000
$ 40,000,000
The Royal Bank of Scotland Finance (Ireland)
$ 40,000,000
Citibank, N.A.
$ 40,000,000
Bank of Montreal
$ 23,500,000
Bank of Tokyo-Mitsubishi UFJ, Ltd.
$ 23,500,000
BNP Paribas
$ 23,500,000
Mizuho Bank, Ltd.
$ 23,500,000
Sumitomo Mitsui Banking Corporation
$ 23,500,000
Compass Bank
$ 17,500,000
Crédit Agricole Corporate and Investment Bank
$ 17,500,000
Royal Bank of Canada
$ 17,500,000
Branch Banking and Trust Company
$ 12,500,000
Canadian Imperial Bank of Commerce, New York Branch
$ 12,500,000
Comerica Bank
$ 12,500,000
DNB Capital LLC
$ 12,500,000
Fifth Third Bank
$ 12,500,000
HSBC Bank USA, N.A.
$ 12,500,000
$ 12,500,000
U.S. Bank National Association
$ 12,500,000
KeyBank National Association
$ 12,500,000
Société Générale
$ 12,500,000
AGGREGATE COMMITMENT
$ 500,000,000
SCHEDULE 1.01B
PRICING SCHEDULE
Applicable
Rate
Level I
Status Level II
Status Level III
Status Level IV
Status Level V
Status
Eurodollar Margin
1.250 % 1.375 % 1.500 % 1.625 % 1.750 %
ABR Margin
0.250 % 0.375 % 0.500 % 0.625 % 0.750 %
For the purposes of this Schedule, the following terms have the following
meanings, subject to the final paragraph of this Schedule:
“Level I Status” exists at any date if, on such date, the Moody’s Rating is Baal
or better or the S&P Rating is BBB+ or better.
“Level II Status” exists at any date if, on such date, (i) the Borrower has not
qualified for Level I Status and (ii) the Moody’s Rating is Baa2 or better or
the S&P Rating is BBB or better.
“Level III Status” exists at any date if, on such date, (i) the Borrower has not
qualified for Level I Status or Level II Status and (ii) the Moody’s Rating is
Baa3 or better or the S&P Rating is BBB- or better.
“Level IV Status” exists at any date if, on such date, (i) the Borrower has not
qualified for Level I Status, Level II Status or Level III Status and (ii) the
Moody’s Rating is Bal or better or the S&P Rating is BB+ or better.
“Level V Status” exists at any date if, on such date, the Borrower has not
qualified for Level I Status, Level II Status, Level III Status or Level IV
Status.
“Moody’s Rating” means, at any time, the rating issued by Moody’s and then in
effect with respect to the Borrower’s senior unsecured debt rating.
“S&P Rating” means, at any time, the rating issued by S&P and then in effect
with respect to the Borrower’s long-term issuer credit rating.
“Status” means Level I Status, Level II Status, Level III Status, Level IV
Status or Level V Status.
The Applicable Rate shall be determined in accordance with the foregoing table
based on the Status based on the then-current Moody’s Rating and S&P Rating (the
“Public Debt Rating”). The credit rating in effect on any date for the purposes
of this Schedule is the credit rating in effect at the close of business on such
date. If at any time the Borrower has no Public Debt Rating, Level V Status
shall exist.
If the Borrower is split-rated and the ratings differential is one level, the
higher rating will apply. If the Borrower is split-rated and the ratings
differential is two levels or more, the rating next below the higher of the
split-ratings will apply. If the rating system of Moody’s or S&P shall change,
or if either such rating agency shall cease to be in the business of rating
corporate debt
obligations, the Borrower and the Lenders shall negotiate in good faith to amend
this definition to reflect such changed rating system or the unavailability of
ratings from such rating agency and, pending the effectiveness of any such
amendment, the Applicable Rate shall be determined by reference to the rating
most recently in effect prior to such change or cessation.
SCHEDULE 6.02
EXISTING LIENS
None.
SCHEDULE 6.03
EXISTING SUBSIDIARY INDEBTEDNESS
None.
EXHIBIT A
ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (the “Assignment and Assumption”) is dated as of
meanings given to them in the Credit Agreement identified below (as the same may
“Credit Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto
are hereby agreed to and incorporated herein by reference and made a part of
this Assignment and Assumption as if set forth herein in full.
obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of the Assignor under the respective facilities
identified below (including any guarantees included in such facilities) and
(ii) to the extent permitted to be assigned under applicable law, all claims,
suits, causes of action and any other right of the Assignor (in its capacity as
a Lender) against any Person, whether known or unknown, arising under or in
connection with the Credit Agreement, any other documents or instruments
delivered pursuant thereto or the loan transactions governed thereby or in any
way based on or related to any of the foregoing, including contract claims, tort
claims, malpractice claims, statutory claims and all other claims at law or in
equity related to the rights and obligations sold and assigned pursuant to
clause (i) above (the rights and obligations sold and assigned pursuant to
clauses (i) and (ii) above being referred to herein collectively as the
“Assigned Interest”). Such sale and assignment is without recourse to the
without representation or warranty by the Assignor.
1. Assignor:
2. Assignee:
[and is [a Lender][an Affiliate/Approved Fund of [identify
Lender]][Permitted Assignee]] 1
3. Borrower:
Southwestern Energy Company
4. Administrative Agent:
Bank of America, N.A., as the administrative agent under the Credit Agreement
5. Credit Agreement:
The Term Loan Credit Agreement dated as of December 19, 2014 among
Southwestern Energy Company, the Lenders party thereto and Bank of America,
N.A., as Administrative Agent
1 Select as applicable.
Exhibit A, Page 1
Aggregate Amount of
Commitment/Loans for all
Lenders
Amount of
Commitment/
Loans Assigned
Percentage Assigned
of
Commitment/Loans2
$
$ %
$
$ %
$
$ %
Effective Date: , 20 [TO BE INSERTED BY THE ADMINISTRATIVE
REGISTER THEREFOR.]
ASSIGNOR
By:
Name:
Title:
ASSIGNEE [NAME OF ASSIGNEE] By:
Name:
Title:
2 Set forth, to at least 8 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.
Exhibit A, Page 2
Consented to3 and Accepted:
BANK OF AMERICA, N.A., as Administrative Agent By:
Name:
Title:
[Consented to:]4 SOUTHWESTERN ENERGY COMPANY By:
Name:
Title:
3 No consent from the Administrative Agent or the Borrower is required for an
4 To be added only when the consent of the Borrower is required by Section
9.04(b)(i)(A) of the Credit Agreement.
Exhibit A, Page 3
ANNEX I
ASSIGNMENT AND ASSUMPTION
hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the
requirements, if any, specified in the Credit Agreement that are required to be
satisfied by it in order to acquire the Assigned Interest and become a Lender,
(iii) from and after the Effective Date, it shall be bound by the provisions of
the Credit Agreement as a Lender thereunder and, to the extent of the Assigned
financial statements delivered pursuant to Section 5.01 thereof, as applicable,
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase the Assigned Interest on the basis of which it has
made such analysis and decision independently and without reliance on the
Administrative Agent or any other Lender, and (v) if it is a Foreign Lender,
attached to the Assignment and Assumption is any documentation required to be
delivered by it pursuant to the terms of the Credit Agreement, duly completed
and executed by the Assignee; and (b) agrees that (i) it will, independently and
without reliance on the Administrative Agent, the Assignor or any other Lender,
and based on such documents and information as it shall deem appropriate at the
principal, interest, fees and other amounts) to the Assignor for amounts which
have accrued to but excluding the Effective Date and to the Assignee for amounts
which have accrued from and after the Effective Date.
counterparts, which together shall constitute one instrument. Acceptance and
adoption of the terms of this Assignment and Assumption by the Assignee and the
Assignor by Electronic Signature or delivery of an executed counterpart of a
signature page of this Assignment and Assumption by any Electronic System shall
be effective as
Annex I to Exhibit A, Page 1
delivery of a manually executed counterpart of this Assignment and Assumption.
This Assignment and Assumption shall be governed by, and construed in accordance
with, the law of the State of New York.
Annex I to Exhibit A, Page 2
EXHIBIT B
FORM OF SUBSIDIARY GUARANTY
THIS SUBSIDIARY GUARANTY (this “Guaranty”) is made as of [ ]
by [ ], a [ ] (together with any other
entity that may from time to time become party hereto by signing a counterpart
hereof, collectively the “Subsidiary Guarantors” and each a “Subsidiary
Guarantor”), in favor of Bank of America, N.A., a national banking association,
as administrative agent (in such capacity, the “Administrative Agent”).
WITNESSETH:
WHEREAS, Southwestern Energy Company, a Delaware corporation (the “Borrower”),
various financial institutions (the “Lenders”) and the Administrative Agent have
entered into a Term Loan Credit Agreement dated as of December 19, 2014 (as the
same may be amended, restated or otherwise modified from time to time, the
“Credit Agreement”), providing, subject to the terms and conditions thereof, for
an extension of credit to be made by the Lenders to the Borrower;
WHEREAS, the Borrower desires that the Subsidiary Guarantors execute and deliver
this Guaranty pursuant to Section 9.15 of the Credit Agreement; and
WHEREAS, in consideration of the financial and other support that the Borrower
has provided, and such financial and other support as the Borrower may in the
future provide, to the Subsidiary Guarantors, and because each Subsidiary
Guarantor has determined that executing this Guaranty is in its interest and to
its financial benefit, each of the Subsidiary Guarantors is willing to guarantee
the obligations of the Borrower under the Credit Agreement and other Loan
Documents;
SECTION 1. Credit Agreement Definitions. Capitalized terms used herein but not
defined herein shall have the respective meanings set forth in the Credit
Agreement.
SECTION 2. Representations and Warranties. Each Subsidiary Guarantor represents
and warrants that (a) as of the date hereof, each of the representations and
warranties in the Credit Agreement and the other Loan Documents, insofar as they
relate to such Subsidiary Guarantor, are true and correct in all respects
(except to the extent such representations and warranties relate solely to an
earlier date) and (b) such Subsidiary Guarantor will derive substantial direct
or indirect benefits from the extension of credit to the Borrower provided for
under the Credit Agreement.
SECTION 3. The Guaranty. Subject to Section 9 hereof, each Subsidiary Guarantor
hereby absolutely and unconditionally guarantees, jointly with the other
Subsidiary Guarantors and severally, as primary obligor and not as merely
surety, the full and punctual payment and performance when due (whether at
stated maturity, upon acceleration or early termination or otherwise, and at all
times thereafter) of all of the Obligations (hereafter referred to as
“Guaranteed Obligations”). Upon failure by the Borrower to pay punctually any of
the Guaranteed Obligations, each Subsidiary Guarantor agrees that it shall
forthwith on written demand pay to the Administrative Agent the amount not so
paid at the place and in the manner specified in the Credit Agreement. This
Guaranty is a guaranty of payment and not of collection. Each Subsidiary
Guarantor waives any right to require the Administrative Agent or any Lender to
attempt to collect from, or to sue the Borrower, any other guarantor, or any
other person obligated for all or any part of the Guaranteed Obligations.
Exhibit B, Page 1
SECTION 4. Guaranty Unconditional. Subject to Sections 9 and 11 hereof, the
obligations of each Subsidiary Guarantor hereunder shall be unconditional and
absolute and, without limiting the generality of the foregoing, shall not be
released, discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or release in
respect of any of the Guaranteed Obligations, by operation of law or otherwise,
or any obligation of any other guarantor of any of the Guaranteed Obligations,
or any default, failure or delay, willful or otherwise, in the payment or
performance of the Guaranteed Obligations;
(ii) any modification or amendment of, supplement to or waiver under the
Credit Agreement or any other Loan Document or any waiver under any of the
foregoing;
(iii) any release, nonperfection or invalidity of any direct or indirect
security for any obligation of the Borrower under the Credit Agreement or any
other Loan Document or any obligation of any other guarantor of any of the
Guaranteed Obligations;
(iv) any change in the corporate, partnership or other existence, structure or
ownership of the Borrower or any other guarantor of any of the Guaranteed
Obligations, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting the Borrower or any other guarantor of the Guaranteed
Obligations, or the assets of any of the foregoing, or any resulting release or
discharge of any obligation of the Borrower or any other guarantor of any of the
Guaranteed Obligations;
(v) the existence of any claim, setoff or other right which such Subsidiary
Guarantor may have at any time against the Borrower, any other guarantor of any
of the Guaranteed Obligations, any Credit Party or any other Person, whether in
connection herewith or any unrelated transaction;
(vi) any invalidity or unenforceability relating to or against the Borrower,
or any other guarantor of any of the Guaranteed Obligations, for any reason
related to the Credit Agreement or any other Loan Document, or any Requirement
of Law purporting to prohibit the payment by the Borrower, or any other
guarantor of the Guaranteed Obligations of the principal of or interest on the
Notes or any other amount payable by the Borrower under the Credit Agreement or
any other Loan Document; or
(vii) any other act or omission to act or delay of any kind by the Borrower,
any other guarantor of the Guaranteed Obligations, any Credit Party or any other
Person or any other circumstance whatsoever which might, but for the provisions
of this paragraph, constitute a legal or equitable discharge of such Subsidiary
Guarantor’s obligations hereunder, except as provided in Section 5.
SECTION 5. Discharge Only Upon Payment In Full; Reinstatement In Certain
Circumstances. Each Subsidiary Guarantor’s obligations hereunder shall remain in
full force and effect until all Guaranteed Obligations shall have been
indefeasibly paid in full and the Aggregate Commitment shall have terminated or
expired. If at any time any payment of the principal of or interest on the Notes
or any other amount payable by the Borrower under the Credit Agreement or any
other Loan Document, or by any Subsidiary Guarantor hereunder, is rescinded or
must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of the Borrower or otherwise, each Subsidiary Guarantor’s
obligations hereunder with respect to such payment shall be reinstated as though
such payment had been due but not made at such time.
Exhibit B, Page 2
SECTION 6. Waivers. Each Subsidiary Guarantor irrevocably waives acceptance
hereof, presentment, demand, protest and, to the fullest extent permitted by
law, any notice not provided for herein, as well as any requirement that at any
time any action be taken by any Person against the Borrower, any other guarantor
of any of the Guaranteed Obligations or any other Person.
SECTION 7. Subrogation. Each Subsidiary Guarantor hereby agrees not to assert
any right, claim or cause of action, including, without limitation, a claim for
subrogation, reimbursement, indemnification or otherwise, against the Borrower
arising out of or by reason of this Guaranty or the obligations hereunder,
including, without limitation, the payment or securing or purchasing of any of
the Guaranteed Obligations by any of the Subsidiary Guarantors, unless and until
the Guaranteed Obligations are indefeasibly paid in full and the Aggregate
Commitment has terminated.
SECTION 8. Stay of Acceleration. If acceleration of the time for payment of any
of the Guaranteed Obligations is stayed upon the insolvency, bankruptcy or
reorganization of the Borrower, all such amounts otherwise subject to
acceleration under the terms of the Credit Agreement or any other Loan Document
shall nonetheless be payable by each of the Subsidiary Guarantors hereunder
forthwith on demand by the Administrative Agent.
SECTION 9. Limitation on Obligations.
(a) The provisions of this Guaranty are severable, and in any action or
proceeding involving any state corporate law, or any state, federal or foreign
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of any Subsidiary Guarantor under this
Guaranty would otherwise be held or determined to be avoidable, invalid or
unenforceable on account of the amount of such Subsidiary Guarantor’s liability
under this Guaranty, then, notwithstanding any other provision of this Guaranty
to the contrary, the amount of such liability shall, without any further action
by any Subsidiary Guarantor, the Administrative Agent or any other Credit Party,
be automatically limited and reduced to the highest amount that is valid and
enforceable as determined in such action or proceeding (such highest amount
determined hereunder being the relevant Subsidiary Guarantor’s “Maximum
Liability”). This Section 9(a) with respect to the Maximum Liability of the
Subsidiary Guarantors is intended solely to preserve the rights of the
Administrative Agent and the Lenders hereunder to the maximum extent not subject
to avoidance under applicable law, and neither a Subsidiary Guarantor nor any
other Person shall have any right or claim under this Section 9(a) with respect
to the Maximum Liability, except to the extent necessary so that the obligations
of each Subsidiary Guarantor hereunder shall not be rendered voidable under
applicable law.
(b) Each Subsidiary Guarantor agrees that the Guaranteed Obligations may at any
time and from time to time exceed the Maximum Liability of such Subsidiary
Guarantor, and may exceed the aggregate Maximum Liability of all other
Subsidiary Guarantors, without impairing this Guaranty or affecting the rights
and remedies of the Administrative Agent hereunder. Nothing in this Section 9(b)
shall be construed to increase any Subsidiary Guarantor’s obligations hereunder
beyond its Maximum Liability.
(c) If any Subsidiary Guarantor (a “Paying Subsidiary Guarantor”) shall make any
payment or payments under this Guaranty, each other Subsidiary Guarantor (each a
“Non-Paying Subsidiary Guarantor”) shall contribute to such Paying Subsidiary
Guarantor an amount equal to such Non-Paying Subsidiary Guarantor’s “Pro Rata
Share” of such payment or payments made by such Paying Subsidiary Guarantor. For
the purposes hereof, each Non-Paying Subsidiary Guarantor’s “Pro Rata Share”
with respect to any such payment by a Paying Subsidiary Guarantor shall be
determined as of the date on which such payment was made by reference to
Exhibit B, Page 3
the ratio of (i) such Non-Paying Subsidiary Guarantor’s Allocable Amount (as
defined below) to (ii) the sum of the Allocable Amounts of all Subsidiary
Guarantors hereunder (including such Paying Subsidiary Guarantor) (as determined
immediately prior to the making of such payment or payments). As of any date of
determination, the “Allocable Amount” of any Subsidiary Guarantor shall be equal
to the excess of the fair saleable value of the property of such Subsidiary
Guarantor over the total liabilities of such Subsidiary Guarantor (including the
maximum amount reasonably expected to become due in respect of contingent
liabilities, calculated, without duplication, assuming each other Subsidiary
Guarantor that is also liable for such contingent liability pays its ratable
share thereof), giving effect to all payments made by other Subsidiary
Guarantors as of such date in a manner to maximize the amount of such
contributions. Nothing in this Section 9(c) shall affect any Subsidiary
Guarantor’s several liability for the entire amount of the Guaranteed
Obligations (up to such Subsidiary Guarantor’s Maximum Liability). Each
Subsidiary Guarantor covenants and agrees that its right to receive any
contribution under this Guaranty from a Non-Paying Subsidiary Guarantor shall be
subordinate and junior in right of payment to all the Guaranteed Obligations.
The provisions of this Section 9(c) are for the benefit of the Credit Parties
and the Subsidiary Guarantors and may be enforced by any of them in accordance
with the terms hereof.
SECTION 10. Application of Payments. All payments received by the Administrative
Agent hereunder shall be applied by the Administrative Agent to payment of the
Guaranteed Obligations in the following order unless a court of competent
jurisdiction shall otherwise direct:
(a) FIRST, to payment of all out-of-pocket expenses of the Administrative Agent
incurred in connection with the collection and enforcement of the Guaranteed
Obligations;
(b) SECOND, to payment of that portion of the Guaranteed Obligations
constituting accrued and unpaid interest and fees; and
(c) THIRD, to payment of any other Guaranteed Obligations.
SECTION 11. Release of Guarantor. Notwithstanding anything to the contrary
herein, a Subsidiary Guarantor will be unconditionally and absolutely released
and discharged from its obligations under this Guaranty upon the delivery by the
Administrative Agent of documentation providing for such release following a
valid request under Section 9.15(b) of the Credit Agreement.
SECTION 12. Notices. Any notice or communication required or permitted hereunder
shall be given as provided in Section 9.01 of the Credit Agreement, addressed
(a) to the Administrative Agent at the address listed in Section 9.01(a)(ii) of
the Credit Agreement and (b) to each Subsidiary Guarantor at the address set
forth under its name on the signature pages hereto (or to any Subsidiary
Guaranty Supplement (as defined below)) or to such other address or to the
attention of such other Person as hereafter shall be designated in writing by
the applicable party sent in accordance herewith.
SECTION 13. No Waivers. No failure or delay by the Administrative Agent in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
The rights and remedies provided in this Guaranty, the Credit Agreement and the
other Loan Documents shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 14. No Duty to Advise. Each Subsidiary Guarantor assumes all
responsibility for being and keeping itself informed of the Borrower’s financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Guaranteed Obligations and the nature, scope
Exhibit B, Page 4
and extent of the risks that such Subsidiary Guarantor assumes and incurs under
this Guaranty, and agrees that the Administrative Agent does not have any duty
to advise such Subsidiary Guarantor of information known to it regarding those
circumstances or risks.
SECTION 15. Successors and Assigns. No Subsidiary Guarantor may assign or
delegate any of its rights or obligations hereunder, but this Guaranty and such
obligations shall be fully binding upon the successors of such Subsidiary
Guarantor, as well as such Subsidiary Guarantor. This Guaranty shall apply to
and inure to the benefit of each Credit Party and its successors and permitted
assigns. Without limiting the generality of the immediately preceding sentence,
each Credit Party may, to the extent and in the manner provided for in
Section 9.04 of the Credit Agreement, assign, grant a participation in, or
otherwise transfer any of the Guaranteed Obligations held by it or any portion
thereof, and each Credit Party may, to the extent and in the manner provided for
in the Credit Agreement, assign or otherwise transfer all or a portion of its
rights and obligations under the Credit Agreement (including all or a portion of
its Commitments and the Loans at the time owing to it) to any other Person, and
such other Person shall thereupon become entitled to all of the benefits in
respect thereof granted to such Credit Party hereunder.
SECTION 16. Changes in Writing Amendments, Etc. No amendment of any provision of
this Guaranty shall be effective unless it is in writing and signed by each
Subsidiary Guarantor and the Administrative Agent, and no waiver of any
provision of this Guaranty, and no consent to any departure by any Subsidiary
Guarantor therefrom, shall be effective unless it is in writing and signed by
the Administrative Agent, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. In
addition, all such amendments and waivers shall be effective only if given with
the necessary approvals of the Lenders as required under the Credit Agreement.
SECTION 17. Costs of Enforcement. Each Subsidiary Guarantor agrees to pay all
out-of-pocket expenses, including, without limitation, all court costs and
attorneys’ fees and expenses, paid or incurred by the Administrative Agent in
endeavoring to collect all or any part of the Guaranteed Obligations from, or in
prosecuting any action against, the Borrower, such Subsidiary Guarantor or any
other guarantor of all or any part of the Guaranteed Obligations.
SECTION 18. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
(A) THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK. (B) EACH SUBSIDIARY GUARANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE
JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK
COUNTY, BOROUGH OF MANHATTAN, AND OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT, OR FOR
HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR,
TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES
HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS GUARANTY OR ANY OTHER LOAN
DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY LENDER MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS GUARANTY OR
ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ANY SUBSIDIARY GUARANTOR OR ITS
Exhibit B, Page 5
PROPERTIES IN THE COURTS OF ANY JURISDICTION. (C) EACH SUBSIDIARY GUARANTOR
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY
LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN
PARAGRAPH (B) OF THIS SECTION. (D) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(E) EACH PARTY TO THIS GUARANTY IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN
THE MANNER PROVIDED FOR NOTICES IN SECTION 12. NOTHING IN THIS GUARANTY OR ANY
OTHER LOAN DOCUMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS GUARANTY TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. (F) WAIVER OF JURY TRIAL. EACH
PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY, ANY OTHER LOAN DOCUMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (1) CERTIFIES THAT NO
TO ENFORCE THE FOREGOING WAIVER AND (2) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTY BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 19. Taxes. etc. All payments required to be made by any of the
Subsidiary Guarantors hereunder shall be made without setoff or counterclaim and
free and clear of and without deduction or withholding for or on account of, any
present or future taxes, levies, imposts, duties or other charges of whatsoever
nature imposed by any government or any political or taxing authority thereof
(but excluding Excluded Taxes), provided, however, that if any Subsidiary
Guarantor is required by law to make such deduction or withholding, such
Subsidiary Guarantor shall forthwith (i) pay to the Administrative Agent or the
applicable Lender such additional amount as results in the net amount received
by the Administrative Agent equaling the full amount which would have been
received by the Administrative Agent or such Lender had no such deduction or
withholding been made, (ii) pay the full amount deducted to the relevant
authority in accordance with applicable law, and (iii) furnish to the
Administrative Agent or such Lender certified copies of official receipts
evidencing payment of such withholding taxes within 30 days after such payment
is made.
SECTION 20. Joinder of Additional Subsidiary Guarantors. Upon the execution and
delivery by any Person of a guaranty supplement in substantially the form of
Exhibit A hereto (each, a “Subsidiary Guaranty Supplement”) to the
Administrative Agent, (i) such Person shall be referred to as an “Additional
Subsidiary Guarantor” and shall become and be a Subsidiary Guarantor hereunder
for all purposes hereunder, and each reference in this Guaranty to a “
Subsidiary Guarantor” shall also mean and be a reference to such Additional
Subsidiary Guarantor, and each reference in any other Loan Document to a
“Subsidiary Guarantor” shall also mean and be a reference to such Additional
Subsidiary Guarantor and (ii) each reference herein to “this Guaranty”,
“hereunder”, “hereof” or words of like import referring to this Guaranty, and
each reference in any other Loan Document to the “Subsidiary Guaranty”,
“thereunder”, “thereof” or words of like import referring to this Guaranty,
shall mean and be a reference to this Guaranty as supplemented by such
Subsidiary Guaranty Supplement.
Exhibit B, Page 6
SECTION 21. Automatic Acceleration in Certain Events. Upon the occurrence of an
Event of Default with respect to the Borrower specified in clauses (g) or (h) of
Section 7.01 of the Credit Agreement, all Guaranteed Obligations shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by each Subsidiary
Guarantor.
SECTION 22. Severability. Wherever possible, each provision of this Guaranty
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
SECTION 23. Delivery of Counterparts. Delivery of an executed counterpart of a
signature page to this Guaranty by facsimile, emailed .pdf or any other
electronic means that reproduces an image of the actual executed signature page
shall be effective as delivery of a manually executed counterpart of this
Guaranty.
Exhibit B, Page 7
IN WITNESS WHEREOF, each Subsidiary Guarantor has caused this Guaranty to be
duly executed by its authorized officer as of the day and year first above
written.
[NAME OF SUBSIDIARY GUARANTOR]
By:
Name:
Title:
Address for notices:
Exhibit B, Page 8
EXHIBIT A
FORM OF
SUBSIDIARY GUARANTY SUPPLEMENT
as Administrative Agent
for the Lenders referred to below
135 S. LaSalle Street, Mail Code: IL4-135-09-61
Chicago, IL 60603
Attention of: Gerund Gore
Facsimile No.: 312-453-3635
Telephone No.: 312-992-8588
700 Louisiana Street, TX4-213-13-15
Houston, TX
Attention of: Raza Jafferi
Facsimile No.: 713-247-7701
Re: Term Loan Credit Agreement dated as of December 19, 2014 (as the same may be
“Credit Agreement”), among Southwestern Energy Company, the Lenders party
thereto (the “Lenders”), and Bank of America, N.A., as administrative agent for
the Lenders (in such capacity, together with its successors and assigns, the
Ladies and Gentlemen:
Reference is made to the Credit Agreement and to that certain Guaranty dated as
of [-] (as amended, restated, supplemented or otherwise modified from time to
time, the “Subsidiary Guaranty”) executed by the Subsidiary Guarantors party
thereto in favor of the Administrative Agent, each Lender and each other Person
to which any Guaranteed Obligations are owed, and each of their respective
successors, endorsees, transferees and assigns (collectively, the “Guaranteed
Parties” and each, individually, a “Guaranteed Party”). The Subsidiary Guaranty,
as supplemented by this Subsidiary Guaranty Supplement (this “Subsidiary
Guaranty Supplement”) and as it may hereafter be amended, restated, further
supplemented or otherwise modified from time to time, is herein referred to as
the “Subsidiary Guaranty Agreement”. Capitalized terms used herein but not
defined herein have the respective meanings ascribed to such terms in the Credit
Agreement or the Subsidiary Guaranty, as applicable.
Section 1. The undersigned (the “Additional Subsidiary Guarantor”) hereby
becomes a Subsidiary Guarantor (as defined in the Subsidiary Guaranty Agreement)
for all purposes of the Subsidiary Guaranty Agreement. Without limiting the
generality of the foregoing, the Additional Subsidiary Guarantor hereby
(a) absolutely, unconditionally and irrevocably
Exhibit A to Subsidiary Guaranty, Page 1
guarantees, jointly with the other Subsidiary Guarantors and severally, to each
Subsidiary Guaranteed Party, the prompt and complete payment in cash when due
(whether at the stated maturity, by acceleration or otherwise) of the
Obligations on the terms and conditions set forth in the Subsidiary Guaranty
Agreement as if it were an original party thereto, (b) accepts and agrees to
perform and observe all of the covenants set forth in the Subsidiary Guaranty
Agreement, (c) waives the rights set forth in Section 6 of the Subsidiary
Guaranty Agreement and (d) waives the rights, submits to jurisdiction, and
waives service of process as described in Section 18 of the Subsidiary Guaranty
Agreement. The terms and provisions of the Subsidiary Guaranty Agreement are
Section 2. The address for notices and other communications to be delivered to
the Additional Subsidiary Guarantor pursuant to Section 12 of the Subsidiary
Guaranty Agreement is set forth on the signature page hereto.
Section 3. Delivery of an executed counterpart of a signature page to this
Subsidiary Guaranty Supplement by facsimile or electronic transmission
(including in .pdf form) shall be effective as delivery of a manually executed
counterpart of this Subsidiary Guaranty Supplement.
Section 4. This Subsidiary Guaranty Supplement shall be construed in accordance
with and governed by the law of the State of New York.
Exhibit A to Subsidiary Guaranty, Page 2
IN WITNESS WHEREOF, the undersigned has caused this Subsidiary Guaranty
Supplement to be duly executed by its authorized officer as of the day and year
first above written.
Very truly yours,
[ADDITIONAL SUBSIDIARY GUARANTOR],
a [ ]
By:
Name:
Title:
Address for notices:
Exhibit A to Subsidiary Guaranty, Page 3
EXHIBIT C-1
FORM OF
Purposes)
Reference is hereby made to the Term Loan Credit Agreement dated as of
December 19, 2014 (as the same may be amended, restated, supplemented or
Southwestern Energy Company (the “Borrower”), the Lenders party thereto and Bank
of America, N.A., as administrative agent (in such capacity, the “Administrative
Agent”).
Pursuant to the provisions of Section 2.17 of the Credit Agreement, the
By:
Name:
Title:
Exhibit C-1, Page 1
EXHIBIT C-2
FORM OF
Purposes)
Agent”).
Section 871(h)(3)(B) of the Code and (iv) it is not a controlled foreign
corporation related to the Borrower as described in
By:
Name:
Title:
Exhibit C-2, Page 1
EXHIBIT C-3
FORM OF
Purposes)
Agent”).
By:
Name:
Title:
Exhibit C-3, Page 1
EXHIBIT C-4
FORM OF
Agent”).
Loan(s)), (iii) with respect to the extension of credit pursuant to the Credit
Borrower as described in
The undersigned has furnished the Administrative Agent and the Borrower] with
IRS Form W-8IMY accompanied by one of the following forms from each of its
By:
Name:
Title:
Exhibit C-4, Page 1
EXHIBIT D-1
FORM OF BORROWING REQUEST
as Administrative Agent
Chicago, IL 60603
Houston, TX
Re: Southwestern Energy Company
[Date]
Ladies and Gentlemen:
Southwestern Energy Company (the “Borrower”), the Lenders from time to time
party thereto and Bank of America, N.A., as administrative agent (in such
capacity, the “Administrative Agent”). Capitalized terms used but not defined
herein shall have the respective meanings assigned to such terms in the Credit
Agreement. Pursuant to Section 2.03 of the Credit Agreement, the Borrower hereby
requests a Borrowing of Loans:
2. In the amount of $ .5
3. Comprised of: (type of Loan requested).
4. For Eurodollar Loans: with an Interest Period of to mature on
.6
5. Location and number of such Borrower’s account to which proceeds of Borrowing
are to be disbursed:
5 Not less than applicable amounts specified in Section 2.02(c) of the Credit
Agreement.
6 Which must comply with the definition of “Interest Period” and end not later
than the Maturity Date.
Exhibit D-1, Page 1
Very truly yours, SOUTHWESTERN ENERGY COMPANY By:
Name: Title:
Exhibit D-1, Page 2
EXHIBIT D-2
as Administrative Agent
Chicago, IL 60603
Houston, TX
[Date]
Ladies and Gentlemen:
Agreement. Pursuant to Section 2.08 of the Credit Agreement, the Borrower hereby
requests a [continuation][conversion] of Loans:
2. List date, Type, principal amount and Interest Period (if applicable) of
existing Borrowing .
3. In the amount of $ for
the resulting Borrowing.
4. Comprised of: (type of Loan requested).
5. For Eurodollar Loans: with an Interest Period of to mature on
.7
7 Which must comply with the definition of “Interest Period” and end not later
Exhibit D-2, Page 1
Name: Title:
Exhibit D-2, Page 2
EXHIBIT E
[FORM OF]
NOTE
December [-], 2014
FOR VALUE RECEIVED, the undersigned, Southwestern Energy Company, a Delaware
corporation (the “Borrower”), HEREBY UNCONDITIONALLY PROMISES TO PAY to [NAME OF
LENDER] (the “Lender”) the aggregate unpaid principal amount of all Loans made
by the Lender to the Borrower pursuant to the Credit Agreement (as defined
below) on the Maturity Date or on such earlier date as may be required by the
terms of the Credit Agreement. Capitalized terms used herein and not otherwise
defined herein have the respective meanings given such terms in the Credit
Agreement.
Loan made to it from the date of such Loan until such principal amount is paid
in full at a rate or rates per annum determined in accordance with the terms of
the Credit Agreement. Interest hereunder is due and payable at such times and on
such dates as set forth in the Credit Agreement.
At the time of each Loan, and upon each payment or prepayment of principal of
each Loan, the Lender shall make a notation either on the schedule attached
hereto and made a part hereof, or in the Lender’s own books and records, in each
case specifying the amount of such Loan, the respective Interest Period thereof
(in the case of Eurodollar Loans) or the amount of principal paid or prepaid
with respect to such Loan, as applicable; provided that the failure of the
Lender to make any such recordation or notation shall not affect the Obligations
of the Borrower hereunder or under the Credit Agreement.
This Note is one of the Notes referred to in, and is entitled to the benefits
of, that certain Term Loan Credit Agreement dated as of December 19, 2014 (as
the same may be amended, restated, supplemented or otherwise modified from time
to time, the “Credit Agreement”) by and among the Borrower, the financial
institutions from time to time parties thereto as Lenders and Bank of America,
N.A., as administrative agent. The Credit Agreement, among other things,
(i) provides for the making of Loans by the Lender to the Borrower in an
aggregate principal amount not to exceed at any time outstanding such Lender’s
Commitment, the indebtedness of the Borrower resulting from each such Loan made
to it by the Lender being evidenced by this Note, and (ii) contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events and also for prepayments of the principal hereof prior to the maturity
hereof upon the terms and conditions therein specified.
Demand, presentment, protest and notice of nonpayment and protest are hereby
waived by the Borrower.
Whenever in this Note reference is made to the Administrative Agent, the Lender
or the Borrower, such reference shall be deemed to include, as applicable, a
reference to their respective successors and assigns. The provisions of this
Note shall be binding upon and shall inure to the benefit of such successors and
assigns. The Borrower’s successors and assigns shall include, without
limitation, a receiver, trustee or debtor in possession of or for the Borrower.
This Note shall be construed in accordance with and governed by the law of the
Exhibit E, Page 1
SOUTHWESTERN ENERGY COMPANY By:
Name: Title:
Exhibit E, Page 2
SCHEDULE OF LOANS AND PAYMENTS OR PREPAYMENTS
Date
Amount of Loan
Interest Period/Rate
Amount of Principal Paid
or Prepaid
Unpaid Principal Balance
Notation Made By
Exhibit E, Page 3
EXHIBIT F
FORM OF COMPLIANCE CERTIFICATE
The undersigned, the [chief financial officer/chief accounting officer] of
Southwestern Energy Company (the “Borrower”) hereby (a) delivers this
Certificate pursuant to Section 5.01(c) of the Term Loan Credit Agreement dated
as of December 19, 2014 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”; capitalized terms
used but not defined herein have the respective meanings given thereto in the
Credit Agreement) among the Borrower, the Lenders from time to time party
thereto, and Bank of America, N.A., as Administrative Agent, and (b) certifies
as follows:
1. Attached hereto as Schedule I are the financial statements of the Borrower as
at the end of and for the fiscal year ¨ fiscal quarter ¨ (check one) ended
, 201 as required by Section 5.01(a) or Section 5.01(b)
of the Agreement, as applicable.
2. [Such financial statements fairly present in all material respects the
financial condition and results of operations of the Borrower and its
Subsidiaries on a consolidated basis as at the end of, and for, the period
covered thereby in accordance with GAAP consistently applied, subject to normal
year-end audit adjustments and the absence of footnotes.]8
3. Attached hereto as Schedule II are detailed calculations used by the Borrower
to establish whether the Borrower was in compliance with the requirements of
Section 6.05 of the Credit Agreement as of the date of the financial statements
attached as Schedule I.
4. [Unless otherwise disclosed on Schedule III attached hereto, no] [No] Default
or Event of Default has occurred which is in existence on the date hereof. [The
Borrower has taken or proposes to take the action to cure such Default or Event
of Default as described on Schedule III.]
5. [Attached as Schedule IV are consolidating spreadsheets showing all
consolidated Unrestricted Subsidiaries and the eliminating entries.]9
6. [As of the date hereof, except as disclosed in the Borrower’s filings with
which would reasonably be expected to have a Material Adverse Effect.]10
8 To be included if certificate accompanies financial statements delivered to
Section 5.01(b) of the Credit Agreement.
9 To be included if, as of the last day of the fiscal period covered by the
financial statements delivered herewith, any of the consolidated Subsidiaries of
the Borrower have been designated as Unrestricted Subsidiaries pursuant to
Section 5.09 of the Credit Agreement.
financial statements delivered herewith, the Borrower does not have an
Investment Grade Rating.
Exhibit F, Page 1
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate as of
, 201 .
SOUTHWESTERN ENERGY COMPANY
By:
Name: Title: [Chief Financial Officer/Chief Accounting Officer]
Exhibit F, Page 2
Schedule I
Financial Statements
(to be attached)
Schedule I to Exhibit F
Schedule II
Compliance Calculations
Schedule II to Exhibit F
[Schedule III
Defaults/Remedial Action
(to be attached)]11
11 If applicable.
Schedule III to Exhibit F
[Schedule IV
Consolidating Spreadsheets
(to be attached)]12
12 If applicable.
Schedule IV to Exhibit F
EXHIBIT G
FORM OF SOLVENCY CERTIFICATE
To the Administrative Agent and each of the Lenders party to the Credit
Agreement referred to below:
I, the undersigned chief financial officer of Southwestern Energy Company, a
Delaware corporation (the “Borrower”), in that capacity only and not in my
individual capacity (and without personal liability), do hereby certify as of
the date hereof, and based upon facts and circumstances as they exist as of the
date hereof (and disclaiming any responsibility for changes in such facts and
circumstances after the date hereof), that:
1. This Solvency Certificate (this “Certificate”) is furnished to the
Administrative Agent and the Lenders pursuant to Section 4.02(f) of the Term
Loan Credit Agreement (the “Credit Agreement”), dated as of December 19, 2014,
among Southwestern Energy Company, the lenders party thereto (the “Lenders”) and
Bank of America, N.A., as administrative agent (the “Administrative Agent”).
Unless otherwise defined herein, capitalized terms used in this Certificate
shall have the meanings set forth in the Credit Agreement.
2. For purposes of this Certificate, the terms below shall have the following
definitions:
(a) “Fair Value”
The amount at which the assets (both tangible and intangible), in their
entirety, of the Borrower and its Subsidiaries taken as a whole would change
facts, with neither being under any compulsion to act.
(b) “Present Fair Salable Value”
The amount that could be obtained by an independent willing seller from an
independent willing buyer if the assets of the Borrower and its Subsidiaries
taken as a whole are sold with reasonable promptness in an arm’s-length
transaction under present conditions for the sale of comparable business
enterprises insofar as such conditions can be reasonably evaluated.
(c) “Liabilities”
The recorded liabilities (including contingent liabilities that would be
recorded in accordance with GAAP) of the Borrower and its Subsidiaries taken as
a whole, as of the date hereof after giving effect to the consummation of the
Transactions, determined in accordance with GAAP consistently applied.
(d) “Will be able to pay their Liabilities as they mature”
For the period from the date hereof through the Maturity Date, the Borrower and
its Subsidiaries taken as a whole will have sufficient assets and cash flow to
pay their Liabilities as those liabilities mature or (in the case of contingent
Liabilities) otherwise become payable, in light of business conducted or
anticipated to be conducted by the Borrower and its Subsidiaries as reflected in
the projected financial statements and in light of the anticipated credit
capacity.
Exhibit G, Page 1
(e) “Do not have Unreasonably Small Capital”
Borrower and its Subsidiaries taken as a whole after consummation of the
Transactions is a going concern and has sufficient capital to reasonably ensure
that it will continue to be a going concern for the period from the date hereof
through the Maturity Date. I understand that “unreasonably small capital”
depends upon the nature of the particular business or businesses conducted or to
be conducted, and I have reached my conclusion based on the needs and
anticipated needs for capital of the business conducted or anticipated to be
conducted by the Borrower and its Subsidiaries as reflected in the projected
financial statements and in light of the anticipated credit capacity.
3. For purposes of this Certificate, I, or officers of Borrower under my
direction and supervision, have performed the following procedures as of and for
the periods set forth below.
(a) I have reviewed the financial statements (including the pro forma financial
statements) referred to in Sections 3.03(a), (b) and (c) of the Credit
Agreement.
(b) I have knowledge of and have reviewed to my satisfaction the Credit
Agreement.
(c) As chief financial officer of the Borrower, I am familiar with the financial
condition of the Borrower and its Subsidiaries.
4. Based on and subject to the foregoing, I hereby certify on behalf of the
Borrower that after giving effect to the consummation of the Transactions, it is
my opinion that (i) the Fair Value of the assets of the Borrower and its
Subsidiaries taken as a whole exceeds their Liabilities, (ii) the Present Fair
Salable Value of the assets of the Borrower and its Subsidiaries taken as a
whole exceeds their Liabilities; (iii) the Borrower and its Subsidiaries taken
as a whole do not have Unreasonably Small Capital; and (iv) the Borrower and its
Subsidiaries taken as a whole will be able to pay their Liabilities as they
mature.
Exhibit G, Page 2
IN WITNESS WHEREOF, the Borrower has caused this Certificate to be executed on
its behalf by its chief financial officer as of the date first written above.
Name: Title:
Exhibit G, Page 3 |
Name: Commission Regulation (EC) Noà 235/2005 of 10 February 2005 concerning tenders notified in response to the invitation to tender for the import of sorghum issued in Regulation (EC) Noà 2275/2004
Type: Regulation
Subject Matter: plant product; tariff policy; EU finance; Europe; trade policy
Date Published: nan
11.2.2005 EN Official Journal of the European Union L 39/43 COMMISSION REGULATION (EC) No 235/2005 of 10 February 2005 concerning tenders notified in response to the invitation to tender for the import of sorghum issued in Regulation (EC) No 2275/2004 THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, Having regard to Council Regulation (EC) No 1784/2003 of 29 September 2003, on the common organisation of the market in cereals (1), and in particular Article 12(1) thereof, Whereas: (1) An invitation to tender for the maximum reduction from third countries in the duty on sorghum imported into Spain was opened pursuant to Commission Regulation (EC) No 2275/2004 (2). (2) Article 7 of Commission Regulation (EC) No 1839/95 (3), allows the Commission to decide, in accordance with the procedure laid down in Article 25 of Regulation (EC) No 1784/2003 and on the basis of the tenders notified to make no award. (3) On the basis of the criteria laid down in Articles 6 and 7 of Regulation (EC) No 1839/95 a maximum reduction in the duty should not be fixed. (4) The measures provided for in this Regulation are in accordance with the opinion of the Management Committee for Cereals, HAS ADOPTED THIS REGULATION: Article 1 No action shall be taken on the tenders notified from 4 to 10 February 2005 in response to the invitation to tender for the reduction in the duty on imported sorghum issued in Regulation (EC) No 2275/2004. Article 2 This Regulation shall enter into force on 11 February 2005. This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 10 February 2005. For the Commission Mariann FISCHER BOEL Member of the Commission (1) OJ L 270, 21.10.2003, p. 78. (2) OJ L 396, 31.12.2004, p. 32. (3) OJ L 177, 28.7.1995, p. 4. Regulation as last amended by Regulation (EC) No 777/2004 (OJ L 123, 27.4.2004, p. 50). |
Exhibit32 ARQULE,INC. CERTIFICATE OF THE CHIEF EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER The undersigned, Paolo Pucci Chief Executive Officer (Principal Executive Officer) of ArQule,Inc. (the “Company”) and Peter S. Lawrence, President and Chief Operating Officer (Principal Financial Officer), of the Company, both duly elected and currently serving, hereby certify that, to the best of his or her knowledge: 1. the quarterly report on Form10-Q for the period ending September 30, 2011, filed on behalf of the Company pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”) and containing the financial statements of the Company, fully complies with the requirements of section 13(a)of the Exchange Act; and 2. the information contained in such quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company for the dates and periods covered by such quarterly report. This certification accompanies the Company’s Quarterly Report on Form10-Q for the period ended September 30, 2011, pursuant to Section906 of the Sarbanes-Oxley Act of 2002 (the “2002 Act”) and shall not be deemed filed by the Company for purposes of Section18 of the Exchange Act. This certification is being made for the exclusive purpose of compliance by the Principal Executive Officer and Principal Financial Officer of the Company with the requirements of Section906 of the 2002 Act, and may not be disclosed, distributed or used by any person for any reason other than as specifically required by law. IN WITNESS WHEREOF, the undersigned have executed this Certificate as of the 4th day of November 2011. /s/ PAOLO PUCCI Name: Paolo Pucci Title: Chief Executive Officer (Principal Executive Officer) /s/ PETER S. LAWRENCE Name: Peter S. Lawrence Title: President and Chief Operating Officer (Principal Financial Officer)
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 January24, 2012 Date of Report (Date of earliest event reported) TRUSTMARK CORPORATION (Exact name of registrant as specified in its charter) Mississippi 000-03683 64-0471500 (State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.) 248 East Capitol Street, Jackson, Mississippi (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (601) 208-5111 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02.Results of Operations and Financial Condition. OnJanuary 24, 2012, Trustmark Corporation issued a press release announcing its financial results for the period endedDecember 31, 2011. This press release is attached as Exhibit 99.1 to this report and incorporated herein by reference. Item 9.01.Financial Statements and Exhibits. (d) Exhibits Exhibit Number Description of Exhibits Press release announcing financial results for the period endedDecember 31, 2011 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TRUSTMARK CORPORATION BY: /s/ Louis E. Greer Louis E. Greer Treasurer and Principal Financial Officer DATE: January24, 2012 EXHIBIT INDEX Exhibit Number Description of Exhibits Press release announcing financial results for the period endedDecember 31, 2011
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EXHIBIT 10.30
[Geron Letterhead]
Original Notice Date: November 14, 2011
Revised: December 7, 2011
Jane Lebkowski
[Home Address]
Re: SEPARATION AGREEMENT AND GENERAL RELEASE
Dear Jane:
This letter sets forth the terms of our agreement with respect to the
termination of your employment with Geron Corporation (“Geron”).
1. Intent. The intent of this Separation Agreement and General Release
(hereinafter “Agreement”) is to mutually, amicably and finally resolve, and
settle any and all issues and claims concerning your employment with Geron, all
actions and conduct occurring during your employment with Geron and the
termination thereof.
2. Parties. The parties to this Agreement are you, Jane Lebkowski, on behalf of
yourself and your heirs, representatives, attorneys, successors and assigns, and
Geron, on behalf of itself, its current and former officers, owners,
shareholders, directors, managers, agents, representatives, servants, employees,
attorneys, as well as its successors, predecessors and assigns.
3. Termination of Employment. We have agreed that your employment with Geron
will formally end on December 31, 2011 (the “Separation Date”). On the
Separation Date, you will be paid for all accrued wages and accrued, unused
vacation. On the earlier of the Separation Date, or the date on which 2011
bonuses are paid to employees, and contingent upon your satisfactory
performance, you will receive a 2011 bonus of $107,200. Long and Short Term
Disability, Life Insurance and AD&D shall cease on the Separation Date. Any
elections for medical, dental and vision coverage will continue until December
31, 2011. You will not be expected to perform any job responsibilities, and will
not be required to come to work, after the Separation Date. In lieu of advance
notice under the Worker Adjustment and Retraining Notification (“WARN”) Act and
the California Reductions, Terminations and Mass Layoffs (“RTML”) law:
(a) You will continue to receive salary through January 13, 2012, as
referenced in the Employee Notice of Layoff letter. (b) In the event that you
elect to receive continued Medical, Dental and/or Vision benefits under the
Consolidated Budget Reconciliation Act of 1983, as amended (“COBRA”), and remain
eligible for such benefits, the Company shall pay healthcare premiums for
coverage through January 31, 2012.
Jane Lebkowski
December 7, 2011
Page 2
(c) As of the Separation Date, you will be vested in all equity
awards issued to you, all equity awards issued to you shall be accelerated, such
that you will be vested in, or the Company right of repurchase shall have
expired, in that number of shares in which you would have vested, or the
Company’s option to repurchase would have expired, had you remained employed
through January 13, 2012.
You shall receive all payments and benefits detailed in this Section 3 without
regard to whether you sign this Agreement.
4. Proprietary Information and Inventions Agreement. You acknowledge and agree
to comply with your obligations under the Proprietary Information and Inventions
Agreement that you executed on March 15, 1998. Specifically, you agree that all
computer equipment, both hardware and software programs, as well as all records,
papers, notes and other documents, and all copies thereof relating to Geron, its
business, and its customers that are or have been obtained by you during your
employment with Geron are Geron’s property, and will be returned by you to
Geron, on your last date of employment. You also acknowledge and agree to comply
with your continuing obligations regarding the disclosure of Confidential
Information (as defined in the agreement you signed) after your employment with
Geron.
5. Consideration. In consideration for this Agreement and the undertakings
described herein, including the General Release of Claims described in paragraph
6 below, and in full settlement for all claims to which you may or may not be
entitled, Geron agrees:
a) to pay you 110% of annual base salary, less applicable state and
federal withholding taxes, and b) to pay your COBRA premium for Medical,
Dental and/or Vision coverage through the earlier of 12 months following the
Separation Date or the date upon which you are no longer eligible for COBRA,*
c) to extend the period during which you may exercise vested options through
December 31, 2013;
____________________
* The payment of COBRA premiums by Geron does not expand or extend the maximum
period of COBRA coverage to which you would otherwise be entitled.
Jane Lebkowski
December 7, 2011
Page 3
d) to provide outplacement services through Right Management,
provided you activate such services within one month of your Separation Date;
and e) not to contest any claim you file for unemployment insurance
through EDD.
You acknowledge that the consideration set forth in this paragraph is in
addition to any benefits to which you are otherwise entitled.
6. General Release of Claims. In consideration for the promises and undertakings
contained in this Agreement, you hereby waive, release and discharge, and agree
that you will not institute, prosecute or pursue any and all complaints, claims,
charges, claim for relief, demands, suits, actions and causes of action, whether
in law or in equity, which you assert or could assert against Geron, its current
and former officers, owners, shareholders, directors, managers, agents,
representatives, servants, employees, attorneys, as well as its successors,
predecessors and assigns at common law or under any statute, rule, regulations,
order, or law, whether federal, state or local, on any ground whatsoever, known
or unknown, including but not limited to, any and all actions for breach of
contract, express or implied, breach of the covenant of good faith and fair
dealing, express or implied, wrongful termination in violation of public policy,
all other claims for wrongful termination and constructive discharge, and all
other tort claims including, but not limited to, intentional or negligent
infliction of emotional distress, invasion of privacy, negligence, negligent
investigation, negligent hiring or retention, assault and battery, defamation,
intentional or negligent misrepresentation, fraud, and any and all claims
arising under any state or federal statute, including but not limited to, the
California Fair Employment and Housing Act, Title VII of the Civil Rights Act of
1964, the Civil Rights Act of 1991, the Fair Labor Standards Act, the Employee
Retirement and Income Security Act, the Americans with Disabilities Act, the
Federal Rehabilitation Act of 1973, 42 U.S.C. Section 1981, the Family and
Medical Leave Act, the California Family Rights Act, the California Labor Code
and Civil Code, the California Constitution, and any and all other laws and
regulations relating to employment termination, employment discrimination,
harassment or retaliation, claims for wages, hours, benefits, compensation, and
any and all claims for attorneys fees and costs, but this release does not
include claims for workers’ compensation; unemployment insurance benefits;
claims for indemnification under California Labor Code Section 2802; your
ability to participate in certain Company benefits under the auspices of COBRA;
your rights under this Agreement; your right to bring to the attention of the
Equal Employment Opportunity Commission and the California Department of Fair
Employment and Housing claims of discrimination, provided, however, that you do
release your right to secure any damages for alleged discriminatory treatment;
and any other claims that cannot be released as a matter of law .
Jane Lebkowski
December 7, 2011
Page 4
7. Waiver of Rights Under Civil Code § 1542. As further consideration and
inducement for this Agreement, you hereby waive and release any and all rights
under Section 1542 of the California Civil Code you have or may have with
respect to Geron. California Civil Code Section 1542 provides as follows:
A general release does not extend to claims, which the creditor does not know or
You understand that Section 1542 gives you the right not to release existing
claims, of which you are not now aware, unless you voluntarily choose to waive
this right. Having been so apprised, you nevertheless hereby voluntarily elect
to, and do, waive the rights described in Section 1542, and elect to assume all
risks for claims that exist in your favor, known or unknown, which arise from
the subject of this Agreement.
8. Confidentiality of Agreement. You agree that the existence, terms and
conditions of this Agreement, including any and all references to any alleged
underlying claims, are strictly confidential. You shall not disclose, discuss or
reveal the existence or terms of the Agreement to any persons, entities or
organizations except to your spouse, attorney, or financial advisor, or as
required by court order.
9. Waiting Period. In accordance with the Older Workers Benefit Protection Act
of 1990, you should be aware of the following:
i. You have the right to consult with an attorney before signing
this agreement; ii. You have forty-five (45) days, from the original date
of this agreement (through December 29, 2011), to consider this agreement;
iii. You have seven (7) days after signing this agreement to revoke this
agreement, and this agreement will not be effective, and you will not receive
any of the separation benefits, until that revocation period has expired; and
iv. The job titles and ages of all individuals eligible or selected for the
separation package and the ages of all individuals in the same job
classification or organizational unit who are not eligible for the separation
package are listed on the form attached as Appendix A.
If you wish to revoke your acceptance of this Agreement, you must deliver
written notice stating your intent to revoke to Human Resources, Geron
Corporation, 230 Constitution Drive, Menlo Park, CA 94025, or via fax at (650)
473-8668, on or before 5:00 p.m. on the seventh (7th) day after the date on
which you sign this Agreement.
Jane Lebkowski
December 7, 2011
Page 5
10. Knowing and Voluntary Agreement. You expressly acknowledge that you have
read and fully understand this Agreement; that you understand that by signing
this Agreement you are giving up any legal claims you have against Geron; that
you have been advised of your right to consult with legal counsel of your own
choosing and to have the terms of this Agreement fully explained to you; that
you are not executing this Agreement in reliance on any promises,
representations or inducements other than those contained in this Agreement; and
that you are executing this Agreement knowingly, voluntarily and free of any
duress or coercion, in exchange for the benefits described in paragraph 5 above.
11. Effective Date. This Agreement shall become effective on the eighth (8th)
day following the date it is signed by you as indicated on the date line
opposite your signature below. In order to accept this Agreement, you must sign
and return it to Human Resources within forty-five (45) days of your receipt of
it, or on the Separation Date, whichever is later.
Very truly yours,
GERON CORPORATION
By: /s/ John A. Scarlett John A. Scarlett, M.D. Chief Executive Officer
Dated: December 8, 2011
Agreed and accepted:
/s/ Jane Lebkowski December 29, 2011 Jane Lebkowski Date
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ITEMID: 001-57478
LANGUAGEISOCODE: ENG
RESPONDENT: NLD
BRANCH: CHAMBER
DATE: 1976
DOCNAME: CASE OF ENGEL AND OTHERS v. THE NETHERLANDS (ARTICLE 50)
IMPORTANCE: 2
CONCLUSION: Non-pecuniary damage - financial award;Non-pecuniary damage - finding of violation sufficient
TEXT: 5. The only question remaining to be settled is that of the application of Article 50 (art. 50) in the present case. Thus, as regards the facts, the Court can refer for the main points to paragraphs 12 to 53 of its judgment of 8 June 1976 (ibid., pp. 6-23), confining itself here to giving some brief details.
6. Mr. Engel, Mr. de Wit, Mr. Dona and Mr. Schul do not allege that they have suffered any material damage, loss of income, legal expenses or other disbursements, but each of them claims a "purely symbolic" sum of one thousand French francs (1,000 FF), presumably for moral damage.
7. The Commission’s delegates think that financial compensation "is due to Mr. Engel for the breach of Article 5 para. 1 (art. 5-1) as such"; they "suggest to the Court that it should follow in this respect the method of calculation adopted in the Ringeisen case" (judgment of 22 June 1972, Series A no. 15). On the other hand, the breach of Article 6 para. 1 (art. 6-1) is said to have caused Mr. de Wit, Mr. Dona and Mr. Schul no "special damage", with the result that "the decision referred to in item 11" of the operative provisions of the judgment of 8 June 1976 would for these applications amount, "in itself", to "just satisfaction within the meaning of Article 50 (art. 50)".
8. The Government ask the Court to "fix the compensation, if any, on a purely symbolic sum" in the case of Mr. Engel. They agree with the delegates as regards Mr. de Wit, Mr. Dona and Mr. Schul.
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Exhibit 10.2
2012 Elected Officer
Cash Bonus Plan Overview
February 2012
This is a summary of the terms and conditions of the Plan. The full terms and
conditions of the DIRECTV Executive Officer Cash Bonus Plan govern the Bonuses.
TERM/CONCEPT
EXPLANATION
Eligibility
Executives of DIRECTV who may become subject to Internal Revenue Code, or IRC,
Section 162(m) and the CFO are eligible to participate in the Plan.
Plan Year
January 1 - December 31
Administration
The Compensation Committee of the Board of Directors, or Committee, administers
the Plan. The Plan and its administration are intended to comply with IRC
Section 162(m). In the beginning of the Plan Year, the Committee:
• Selects one or more annual performance measures for the Plan,
▪ Sets individual executive target bonuses as a percentage of base salary or as
a dollar amount, and
▪ Establishes the maximum funding for each executive in the Plan,
At the end of the Plan Year, the Committee determines final bonuses.
Company Performance Measures
For 2012, the Committee has selected growth in cash flow before interest and
taxes (“CFBIT”) as the performance measure. If the Company's CFBIT exceeds $2.0
billion, the available bonus fund will be equal to or greater than the target
bonus.
Bonus Determination
• Following the end of the Plan Year, the Committee will review Company and
individual performance and determine bonuses.
• Typically, when determining bonuses the Committee will reduce bonuses from the
funded amounts to align the bonuses with Company and individual performance.
Seventy percent of the bonus will be evaluated on Base Business results for the
senior leadership as a team; the remaining 30% will be evaluated on
individual performance for Strategic Initiatives and Talent & Teamwork. The
Committee may also consider other performance factors in its sole discretion as
it determines the actual bonuses. For example, these factors may include net
subscriber growth, churn, ARPU growth, SAC, margin improvement, customer
satisfaction, revenue growth, cash flow growth and basic EPS growth.
Timing of Payments
Bonuses, if any, are paid by March 15 following the end of the Plan Year.
Pro-Rated Bonuses
An executive who participates in the Plan for less than a full year may be
eligible for a pro-rated target bonus. A pro rata calculation may also apply to
changes in base salary or target bonus percentage that occur during the year.
Taxation
Bonuses are subject to applicable income and employment tax withholding. The
Company will also withhold contributions for the savings benefit plans.
TERM/CONCEPT
EXPLANATION
Employment Status:
• Resignation or Termination for Cause
• A voluntary resignation during the Plan Year will result in the forfeiture of
the bonus.
• A termination for cause during the Plan Year or at any time before payment of
the bonus will result in the forfeiture of the bonus.
• Retire, Layoff, Death or Disability
Executives who terminate for these reasons are eligible to receive a pro-rated
bonus during the usual payout cycle. Individual employment agreements may have
other terms and conditions. The Committee may use daily, monthly or other
methods to pro rate the bonuses.
• Leave of Absence During the Year
Executives who are on an unpaid Company-approved leave of absence during the
Plan Year are eligible to receive a bonus (pro-rated to exclude the period of
their absence) during the usual payout cycle.
Employee Benefits
Bonuses are Covered Compensation for purposes of determining 401K and pension
benefits.
Recovery of Bonus Awards
If the financial or operating results used to determine the payout of bonuses
are subsequently restated or revised such that smaller bonuses would have been
awarded using such restated or revised results, the Company will be entitled to
recover the portion of the bonuses that should not have been awarded. See the
policy statement in the 2011 Proxy Statement section “Compensation Discussion
and Analysis.”
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Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the accompanying Form N-CSR of Calvert World Values Fund, Inc. (the "Company"), as filed with the Securities and Exchange Commission (the "Report"), I, Barbara J. Krumsiek, President of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: June 1, 2012 /s/ Barbara J. Krumsiek Barbara J. Krumsiek President Principal Executive Officer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Calvert World Values Fund, Inc. will be retained by Calvert World Values Fund, Inc. and furnished to the SEC or its staff upon request. This certification is being furnished solely pursuant to 18 U.S.C. 1350 and is not being filed as part of the Report or as a separate disclosure document. Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the accompanying Form N-CSR of Calvert World Values Fund, Inc. (the "Company"), as filed with the Securities and Exchange Commission (the "Report"), I, Ronald M. Wolfsheimer, Treasurer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: June 1, 2012 /s/ Ronald M. Wolfsheimer Ronald M. Wolfsheimer Treasurer Principal Financial Officer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Calvert World Values Fund, Inc. and will be retained by Calvert World Values Fund, Inc. and furnished to the SEC or its staff upon request. This certification is being furnished solely pursuant to 18 U.S.C. 1350 and is not being filed as part of the Report or as a separate disclosure document.
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Title: (OH) can I really get an ovi for jist acong "weird?"
Question:I was following my girlfriend on an unknown territory. Had my GPS on bumped over a curb and straighted it out immediately. No harm done. Plus there was no traffic.
I get pulled over. I should also mention that I am in drug court from abusing benzos due a chronic pain and panic condition, but thas I'm the past. I am 100% sober.takes me in for sobriety tests and a urine test. Aced it all except a slight balance walking thay line that was very veryvshort. Everything else was perfect.
Now what the fuck can o except? This is going to send me to jail since I'm in drug court!
Answer #1: i,m defintly nit fucled on banzos and litrealy typrng in slurmodeAnswer #2: Someone like you is why my aunt has permanent brain damage. I hope you get locked up for a long time. |
Exhibit Agreement Relating to N. William White Employment Agreement and Release This Agreement Relating to the Employment Agreement of N. William White and Release (“Agreement and Release”) is made and executed as of the 25th day of March, 2008, by and between N. William White, an individual (“Employee”), and 1st Independence Financial Group, Inc., a Delaware corporation (“1st Independence Financial”), and joined in by 1st Independence Bank, Inc., a Kentucky banking corporation (the “Bank”).1st Independence Financial and the Bank may sometimes be referred to herein together as “1st Independence”. Recitals A.MainSource Financial Group, Inc., an Indiana corporation (“MainSource”), 1st Independence Financial and the Bank entered into an Agreement and Plan of Merger, dated as of February 26, 2008 (the “Merger Agreement”), concerning the merger of 1st Independence Financial with and into MainSource (the “Merger”). B.Subject to and contingent upon the consummation of the Merger, Section 5.18(a) of the Merger Agreement provides for the payment by 1st Independence to Employee of a cash sum equal to the amount payable to Employee under Section 8(e) of the Employment Agreement dated as of July 9, 2004, as amended, by and between Employee and 1st
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Filed Pursuant to Rule 433 Registration Statement No. 333-197364 Market Linked Securities – Leveraged Upside Participation to a Cap and Fixed Percentage Buffered Downside Principal at Risk Securities Linked to the iShares ® MSCI Emerging Markets ETF due November 30, 2018 Term Sheet to Preliminary Pricing Supplement dated November 3, 2015 Summary of terms Issuer The Toronto Dominion Bank (“TD”) Term Approximately 3 years Reference Asset iShares ® MSCI Emerging Markets ETF Pricing Date November 24, 2015* Issue Date November 30, 2015* Principal Amount $1,000 per Security Payment at Maturity See “How the payment at maturity is calculated” on page 3 Maturity Date November 30, 2018* Initial Price The closing price of the Reference Asset on the Pricing Date Final Price The closing price of the Reference Asset on the Valuation Date Percentage Change Final Price- Initial Price Initial Price Maximum Redemption Amount [135% to 140%] of the principal amount of the Securities ($1,350 to $1,400 per $1,000 principal amount of the Securities), to be determined on the pricing date Buffer Price 90% of the Initial Price Buffer Percentage 10% Leverage Factor 150% Valuation Date November 23, 2018* Calculation Agent TD Minimum
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Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of the
____ day of September, 2013 (the “Effective Date”) by and between Royal Gold,
Inc., a Delaware corporation (the “Company”), and [•] (the “Executive”).
Recitals
A. The Company desires to continue to employ Executive as President
and Chief Executive Officer of the Company, and Executive desires to continue in
such employment with the Company in said capacity, subject to the at-will
employment relationship between the Company and Executive; and
B. Each party desires to set forth in writing the terms and conditions
of their understandings and agreements.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
obligations contained herein, and other good and valuable consideration, the
receipt and adequacy of which the Company and Executive hereby acknowledge, the
Agreement
1. Position.
(a) The Company agrees to employ Executive in the positions of
President and Chief Executive Officer. Executive shall serve and perform the
duties which may from time to time be assigned to him by the Board of Directors
of the Company (the “Board”). The Board may delegate its authority to take any
action under this Agreement to the Compensation, Nominating and Governance
Committee of the Board (the “Compensation Committee”).
(b) Executive agrees to serve as President and Chief Executive Officer
and agrees that he will devote his best efforts and full business time and
attention to the Company. Executive agrees that he will faithfully and
diligently carry out the duties of President and Chief Executive Officer.
Executive further agrees to comply with all Company policies as in effect from
time to time and to comply with all laws, rules and regulations, including, but
not limited to, those applicable to the Company.
(c) Executive agrees to travel as necessary to perform his duties under
this Agreement.
(d) Nothing herein shall preclude Executive from (i) serving as a
member of the board of directors of up to two (2) for-profit businesses; (ii)
serving as a member of the board of directors of such other affiliated or
non-affiliated entities at the request of the Board; (iii) engaging in
charitable and community activities; (iv) participating in industry and trade
organization activities; and (v) managing his and his family’s personal
investments and affairs; provided, that such activities do not (x) materially
interfere with the regular performance of his duties and responsibilities under
this Agreement or (y) constitute activities that compete with the business of
Company and/or that violate Executive’s obligations under Sections 8 and/or 9 of
this Agreement.
(e) In addition, for so long as Executive remains President and Chief
Executive Officer of the Company, the Board shall nominate him as a member of
the Board and shall use its best efforts to cause his election as a member of
the Board.
2. Term. The initial term of this Agreement shall be one (1) year from
the Effective Date (“Initial Term”), unless otherwise terminated pursuant to
Section 4 of this Agreement. This Agreement shall automatically renew for four
(4) successive one (1) year terms unless either party gives written notice of
its or his intent not to renew this Agreement at least sixty (60) days prior to
the expiration of the then-current term. Executive’s continued employment after
the expiration of the Initial Term shall be in accordance with and governed by
this Agreement, unless modified by the parties to this Agreement in writing.
References herein to the “Term” shall refer both to the Initial Term and any
successive term as the context requires. In the event Executive continues
employment after the expiration of the final one (1) year renewal term and the
parties do not enter into a new contract for employment, the nature of such
continued employment shall be at-will.
3. Compensation and Benefits.
(a) Base Salary. The Company shall pay Executive a base salary of $ [•]
per year (“Base Salary”). The Base Salary may be increased annually by an amount
as may be approved by the Board or the Compensation Committee, and, upon such
increase, the increased amount shall thereafter be deemed to be the Base Salary
for purposes of this Agreement.
(b) Bonus Opportunities. For each fiscal year during the Term,
Executive shall be eligible to be considered to receive incentive compensation
(an “Annual Bonus”) from the Company in an amount determined by the Board or the
Compensation Committee and in accordance with the Company’s compensation
policies and practices as in effect from time to time.
(c) Long-Term Incentive Award Opportunities. Executive shall be
eligible to participate throughout the Term in the Company’s 2004 Omnibus
Long-Term Incentive Plan (the “LTIP”) or other equity incentive plans as may be
in effect from time to time (the “Equity Incentive Plans”), in accordance with
the Company’s compensation policies and practices as in effect from time to time
and the terms and provisions of the LTIP or other Equity Incentive Plan.
(d) Payment. Payment of all compensation to Executive hereunder shall
be made in accordance with applicable law, the terms of this Agreement and
applicable Company policies and practices as in effect from time to time,
including normal payroll practices, and shall be subject to all applicable
withholdings and taxes.
2
(e) Welfare Benefits and Retirement Plans. During the Term, Executive
shall be allowed to participate, on the same basis generally as other similarly
situated executive officers of the Company, in all general employee benefit
plans and programs, including improvements or modifications of the same, which
on the Effective Date or thereafter are made available by the Company or its
affiliates to all or substantially all of the Company’s similarly situated
executive officers. Such benefits, plans, and programs may include, without
limitation, health, vision care, dental care, medical reimbursement,
prescription drug, life insurance, disability protection, and qualified and
non-qualified retirement plans. Except as specifically provided herein, nothing
in this Agreement is to be construed or interpreted to increase or alter in any
way the rights, participation, coverage, or benefits under such benefit plans or
programs from those provided to similarly situated executive officers pursuant
to the terms and conditions of such benefit plans and programs. The Company
shall be permitted to modify such benefits from time to time consistent with any
modifications that impact other similarly situated executive officers of the
Company.
(f) Fringe Benefits. During the Term, Executive shall be entitled to
fringe benefits of the kind and quality which are provided to similarly situated
executive officers of the Company in accordance with the Company’s policies and
practices as in effect from time to time.
(g) Vacation. Executive shall be entitled to paid vacation for up to
[•] weeks during each calendar year, and such vacation shall be taken in
accordance with, and otherwise governed by, the Company’s policies and practices
(h) Holidays. Executive shall be entitled to paid holidays, personal
days, and sick days consistent with the Company’s policies and practices as in
(i) Reimbursement of Expenses. Promptly following presentation of
expense statements, receipts, vouchers, or such other information and
documentation as the Company may reasonably require, the Company shall reimburse
Executive for all business expenses that are reasonable and necessary and
incurred by Executive while performing his duties under this Agreement.
(j) Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit Executive’s continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company and for which
Executive may qualify, nor shall anything herein limit or otherwise affect such
rights as Executive may have under any other agreement with the Company or any
of its affiliated companies. Except as otherwise provided herein, amounts which
are vested benefits or which Executive is otherwise entitled to receive under
any plan or program of the Company at or subsequent to the date of termination
of employment shall be payable in accordance with such plan or program.
3
(a) Termination by Company without Cause. The Company may terminate
Executive’s employment and this Agreement for any reason, with or without prior
notice, with such termination to be effective upon the date provided in a
written notice to Executive informing him of the decision to terminate
Executive’s employment in accordance with this Section 4(a) of this Agreement.
(b) Termination by Company for Cause. The Company may terminate
Executive’s employment and this Agreement at any time for Cause. For purposes of
this Agreement, “Cause” for termination of Executive’s employment by the Company
shall be deemed to exist if: (i) in the reasonable judgment of the Board,
Executive has committed fraud, theft, embezzlement or misappropriation against
the Company or any of its affiliates; (ii) Executive is found guilty by a court
of having committed a felony or any other crime involving moral turpitude and
such conviction is affirmed on appeal or the time for appeal has expired;
(iii) in the reasonable judgment of the Board, Executive has compromised
Proprietary and Confidential Information (as defined below) or has engaged in
gross or willful misconduct that causes substantial and material harm to the
business and operations of the Company or any of its affiliates; or
(iv) Executive materially breaches this Agreement and fails to cure such breach
within ten (10) days of being informed of such breach in writing by the Company.
(c) Termination by Executive for Good Reason. Executive may terminate
his employment and this Agreement for Good Reason. For purposes of this
Agreement, “Good Reason” means, without Executive’s express written consent, the
occurrence of any of the following circumstances if Executive has given notice
of the circumstances within ninety (90) days of the occurrence and such
circumstances have not been fully corrected within thirty (30) days of the
notice given in respect thereof: (i) any material, adverse change in Executive’s
title or responsibilities with the Company, (ii) any material reduction in
Executive’s Base Salary, (iii) receipt of notice that Executive’s principal
workplace will be relocated by more than fifty (50) miles from the job-site
immediately prior to the Effective Date, or (iv) if a Change of Control (as
defined below) has occurred, failure to provide for Executive’s participation in
bonus, stock option, restricted stock, incentive awards and other compensation
plans which provide opportunities to receive compensation that are not less than
(x) the opportunities provided by the Company to similarly situated executive
officers of the Company and (y) the opportunities under any such plans in which
the Executive was participating immediately prior to the date on which a Change
of Control occurs.
(d) Termination by Executive without Good Reason. Executive may
terminate his employment and this Agreement for reasons other than Good Reason
upon transmittal of at least sixty (60) days’ written notice to the Company in
(e) Disability. The Company may terminate Executive’s employment and
this Agreement at any time Executive shall have sustained a Disability (as
defined below) as determined by the Board, by giving Executive written notice of
its intention to terminate Executive’s employment, and Executive’s employment
with the Company shall terminate effective on the ninetieth (90th) day after
receipt of such notice (the “Disability Effective Date”), unless the Executive
has returned to work full-time and is able to perform the essential functions of
his position, with or without reasonable accommodation, by such date. For
purposes of this Agreement, “Disability” means Executive is unable due to a
physical or mental condition to perform the essential functions of his position
with or without reasonable accommodation for a period of three (3) consecutive
months or based on the written certification of a licensed physician selected by
the Board and approved by Executive (which approval shall not be unreasonably
withheld, delayed or conditioned) of the likely continuation of such condition
for such period.
4
(f) Death. This Agreement and Executive’s employment shall terminate
automatically upon Executive’s death.
5. Obligations upon Termination. Other than as specifically set forth
or referenced in this Agreement, Executive shall not be entitled to any benefits
on or after termination of employment or this Agreement.
(a) Termination by Company without Cause; by Executive for Good Reason;
or by Company for Failure to Renew. If (i) the Company terminates Executive’s
employment or this Agreement without Cause during the Term, (ii) Executive
terminates his employment or this Agreement for Good Reason during the Term, or
(iii) Executive’s employment is terminated upon the Company’s election not to
renew the term for one (1) of the four (4) successive one (1) year renewal terms
pursuant to Section 2 hereof, and any such termination does not occur within
ninety (90) days prior to or within two (2) years after the occurrence of a
Change of Control, then the Company shall pay to Executive, and Executive shall
be entitled to receive, the following:
(i) the unpaid portion of Executive’s Base Salary as of the date of
termination of Executive’s employment, pro rated through the date of
termination, and a payment for any vacation Executive has accrued but not used
through the date of termination payable in accordance with Section 3(d);
(ii) promptly following submission by Executive of supporting
documentation, any costs and expenses paid or incurred by Executive which would
have been payable under Section 3(i) if Executive’s employment had not
terminated (Section 5(a)(i) and (ii), together, the “Accrued Obligations”); and
(iii) provided that on or prior to the sixtieth (60th) day following the
termination of Executive’s employment, Executive executes a release of claims,
which will consist in substance of the language attached as Exhibit A (the
“Release Document”), and all revocation periods applicable to the Release
Document have expired on or prior to such sixtieth (60th) day, a payment of (A)
one (1) times Executive’s Base Salary plus (B) one (1) times the average of the
Annual Bonuses paid to Executive for the three (3) full fiscal years ending
immediately prior to the date of termination of Executive’s employment (the
“Severance Payment”), payable within sixty (60) business days of the date of
termination of Executive’s employment, with the exact timing of payment
determined in the Company’s sole discretion, provided that if the Executive is
terminated within sixty (60) days prior to the end of a calendar year, payment
will be made in the subsequent calendar year.
5
(b) Termination by the Company for Cause; by Executive other than for
Good Reason; by Executive for Failure to Renew; or by Either Party Upon the
Expiration of the Final One (1) Year Renewal Period Referenced in Section 2. If
(i) Executive’s employment is terminated for Cause, (ii) Executive terminates
his employment other than for Good Reason, (iii) Executive terminates his
employment upon his election not to renew the term for one (1) of the four (4)
successive one (1) year renewal terms pursuant to Section 2 hereof, or (iv)
either party terminates the employment relationship after the expiration of the
final one (1) year renewal period referenced in Section 2, then this Agreement
shall terminate without further obligations by the Company to Executive under
this Agreement, and the Company shall pay Executive, and Executive shall be
entitled to receive, the Accrued Obligations.
(c) Death. If Executive’s employment is terminated by reason of
Executive’s death, then this Agreement shall terminate without further
obligations by the Company to Executive’s legal representatives under this
Agreement other than those obligations under the terms of a Company plan or
program that take effect at the date of Executive’s death, and the Company shall
pay Executive’s estate, and Executive’s estate shall be entitled to receive, (i)
the Accrued Obligations, plus (ii) one (1) times the average of the Annual
Bonuses paid to Executive for the three (3) full fiscal years ending immediately
prior to the date of termination of Executive’s employment, pro-rated from the
first day of the fiscal year through the effective date of the termination of
Executive’s employment.
(d) Disability. If Executive’s employment is terminated by reason of
Executive’s Disability, then this Agreement shall terminate without further
obligations by the Company to Executive under this Agreement except for
obligations which expressly continue after termination of employment due to
Disability, and the Company shall pay Executive, and Executive shall be entitled
to receive, (i) the Accrued Obligations, plus (ii) one (1) times the average of
the Annual Bonuses paid to Executive for the three (3) full fiscal years ending
immediately prior to the date of termination of Executive’s employment,
pro-rated from the first day of the fiscal year through the effective date of
the termination of Executive’s employment. In addition, Executive shall be
entitled to receive any disability benefits payable in accordance with the
Company’s plans, programs and policies as in effect from time to time.
(e) Change of Control. If (i) the Company terminates Executive’s
pursuant to Section 2 hereof, and any such termination occurs within ninety (90)
days prior to or within two (2) years after the occurrence of a Change of
Control, then, in addition to the Accrued Obligations, the Company shall pay to
the Executive, and Executive shall be entitled to receive, the following,
provided Executive executes and does not revoke the Release Document within the
time set forth in Section 5(a)(iii):
(i) two and one-half (2.5) times Executive’s Base Salary, payable in
accordance with the time period set forth in Section 5(a)(iii); and
(ii) two and one-half (2.5) times the average of the Annual Bonuses paid
to Executive for the three (3) full fiscal years ending immediately prior to the
date of termination of Executive’s employment, payable in accordance with the
time period set forth in Section 5(a)(iii) (collectively, clauses (i) and (ii)
of this Section 5(e) the “Change of Control Severance Payment”);
6
(iii) if Executive (and Executive’s eligible dependants) timely elect
participation in the Company’s group health insurance plan pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) or
any Colorado statute that provides for the continuation of benefits under such
plan (“Colorado Continuation Statute”), the Company will pay the normal monthly
employer’s cost of coverage under the Company’s group health insurance plan for
full-time employees toward such COBRA coverage or Colorado Continuation Statute
coverage for twelve (12) months following the date of termination of Executive’s
employment. Executive acknowledges and agrees that Executive is responsible for
paying the balance of any costs not paid by the Company under this Agreement
which are associated with Executive’s (and Executive’s eligible dependants’)
participation in the Company’s health insurance plan and that Executive’s
failure to pay such costs may result in the termination of Executive’s (and
Executive’s eligible dependants’) participation in such plan. The Company’s
obligations under this Section 5(e)(iii) will cease on the date on which
Executive becomes eligible for health insurance coverage under another
employer’s group health insurance plan, and, within five (5) business days of
Executive becoming eligible for health insurance coverage under another
employer’s group health insurance plan, Executive shall inform the Company of
such fact in writing; and
(iv) the Company will arrange to provide for Executive (and Executive’s
eligible dependants) benefits provided under any vision care, dental care,
medical reimbursement, prescription drug, life insurance and disability
protection group insurance plans maintained by the Company for full-time
employees for twelve (12) months following the date of termination of
Executive’s employment. If and to the extent that the Company cannot provide
coverage to Executive (and Executive’s eligible dependants) under any such
vision care, dental care, medical reimbursement, prescription drug, life
insurance and disability protection group insurance plans (i) solely due to the
fact that Executive is no longer an employee or officer of the Company or (ii)
as a result of the amendment or termination of any vision care, dental care,
protection group insurance plan, the Company will then pay or provide for the
payment of such vision care, dental care, medical reimbursement, prescription
drug, life insurance and disability protection group insurance plan during the
twelve (12) months following the date of termination of Executive’s employment.
Executive acknowledges and agrees that Executive is responsible for paying the
balance of any costs not paid by the Company under this Agreement which are
associated with Executive’s (and Executive’s eligible dependants’) participation
in any vision care, dental care, medical reimbursement, prescription drug, life
insurance and disability protection group insurance plan and that Executive’s
obligations under this Section 5(e)(iv) will cease on the date on which
Executive becomes eligible for any vision care, dental care, medical
reimbursement, prescription drug, life insurance and disability protection group
insurance plan (but only with respect to the particular coverage(s) available),
and, within five (5) business days of Executive becoming eligible for any
insurance coverage(s) under another employer’s group insurance plan, Executive
shall inform the Company of such fact in writing.
7
For purposes of this Agreement, “Change of Control” means any of the following:
(i) the dissolution or liquidation of the Company or a merger, consolidation, or
reorganization of the Company with one (1) or more other entities in which the
Company is not the surviving entity, (ii) a sale of substantially all of the
assets of the Company to another person or entity, (iii) any transaction
(including without limitation a merger or reorganization in which the Company is
the surviving entity) which results in any person or entity (other than persons
who are stockholders or affiliates immediately prior to the transaction) owning
fifty percent (50%) or more of the combined voting power of all classes of stock
of the Company, or (iv) during any period of two (2) consecutive years, members
who at the beginning of such period constituted the Board shall have ceased for
any reason to constitute a majority thereof, unless the election, or nomination
for election, by the Company’s equity holders of each director shall have been
approved by the vote of at least a majority of the directors then still in
office and who were directors at the beginning of such period (so long as such
director was not nominated by a person who has expressed an intent to effect a
Change of Control or engage in a proxy or other control contest).
(f) Resignation from Boards of Directors. If Executive is a director
of the Company or any of its affiliates and his employment is terminated for any
reason, Executive shall, if requested by the Company, immediately resign as a
director of the Company and/or any affiliate and any committees of such boards
of directors. If such resignation is not received within ten (10) business days
after Executive receives written notice from the Company requesting the
resignations, Executive shall forfeit any right to receive any payments pursuant
to this Agreement.
(g) Release. Notwithstanding any other provision in this Agreement to
the contrary, as a condition precedent to receiving any Severance Payment or
Change of Control Severance Payment, Executive agrees to execute (and not
revoke) the Release Document on or before the sixtieth (60th) business day
following the date of termination of Executive’s employment so that all
revocation periods will have expired on or before the sixtieth (60th) day
following the date of termination of Executive’s employment. If Executive fails
to execute and deliver the Release Document, or revokes the Release Document,
Executive agrees that he shall not be entitled to receive the Severance Payment
or Change of Control Severance Payment, as applicable.
8
6. Limitations Under Code Section 409A. Notwithstanding anything to the
contrary in this Agreement, in the event that, as a result of Section 409A of
the Internal Revenue Code of 1986, as amended (the “Code”) (and any related
regulations or other pronouncements), any of the payments that Executive is
entitled to under the terms of this Agreement or any other plan involving
deferred compensation (as defined under Section 409A of the Code) may not be
made at the time contemplated by the terms thereof without causing Executive to
be subject to constructive receipt at a date prior to actual payment and/or an
income tax penalty and interest and the timing of payment is the sole cause of
such adverse tax consequences, the Company will make such payment on the first
day permissible under Section 409A of the Code without Executive incurring such
adverse tax consequences. In particular, with respect to any lump sum payment
otherwise required hereunder, in the event of any delay in the payment date as a
result of Section 409A(a)(2)(A)(i) and (B)(i) of the Code, the Company will
adjust the payments to reflect the deferred payment date by crediting interest
thereon at the prime rate in effect at the time such amount first becomes
payable, as quoted by the Company’s principal bank. In the event that Executive
is deemed to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i)
of the Code, any payments to Executive hereunder that are subject to the
provisions of Section 409A of the Code shall not be made prior to the six-month
anniversary of Executive’s date of termination. It is intended that each
installment of the payments and benefits provided under this Agreement shall be
treated as a separate “payment” for purposes of Section 409A of the Code. No
payments that are subject to Section 409A of the Code shall be made to Executive
upon Executive’s termination of employment from the Company under this Agreement
unless such termination of employment is a “separation from service” within the
meaning of Section 409A of the Code. In addition, other provisions of this
Agreement or any other such plan notwithstanding, the Company shall have no
right to accelerate any such payment or to make any such payment as the result
of any specific event except to the extent permitted under Section 409A of the
Code. The Company shall not be obligated to reimburse Executive for any tax
penalty or interest or provide a gross-up in connection with any tax liability
of Executive under Section 409A of the Code.
7. Excise Tax-Related Provisions.
(a) Notwithstanding anything in this Agreement to the contrary, if any
payment or benefit Executive would receive from the Company pursuant to a Change
of Control or otherwise (“Payment”) would (i) constitute a “parachute payment”
within the meaning of Section 280G of the Code, and (ii) but for this Section
7(a), be subject to the excise tax imposed by Section 4999 of the Code (the
“Excise Tax”), then such Payment shall be equal to the Reduced Amount (as
defined below). For the avoidance of doubt, a Payment shall not be considered a
parachute payment for purposes of this paragraph if such Payment is approved by
the shareholders of the Company in accordance with the procedures set forth in
Section 280G(b)(5)(A)(ii) and (B) of the Code and the regulations thereunder,
and at the time of such shareholder approval, no stock of the successor
corporation is readily tradable on an established securities market or otherwise
(within the meaning of Section 280G(b)(5)(A)(ii)(I) of the Code). The “Reduced
Amount” shall be either (x) the largest portion of the Payment that would result
in no portion of the Payment being subject to the Excise Tax, or (y) the Payment
or a portion thereof after payment of the applicable Excise Tax, whichever
amount after taking into account all applicable federal, state and local
employment taxes, income taxes, and the Excise Tax payable by Executive (all
computed at the highest applicable marginal rate), results in Executive’s
receipt, on an after-tax basis, of the greatest amount of the Payment to
Executive. If a reduction in payments or benefits constituting “parachute
payments” is necessary so that the Payment equals the Reduced Amount, to the
extent required by Section 409A of the Code, reduction shall occur in the
following order: by first reducing or eliminating the portion of the Payments
which are payable in cash (with the payments to be made furthest in the future
being reduced first), then by reducing or eliminating any accelerated vesting of
stock options or stock appreciation rights, then by reducing or eliminating any
accelerated vesting of restricted stock or stock units and then by reducing or
eliminating any other remaining Payments.
9
(b) All determinations under this Section 7 shall be made by a
nationally recognized public accounting or consulting firm selected by the
Company and subject to the approval of Executive, which approval shall not be
unreasonably withheld, conditioned or delayed. Such determination shall be
binding upon Executive and the Company. The Company shall bear all expenses with
respect to the determinations by such accounting or consulting firm required to
be made hereunder.
(c) The accounting or consulting firm engaged to make the
determinations hereunder shall provide its calculations, together with detailed
supporting documentation, to the Company and Executive within fifteen (15)
calendar days after the date on which Executive’s right to a Payment is
triggered (if requested at that time by the Company or Executive) or such other
time as requested by the Company or Executive.
8. Ownership and Protection of Intellectual Property and Confidential
Information.
(a) All information, ideas, concepts, improvements, discoveries, and
inventions, whether patentable or not, which are conceived, made, developed or
acquired by Executive, individually or in conjunction with others, during
Executive’s employment by the Company or any of its affiliates (whether during
business hours or otherwise and whether on the Company’s premises or otherwise)
which relate to the business, products or services of the Company or its
affiliates (including, without limitation, all such information relating to
corporate opportunities; geological, metallurgical, and other technical data and
information, including operations, reserve information and exploration data;
research, financial and sales data; pricing and trading terms; evaluations;
opinions; interpretations; acquisition prospects; the identity of customers or
their requirements; the identity of key contacts within the customer’s
organizations or within the organization of acquisition prospects; or marketing
and merchandising techniques, prospective names, and marks), and all
correspondence, memoranda, notes, records, data or information, analyses, or
other documents (including, without limitation, any computer-generated,
computer-stored or electronically-stored materials) of any type embodying any of
such items, shall be the sole and exclusive property of the Company or its
affiliates, as the case may be.
(b) Executive acknowledges that the Company’s business is highly
competitive and that the Company has developed and owns valuable information
which is confidential, unique and specific to the Company and its affiliates
(“Proprietary and Confidential Information”) and which includes, without
limitation, financial information; geological, metallurgical, and other
technical data and information, including operations, reserve information and
exploration data; marketing plans; business and implementation plans;
engineering plans and processes; models and templates; prospect lists; technical
information concerning products, services and processes; names and other
information (such as credit and financial data) concerning customers and
business affiliates; and other trade secrets, concepts, ideas, plans,
strategies, analyses, surveys and proprietary information related to the past,
present or anticipated business of the Company and its affiliates. Executive
further acknowledges that protection of such Proprietary and Confidential
Information against unauthorized disclosure and use is of critical importance to
the Company and its affiliates in maintaining their competitive position.
Executive hereby agrees that he shall not, at any time during or after his
employment by the Company, disclose to others, permit to be disclosed, use,
permit to be used, copy or permit to be copied, any such Proprietary and
Confidential Information (whether or not developed by Executive and whether or
not received as an employee) without the prior written consent of the General
Counsel of the Company. Executive further agrees to maintain in confidence any
proprietary and confidential information of third parties received or of which
he has knowledge as a result of his employment. The prohibitions of this
Section 8(b) shall not apply, however, to information in the public domain (but
only if the same becomes part of the public domain through means other than a
disclosure prohibited hereunder). The above notwithstanding, a disclosure shall
not be unauthorized if (i) it is required by law or by a court of competent
jurisdiction or (ii) it is in connection with any judicial, arbitration, dispute
resolution or other legal proceeding in which Executive’s legal rights and
obligations as an employee or under this Agreement are at issue; provided,
however, that Executive shall, to the extent practicable and lawful in any such
events, give prior notice to the Company of his intent to disclose any such
Proprietary and Confidential Information in such context so as to allow the
Company or its affiliates an opportunity (which Executive shall not oppose) to
obtain such protective orders or similar relief with respect thereto as may be
deemed appropriate.
10
(c) All written materials, records, data and information, analyses, and
computer-stored or electronically-stored data and other materials), and all
copies thereof, made, composed or received by Executive solely or jointly with
others, and which are in Executive’s possession, custody or control and which
are related in any manner to the past, present or anticipated business of the
Company or any of its affiliates (collectively, the “Company Documents”) shall
be and remain the property of the Company, or its affiliates, as the case may
be. Upon termination of Executive’s employment with the Company, for any reason,
Executive promptly shall deliver the Company Documents, and all copies thereof,
to the Company.
9. Covenant Not to Compete and Other Restrictive Covenants.
(a) Other than the performance of his responsibilities pursuant to this
Agreement carried out in the best interests of the Company, during his
employment and for a period of twelve (12) months after the date of termination
of employment, Executive shall restrict his activities as follows:
(i) Executive shall not, directly or indirectly, for himself or others,
own, manage, operate, control, be employed by (whether in an executive,
managerial, supervisory or other capacity), consult with, assist or otherwise
engage or participate in or allow his skill, knowledge, experience or reputation
to be used in connection with, the ownership, management, operation or control
of, any company or other business enterprise engaged in the Subject Business (as
defined below) within any of the Subject Areas (as defined below); provided,
however, that nothing contained herein shall prohibit Executive from making
passive investments as long as Executive does not beneficially own more than one
percent (1%) of the equity interests of a business enterprise listed on a
national securities exchange or publicly traded on a nationally recognized
over-the-counter market engaged in the Subject Business within any of the
Subject Areas. For purposes of this paragraph, “beneficially own” shall have the
same meaning ascribed to that term in Rule 13d-3 under the Securities Exchange
Act of 1934, as amended;
11
(ii) Executive shall not solicit, divert or entice away the business of
any current counterparty of the Company or its affiliates, or any prospective
counterparty who on the date of termination of Executive’s employment is engaged
in discussions or negotiations to enter into a business relationship with the
Company or its affiliates, or otherwise disrupt any previously established
relationship existing between such person or entity and the Company or its
affiliates;
(iii) Executive shall not solicit, induce, influence or attempt to
influence any supplier, lessor, lessee, licensor, partner, joint venturer,
potential acquiree or any other person who has a business relationship with the
Company or its affiliates, or who on the date of termination of Executive’s
employment is engaged in discussions or negotiations to enter into a business
relationship with the Company or its affiliates, to discontinue or reduce or
limit the extent of or refrain from entering into a relationship with the
Company or its affiliates; and
(iv) Without the consent of the Company, Executive shall not make
contact with any of the employees or consultants of the Company or its
affiliates with whom he had contact during the course of his employment with the
Company for the purpose of soliciting such employee or consultant for hire,
whether as an employee or independent contractor, or otherwise disrupting such
employee’s or consultant’s relationship with the Company or its affiliates.
For purpose of this Agreement, (x) “Subject Areas” mean the continents of North
America, Central and South America, Africa, Europe and Australia, and (y)
“Subject Business” means the business of creating, financing, acquiring,
investing in and managing precious metals royalties, precious metals streams and
similar interests involving mineral properties.
(b) Acknowledgements.
(i) Executive acknowledges that (x) the compensation provided to
Executive during the Term, (y) the agreement to provide the Severance Payment or
Change of Control Severance Payment to Executive in connection with certain
terminations of Executive’s employment, and (z) the specialized training and the
Proprietary and Confidential Information provided to Executive pursuant to his
employment with the Company give rise to the Company’s interest in restraining
Executive from competing with the Company, that the noncompetition and
nonsolicitation covenants are designed to enforce such consideration, that the
Company’s business is worldwide in geographic scope and that any limitations as
to time, geographic scope and scope of activity to be restrained as defined
herein are reasonable and do not impose a greater restraint than is necessary to
protect the goodwill or other business interest of the Company. Executive
further acknowledges that as an executive of a publicly traded company he falls
within the exceptions to C.R.S 8-2-113(2) contained in both C.R.S 8-2-113(2)(b),
which exempts contracts for the protection of trade secrets, and C.R.S
8-2-113(2)(d), which exempts executive and management personnel, officers and
employees who constitute professional staff to executive and management
personnel, from the prohibitions of non-compete provisions under Colorado law.
12
(ii) Executive and the Company hereby agree to reasonably allocate an
amount of the Change of Control Severance Payment to the non-competition
covenant set forth in this Section 9, which amount will be established by the
parties in good faith negotiations, relying upon third party advisers to the
extent reasonably determined by the parties, at the time a Change of Control
transaction is reasonably likely or at such earlier time as is determined by the
parties in good faith.
(c) Survival of Covenants. Sections 8 and 9 shall survive the
expiration or termination of this Agreement for any reason. Executive agrees not
to challenge the enforceability or scope of Sections 8 and 9. Executive further
agrees to notify all future persons or businesses with which he becomes
affiliated or employed, of the restrictions set forth in Sections 8 and 9, prior
to the commencement of any such affiliation or employment.
10. Severability and Reformation. If any one or more of the terms,
provisions, covenants or restrictions of this Agreement shall be determined by a
remainder of the terms, provisions, covenants and restrictions shall remain in
full force and effect, and the invalid, void or unenforceable provisions shall
be deemed severable. Moreover, if any one or more of the provisions contained in
this Agreement shall for any reason be held to be excessively broad as to
duration, geographical scope, activity or subject, it shall be reformed by
limiting and reducing it to the minimum extent necessary, so as to be
enforceable to the extent compatible with the applicable law as it shall then
appear.
11. Indemnification. The Company and Executive have executed and
delivered an Indemnification Agreement dated [•] (the “Indemnification
Agreement”). To the extent any provision set forth in the Indemnification
Agreement is in conflict with any provision set forth in this Agreement, the
provision set forth in the Indemnification Agreement shall govern. Further,
Executive shall be entitled to coverage under the Directors and Officers
Liability Insurance program to the same extent as other similarly situated
executive officers of the Company.
12. Miscellaneous.
(a) Entire Agreement. This Agreement sets forth the entire agreement
between the parties hereto and fully supersedes any and all prior agreements or
understandings, written or oral, between the parties hereto pertaining to the
subject matter hereof.
(b) Notices. Whenever under this Agreement it becomes necessary to give
notice, such notice shall be in writing, signed by the party or parties giving
or making the same, and shall be served on the person or persons for whom it is
intended or who should be advised or notified, by (i) personal delivery, (ii)
Federal Express or other similar overnight service or (iii) certified or
registered mail, return receipt requested, postage prepaid and addressed to such
party at the address set forth below or at such other address as may be
designated by such party by like notice:
13
Royal Gold, Inc.
1660 Wynkoop Street, Suite 1000
Denver, CO 80202
Attention: Vice President, General Counsel and Secretary
If to Executive:
[•]
In the case of personal delivery, such notice or advice shall be effective on
the date of delivery, in the case of Federal Express or other similar overnight
service, such notice or advice shall be effective on the next business day, and,
in the cases of certified or registered mail, such notice or advice shall be
effective three (3) business days after deposit into the mails for delivery by
the U.S. Post Office.
(c) Governing Law and Venue. This Agreement is governed by and is to be
construed, administered, and enforced in accordance with the laws of the State
of Colorado, without regard to conflicts of law principles. If under the
governing law, any portion of this Agreement is at any time deemed to be in
conflict with any applicable statute, rule, regulation, ordinance, or other
principle of law, such portion shall be deemed to be modified or altered to the
extent necessary to conform thereto or, if that is not possible, to be omitted
from this Agreement. Any action or arbitration in regard to this Agreement or
arising out of its terms and conditions, pursuant to Sections 12(n) and 12(o),
shall be instituted and litigated only in the City and County of Denver,
Colorado.
(d) Assignment. This Agreement and Executive’s rights and obligations
hereunder may not be assigned by Executive. Any purported assignment or
delegation by Executive in violation of the foregoing shall be null and void ab
initio and of no force and effect. The Company may assign this Agreement and its
rights, together with its obligations hereunder, to an affiliate of the Company
or to a person or entity which is a successor in interest to substantially all
of the business operations of the Company. Upon such assignment, the rights and
obligations of the Company hereunder shall become the rights and obligations of
such affiliate, successor, person or entity.
(e) Counterparts. This Agreement may be executed in counterparts, each
of which shall take effect as an original, and all of which shall evidence one
and the same Agreement.
(f) Amendment. This Agreement may be amended only in writing signed by
Executive and by a duly authorized representative of the Company (other than
Executive).
14
(g) Construction. The headings and captions of this Agreement are
provided for convenience only and are intended to have no effect in construing
or interpreting this Agreement. The language in all parts of this Agreement
shall be in all cases construed in accordance to its fair meaning and not
strictly for or against the Company or Executive.
(h) Non-Waiver. The failure by either party to insist upon the
performance of any one or more terms, covenants or conditions of this Agreement
shall not be construed as a waiver or relinquishment of any right granted
hereunder or of any future performance of any such term, covenant or condition,
and the obligation of either party with respect hereto shall continue in full
force and effect, unless such waiver shall be in writing signed by the Company
(other than by Executive) and Executive.
(i) Use of Name, Likeness and Biography. The Company shall have the
right (but not the obligation) to use, publish and broadcast, and to authorize
others to do so, the name, approved likeness and approved biographical material
of Executive to advertise, publicize and promote the business of Company and its
affiliates, but not for the purposes of direct endorsement without Executive’s
consent. This right shall terminate upon the termination of this Agreement. An
“approved likeness” and “approved biographical material” shall be, respectively,
any photograph or other depiction of Executive, or any biographical information
or life story concerning the professional career of Executive, as approved by
Executive from time to time.
(j) Right to Insure. The Company shall have the right to secure, in its
own name or otherwise, and at its own expense, life, health, accident or other
insurance covering Executive, and Executive shall have no right, title or
interest in and to such insurance. Executive shall assist Company in procuring
such insurance by submitting to reasonable examinations and by signing such
applications and other reasonable instruments as may be required by the
insurance carriers to which application is made for any such insurance.
(k) Assistance in Litigation. Executive shall reasonably cooperate with
the Company in the defense or prosecution of any claims or actions now in
existence or that may be brought in the future against or on behalf of the
Company that relate to events or occurrences that transpired while Executive was
employed by the Company. Executive’s cooperation in connection with such claims
or actions shall include, but not be limited to, being available to meet with
counsel to prepare for discovery or trial and to act as a witness on behalf of
the Company at mutually convenient times. Executive also shall cooperate fully
with the Company in connection with any investigation or review by any federal,
state, or local regulatory authority as any such investigation or review relates
to events or occurrences that transpired while Executive was employed by the
Company. The Company shall pay Executive a reasonable hourly rate for
Executive’s cooperation pursuant to this Section 12(k).
(l) No Inconsistent Obligations. Executive represents and warrants that
to his knowledge he has no obligations, legal, in contract, or otherwise,
inconsistent with the terms of this Agreement or with his continued employment
with the Company to perform the duties described herein. Executive shall not
disclose to the Company, or use, or induce the Company to use, any confidential,
proprietary, or trade secret information of others. Executive represents and
warrants that to his knowledge he has returned all property and confidential
information belonging to all prior employers, if he is obligated to do so.
15
(m) Binding Agreement. This Agreement shall inure to the benefit of and
be binding upon Executive, his heirs and personal representatives, and the
Company and its successors.
(n) Remedies. The parties recognize and affirm that in the event of a
breach of Sections 8 and 9 of this Agreement, money damages would be inadequate
and the Company would not have an adequate remedy at law. Accordingly, the
parties agree that in the event of a breach or a threatened breach of Sections 8
and 9, the Company may, in addition and supplementary to other rights and
remedies existing in its favor, apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce or prevent any violations of the provisions hereof (without posting a
bond or other security). In addition, Executive agrees that in the event a court
of competent jurisdiction finds that Executive violated Section 9, the time
periods set forth in Section 9 shall be tolled for any period during which
breach or violation has occurred or been ongoing. In the event that Executive
breaches his obligations under Sections 8 and/or 9, Executive shall forfeit his
right to receive any unpaid portion of the Change of Control Severance Payment,
the Severance Payment, and any future benefits and/or payments due to Executive
under Section 5(e)(iii) and/or (iv), except to the extent required by law and
the Company may offset any other payments that are otherwise due to Executive.
(o) Arbitration. Other than disputes under Section 8 and/or 9 of this
Agreement, the parties agree that any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be resolved by
arbitration in accordance with the Employment Dispute Resolution Rules of the
American Arbitration Association. The arbitration shall take place in Denver,
Colorado. All disputes shall be resolved by one (1) arbitrator chosen by
agreement of the parties in accordance with the National Rules for the
Resolution of Employment Disputes. The arbitrator shall have the authority to
award the same remedies, damages, and costs that a court could award. The
arbitrator shall issue a reasoned award explaining the decision, the reasons for
the decision, and any damages awarded. The arbitrator’s decision shall be final
and binding. The judgment on the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof. The arbitration proceedings, any
record of the same, and the award shall be considered Proprietary and
Confidential Information under this Agreement. This provision and any decision
and award hereunder can be enforced under the Federal Arbitration Act.
(p) Voluntary Agreement. Each party to this Agreement has read and
fully understands the terms and provisions hereof, has had an opportunity to
review this Agreement with legal counsel, has executed this Agreement based upon
such party’s own judgment and advice of counsel (if any), and knowingly,
voluntarily, and without duress, agrees to all of the terms set forth in this
Agreement. The parties have participated jointly in the negotiation and drafting
of this Agreement. If an ambiguity or question of intent or interpretation
party because of authorship of any provision of this Agreement. Except as
expressly set forth in this Agreement, neither the parties nor their affiliates,
advisors and/or their attorneys have made any representation or warranty,
express or implied, at law or in equity with respect to the subject matter
contained herein. Without limiting the generality of the previous sentence, the
Company, its affiliates, advisors, and/or attorneys have made no representation
or warranty to Executive concerning the state or federal tax consequences to
Executive regarding the transactions contemplated by this Agreement, other than
any determination that may be made pursuant to Section 7(b).
16
(q) Jury Trial Waiver. THE PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING TO WHICH THEY ARE PARTIES INVOLVING, DIRECTLY OR INDIRECTLY,
ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS
AGREEMENT.
(r) Survival. The rights and obligations of the Company and Executive
contained in Sections 8, 9 and 12(s) of this Agreement shall survive the
termination of the Agreement. Following termination of Executive’s employment
and this Agreement, each party shall have the right to enforce all rights, and
shall be bound by all obligations, of such party that are continuing rights and
(s) Non-disparagement. Executive shall not make any disparaging,
derogatory or detrimental comments about the Company or any of its affiliates or
any of their directors, officers, employees, partners, members, managers or
shareholders, or any investor or other person or entity having a business
relationship with the Company or any of its affiliates. The Company, each of its
affiliates and the directors and officers of the Company and its affiliates
shall not make any disparaging, derogatory or detrimental comments about
Executive.
(t) Certain Definitions. For purposes of this Agreement:
(i) an “affiliate” of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person, and includes subsidiaries;
(ii) a “business day” means the period from 9:00 am to 5:00 pm on any
weekday that is not a banking holiday in the State of Colorado; and
(iii) a “subsidiary” of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its board of directors or
other governing body (or, if there are no such voting interests or no board of
directors or other governing body, fifty percent (50%) or more of the equity
interests of which) is owned directly or indirectly by such first person.
17
IN WITNESS WHEREOF, the Company and Executive have executed this Agreement,
effective as of the day and year first above written.
ROYAL GOLD, INC. By: Name: [•] Title: [•] [•]
18
EXHIBIT A
RELEASE
For and in consideration of the payments and other benefits due to [•] (the
“Executive”) pursuant to the Employment Agreement dated as of September __, 2013
(the “Employment Agreement”), by and between Royal Gold, Inc., a Delaware
corporation (the “Company”) and Executive, and for other good and valuable
consideration, Executive hereby agrees, for Executive, Executive’s spouse and
child or children (if any), Executive’s heirs, beneficiaries, devisees,
executors, administrators, attorneys, personal representatives, successors and
assigns, to forever release, discharge and covenant not to sue the Company, or
any of its divisions, affiliates, subsidiaries, parents, branches, predecessors,
successors, assigns, and, with respect to such entities, their officers,
directors, trustees, employees, agents, shareholders, administrators, general or
limited partners, representatives, attorneys, insurers and fiduciaries, past,
present and future (the “Released Parties”) from any and all claims of any kind
arising out of, or related to, his employment with the Company, its affiliates
and subsidiaries (collectively, with the Company, the “Affiliated Entities”) or
Executive’s separation from employment with the Affiliated Entities, which
Executive now has or may have against the Released Parties, whether known or
unknown to Executive, by reason of facts which have occurred on or prior to the
date that Executive has signed this Release. Such released claims include,
without limitation, any and all claims relating to the foregoing under federal,
state or local laws pertaining to employment, including, without limitation, the
Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964,
as amended, 42 U.S.C. Section 2000e et. seq., the Fair Labor Standards Act, as
amended, 29 U.S.C. Section 201 et. seq., the Americans with Disabilities Act, as
amended, 42 U.S.C. Section 12101 et. seq., the Reconstruction Era Civil Rights
Act, as amended, 42 U.S.C. Section 1981 et. seq., the Rehabilitation Act of
1973, as amended, 29 U.S.C. Section 701 et. seq., the Family and Medical Leave
Act of 1992, 29 U.S.C. Section 2601 et. seq., the Older Workers Benefit
Protection Act of 1990, the Pregnancy Discrimination Act, the Equal Pay Act of
1963, the Colorado Civil Rights Act, the Colorado Anti-Discrimination Act and
any and all state or local laws regarding employment discrimination and/or
federal, state or local laws of any type or description regarding employment,
including but not limited to any claims arising from or derivative of
Executive’s employment with, or termination from, the Affiliated Entities, as
well as any and all such claims under contract or tort law, including, without
limitation, any and all claims for wrongful discharge, breach of implied or
express contract, promissory estoppel, breach of any covenant of good faith and
fair dealing, intentional or negligent infliction of emotional distress,
defamation, or any claim that the Company has dealt with Executive unfairly or
in bad faith. Executive represents and warrants that he has not sold or
otherwise assigned any claim or any portion of any claim to any third party.
19
Executive has read this Release carefully, acknowledges that Executive has been
given at least [twenty-one (21) OR forty-five (45)] days to consider all of its
terms and has been advised to consult with an attorney and any other advisors of
Executive’s choice prior to executing this Release. Executive fully understands
that by signing below Executive is voluntarily giving up any right which
Executive may have to sue or bring any claims against the Released Parties,
including any rights and claims under the Age Discrimination in Employment Act.
Executive also understands that Executive has a period of seven (7) days after
signing this Release within which to revoke his agreement by written notice
delivered to the Company in accordance with the Employment Agreement, and that
neither the Company nor any other person is obligated to make any payments or
provide any other benefits to Executive pursuant to the Employment Agreement
until eight (8) days have passed since Executive’s signing of this Release
without Executive’s signature having been revoked, other than any accrued
obligations or other benefits payable pursuant to the terms of the Company’s
normal payroll practices or employee benefit plans. Finally, Executive has not
been forced or pressured in any manner whatsoever to sign this Release, and
Executive agrees to all of its terms voluntarily.
Notwithstanding anything else herein to the contrary, this Release shall not
affect: (i) the Company’s obligations under any compensation or employee benefit
plan, program or arrangement (including, without limitation, obligations to
Executive under the Employment Agreement, any stock option, stock award or
agreements or obligations under any pension, deferred compensation or retention
plan) provided by the Affiliated Entities where Executive’s compensation or
benefits are intended to continue or Executive is to be provided with
compensation or benefits, in accordance with the express written terms of such
plan, program or arrangement, beyond the date of Executive’s termination; (ii)
rights to indemnification Executive may have under the Employment Agreement or a
separate agreement entered into with the Company; or (iii) rights Executive may
have as a shareholder.
Executive agrees that Executive shall not make any disparaging, derogatory or
detrimental comments about the Company or any of the Affiliated Entities or any
relationship with the Company or any of the Affiliated Entities. Executive also
acknowledges that the terms of this Release constitute Proprietary and
Confidential Information (as defined in the Employment Agreement).
This Release is final and binding and may not be changed or modified except in a
writing signed by both parties. This Release is governed by and is to be
of Colorado, without regard to conflicts of law principles.
[•] ROYAL GOLD, INC. By: Name: [•] Title: [•]
20
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Exhibit 99.1 VeriTeQ Completes Transaction with Digital Angel Corporation and Will Continue Trading under Symbol “DIGA” Until Name Change Effected Digital Angel to Change Name to VeriTeQ Corporation Reflecting Portfolio of Implantable Medical Device Identification and Radiation Therapy Treatments with Multiple FDA Clearances and CE Marks DELRAY BEACH, FL – July 10, 2013 – VeriTeQ Acquisition Corporation (“VeriTeQ”), a provider of implantable medical device identification and radiation dose measurement technologies , announced today it has completed the Share Exchange Agreement with Digital Angel Corporation (“Digital Angel”) (OTC Market: DIGA) and all VeriTeQ shareholders, whereby Digital Angel has acquired all of the issued and outstanding shares of VeriTeQ’s common stock in exchange for 4,107,592 shares of Digital Angel’s Series B convertible preferred stock, and the VeriTeQ stockholders have become the majority owners of Digital Angel. In conjunction with this announcement, Digital Angel plans to file a Schedule 14C with the U.S. Securities and Exchange Commission. The majority stockholders of Digital Angel took action by written consent to change Digital Angel's name to VeriTeQ Corporation, effect a 1-for-30 reverse stock split, and approve a new stock incentive plan. VeriTeQ will continue to trade under the stock ticker “DIGA” until the reverse stock split and name change are completed, at which time its ticker symbol will change. VeriTeQ is focused on the unique device identification of implantable medical devices and radiation dose measurement during radiation therapy through its patented and FDA cleared technologies. VeriTeQ’s strong intellectual property portfolio includes more than 100 patents issued, patents pending, and patent licenses. VeriTeQ also has data analytics capabilities related to information gathered by its technologies. With its passive radio frequency identification (“RFID”) microchip, VeriTeQ can enable medical device manufacturers to comply with the FDA Proposed Rule for UDI, specifically the Direct Part Marking requirement for implantable medical devices to be read on demand. VeriTeQ’s radiation dosimeter, or biodosimetry, technologies include the DVS SmartMarker® and OneDose®. DVS SmartMarker is the world’s first FDA cleared, implantable, wireless radiation sensor, and is used to measure the radiation dose delivered to a patient directly from the site of the tumor during cancer treatment. DVS SmartMarker is cleared for use in breast and prostate cancer patients. Its OneDose® adhesive technology is FDA cleared for use in cancer patients being treated with external beam radiation to measure radiation dose levels at the skin surface. VeriTeQ’s UDI and biodosimetry technologies also have CE marks, which is a key indicator of a product’s compliance with legislation in the European Union. VeriTeQ’s technology enables data to be transmitted from the company’s scanning devices to a designated third party recipient database and/or electronic health record. Its Office of Medicine and Data Science is focused on linking data from disparate sources with in vivo medical devices to create complete and accurate amalgamations of patient data. Data synthesis and analytics relating directly to patient outcomes and patient safety issues created by linking multiple data sources with granular device data can be used to populate repository systems for hospitals, healthcare providers, insurance companies, Medicare/Medicaid, medical device manufacturers and regulatory authorities. The expertise offered by the Office of Medicine and Data Science can ultimately benefit the patient by providing relevant information and outcomes to medical device manufactures, thereby helping them create safer, more effective devices for patients. Scott R. Silverman, Chairman and CEO of VeriTeQ, stated, “The executive team at VeriTeQ is very pleased that we are now a publicly traded company and we are excited to bring our important healthcare technologies to patients and providers. We are immediately focused on partnerships with implantable medical device manufacturers to help them comply with FDA’s Proposed Rule for Unique Device Identification through our patented technologies.” Digital Angel’s board of directors now consists of five directors including Mr. Silverman, Barry M. Edelstein, Michael Krawitz, Daniel E. Penni and Shawn Wooden. Conference Call The Company will host a conference call on Monday, July 15, 2013, at 4:15 p.m. ET to discuss the transaction and the Company’s business. Interested participants should call (561) 327-7333 and use passcode 744959. For people unable to participate in the conference call, a digitized replay will be available 24 hours following the conference call on the Company’s website at www.veriteqcorp.com. About VeriTeQ VeriTeQ develops innovative, proprietary RFID technologies for implantable medical device identification, and dosimeter technologies for use in radiation therapy treatment. VeriTeQ offers the world's first and only implantable RFID technology used to identify implantable medical devices, in vivo, on demand, at the point of care. VeriTeQ's dosimeters provide patient safety mechanisms while measuring and recording the dose of radiation delivered to a patient in real time. For more information on VeriTeQ, please visit www.veriteqcorp.com . Statements in this press release about our future expectations, including without limitation, the likelihood of the benefits of the share exchange with Digital Angel; the likelihood that the expertise offered by VeriTeQ’s Office of Medicine and Data Science can ultimately benefit the patient by providing relevant information and outcomes to medical device manufactures, thereby helping them create safer, more effective devices for patients, constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and as that term is defined in the Private Litigation Reform Act of 1995. Such forward-looking statements involve risks and uncertainties and are subject to change at any time, and our actual results could differ materially from expected results. These risks and uncertainties include, without limitation, VeriTeQ’s ability to complete the reverse stock split, the respective parties' performance of their obligations under the Share Exchange Agreement and other factors affecting the execution of the transactions contemplated by the Exchange Agreement, the ability to promptly and effectively integrate the businesses of Digital Angel and VeriTeQ; VeriTeQ’s ability to target the UDI sector, implantable medical device manufacturers, the radiation therapy sector; VeriTeQ’s ability to complete the development of a UDI data acquisition and push technology delivery system capable of providing real-time analytics and outcomes reports; VeriTeQ’s ability to raise capital; as well as other risks. Additional information about these and other factors may be described in future filings with the Securities and Exchange Commission The Company undertakes no obligation to update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this statement or to reflect the occurrence of unanticipated events, except as required by law. Contact: Allison Tomek 561-846-7003 [email protected]
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REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of June 11,
2012, is by and among LightPath Technologies, Inc., a Delaware corporation
(the “Company”), and each of the undersigned buyers (each, a “Buyer,” and
collectively, the “Buyers”).
RECITALS
A. In connection with the Securities Purchase Agreement by and among
the parties hereto, dated as of June 11, 2012 (the “Securities Purchase
conditions of the Securities Purchase Agreement, to issue and sell to each Buyer
(i) shares (the “Common Shares”) of Common Stock (as defined in the Warrants (as
defined in the Securities Purchase Agreement)) and (ii) the Warrants, which will
be exercisable to purchase Warrant Shares (as defined in the Securities Purchase
Agreement) in accordance with the terms of the Warrants.
B. To induce the Buyers to consummate the transactions contemplated by
the Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
“1933 Act”), and applicable state securities laws.
AGREEMENT
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each of the Buyers
1. Definitions.
respective meanings set forth in the Securities Purchase Agreement. As used in
this Agreement, the following terms shall have the following meanings:
(a) “Business Day” means any day other than Saturday, Sunday or any
other day on which commercial banks in New York, New York are authorized or
required by law to remain closed.
(b) “Closing Date” shall have the meaning set forth in the Securities
Purchase Agreement.
(c) “Effective Date” means the date that the applicable Registration
Statement has been declared effective by the SEC.
(d) “Effectiveness Deadline” means (i) with respect to the initial
earlier of the (A) 90th calendar day after the Closing Date (or the 120th
calendar day after the Closing Date in the event that such Registration
Statement is subject to review by the SEC) and (B) third (3rd) Business Day
after the date the Company is notified (orally or in writing, whichever is
earlier) by the SEC that such Registration Statement will not be reviewed or
will not be subject to further review and (ii) with respect to any additional
Registration Statements that may be required to be filed by the Company pursuant
to this Agreement, the earlier of the (A) 90th calendar day following the date
on which the Company was required to file such additional Registration Statement
(or the 120th calendar day after such date in the event that such Registration
will not be subject to further review; provided, however, if (but only if) a
Filing Failure did not occur, then such time periods shall be tolled on a
day-for-day basis for so long as the Company’s audited financial statements are
stale pursuant to Regulation S-X Rule 3-12(b).
(e) “Filing Deadline” means (i) with respect to the initial
Registration Statement required to be filed pursuant to Section 2(a), the 8th
Business Day after the Closing Date and (ii) with respect to any additional
to this Agreement, the date on which the Company was required to file such
additional Registration Statement pursuant to the terms of this Agreement.
(f) “Investor” means a Buyer or any transferee or assignee of any
Registrable Securities or Warrants, as applicable, to whom a Buyer assigns its
rights under this Agreement and who agrees to become bound by the provisions of
this Agreement in accordance with Section 9 and any transferee or assignee
thereof to whom a transferee or assignee of any Registrable Securities or
Warrants, as applicable, assigns its rights under this Agreement and who agrees
to become bound by the provisions of this Agreement in accordance with Section
9.
(g) “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization or a government or any department or agency thereof.
(h) “register,” “registered,” and “registration” refer to a
registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415 and the
declaration of effectiveness of such Registration Statement(s) by the SEC.
(i) “Registrable Securities” means (i) the Common Shares, (ii) the
Warrant Shares and (iii) any capital stock of the Company issued or issuable
with respect to the Common Shares, the Warrant Shares or the Warrants,
including, without limitation, (1) as a result of any stock split, stock
dividend, recapitalization, exchange or similar event or otherwise and (2)
shares of capital stock of the Company into which the shares of Common Stock are
converted or exchanged and shares of capital stock of a Successor Entity (as
defined in the Warrants) into which the shares of Common Stock are converted or
exchanged, in each case, without regard to any limitations on exercise of the
Warrants.
(j) “Registration Statement” means a registration statement or
registration statements of the Company filed under the 1933 Act covering
Registrable Securities.
(k) “Required Holders” means the holders of at least 80% of the
Registrable Securities.
2
(l) “Required Registration Amount” means the sum of (i) the Common
Shares issued and (ii) the maximum number of Warrant Shares issued and issuable
pursuant to the Warrants as of the Trading Day (as defined in the Warrants)
immediately preceding the applicable date of determination (without taking into
account any limitations on the exercise of the Warrants set forth therein), all
subject to adjustment as provided in Section 2(d).
(m) “Rule 144” means Rule 144 promulgated by the SEC under the 1933
Act, as such rule may be amended from time to time, or any other similar or
successor rule or regulation of the SEC that may at any time permit the
Investors to sell securities of the Company to the public without registration.
(n) “Rule 415” means Rule 415 promulgated by the SEC under the 1933
successor rule or regulation of the SEC providing for offering securities on a
continuous or delayed basis.
(o) “SEC” means the United States Securities and Exchange Commission or
any successor thereto.
2. Registration.
(a) Mandatory Registration. The Company shall prepare and, as soon as
practicable, but in no event later than the Filing Deadline, file with the SEC
an initial Registration Statement on Form S-3 covering the resale of all of the
Registrable Securities, provided that such initial Registration Statement shall
register for resale at least the number of shares of Common Stock equal to the
Required Registration Amount as of the date such Registration Statement is
initially filed with the SEC, provided further that if Form S-3 is unavailable
for such a registration, the Company shall use such other form as is required by
Section 2(c). Such initial Registration Statement, and each other Registration
Statement required to be filed pursuant to the terms of this Agreement, shall
contain (except if otherwise directed by the Required Holders) the “Selling
Stockholders” and “Plan of Distribution” sections in substantially the form
attached hereto as Exhibit B. The Company shall use commercially reasonable
efforts to have such initial Registration Statement, and each other Registration
Statement required to be filed pursuant to the terms of this Agreement, declared
effective by the SEC as soon as practicable, but in no event later than the
applicable Effectiveness Deadline for such Registration Statement.
(b) Legal Counsel. Subject to Section 5 hereof, Cranshire Capital
Master Fund, Ltd. (“Cranshire”) shall have the right to select one (1) legal
counsel to review and oversee, solely on its behalf, any registration pursuant
to this Section 2 (“Legal Counsel”), which shall be Greenberg Traurig, LLP or
such other counsel as thereafter designated by Cranshire.
(c) Ineligibility to Use Form S-3. In the event that Form S-3 is not
available for the registration of the resale of Registrable Securities
hereunder, the Company shall (i) register the resale of the Registrable
Securities on another appropriate form reasonably acceptable to the Required
Holders and (ii) undertake to register the resale of the Registrable Securities
on Form S-3 as soon as such form is available, provided that the Company shall
maintain the effectiveness of all Registration Statements then in effect and the
availability for use of each prospectus contained therein until such time as a
Registration Statement on Form S-3 covering the resale of all the Registrable
Securities has been declared effective by the SEC and the prospectus contained
therein is available for use.
3
(d) Sufficient Number of Shares Registered. In the event the number of
shares available under any Registration Statement is insufficient to cover all
of the Registrable Securities required to be covered by such Registration
Statement or an Investor’s allocated portion of the Registrable Securities
pursuant to Section 2(h), the Company shall amend such Registration Statement
(if permissible), or file with the SEC a new Registration Statement (on the
short form available therefor, if applicable), or both, so as to cover at least
the Required Registration Amount as of the Trading Day immediately preceding the
date of the filing of such amendment or new Registration Statement, in each
case, as soon as practicable, but in any event not later than fifteen (15) days
after the necessity therefor arises (but taking account of any Staff position
with respect to the date on which the Staff will permit such amendment to the
Registration Statement and/or such new Registration Statement (as the case may
be) to be filed with the SEC). The Company shall use commercially reasonable
efforts to cause such amendment to such Registration Statement and/or such new
Registration Statement (as the case may be) to become effective as soon as
practicable following the filing thereof with the SEC, but in no event later
than the applicable Effectiveness Deadline for such Registration Statement. For
purposes of the foregoing provision, the number of shares available under a
Registration Statement shall be deemed “insufficient to cover all of the
Registrable Securities” if at any time the number of shares of Common Stock
available for resale under the applicable Registration Statement is less than
the product determined by multiplying (i) the Required Registration Amount as of
such time by (ii) 0.85. The calculation set forth in the foregoing sentence
shall be made without regard to any limitations on exercise of the Warrants (and
such calculation shall assume that the Warrants are then fully exercisable for
shares of Common Stock at the then-prevailing applicable Exercise Price).
4
(e) Effect of Failure to File and Obtain and Maintain Effectiveness of
any Registration Statement. If (i) a Registration Statement covering the resale
of all of the Registrable Securities required to be covered thereby
(disregarding any reduction pursuant to Section 2(f)) and required to be filed
by the Company pursuant to this Agreement is (A) not filed with the SEC on or
before the Filing Deadline for such Registration Statement (a “Filing Failure”)
(it being understood that if the Company files a Registration Statement without
affording each Investor the opportunity to review and comment on the same as
required by Section 3(c) hereof, the Company shall be deemed to not have
satisfied this clause (i)(A) and such event shall be deemed to be a Filing
Failure) or (B) not declared effective by the SEC on or before the Effectiveness
Deadline for such Registration Statement (an “Effectiveness Failure”) (it being
understood that if on the Business Day immediately following the Effective Date
for such Registration Statement the Company shall not have filed a “final”
prospectus for such Registration Statement with the SEC under Rule 424(b) in
accordance with Section 3(b) (whether or not such a prospectus is technically
required by such rule), the Company shall be deemed to not have satisfied this
clause (i)(B) and such event shall be deemed to be an Effectiveness Failure),
(ii) other than during an Allowable Grace Period (as defined below), on any day
after the Effective Date of a Registration Statement sales of all of the
Registrable Securities required to be included on such Registration Statement
(disregarding any reduction pursuant to Section 2(f)) cannot be made pursuant to
such Registration Statement (including, without limitation, because of a failure
to keep such Registration Statement effective, a failure to disclose such
information as is necessary for sales to be made pursuant to such Registration
Statement, a suspension or delisting of (or a failure to timely list) the shares
of Common Stock on the Principal Market (as defined in the Securities Purchase
Agreement), or a failure to register a sufficient number of shares of Common
Stock or by reason of a stop order) or the prospectus contained therein is not
available for use for any reason (a “Maintenance Failure”), or (iii) if the
Company fails to file with the SEC any required reports under Section 13 or
15(d) of the 1934 Act such that it is not in compliance with Rule 144(c)(1) (or
Rule 144(i)(2), if applicable) (a “Current Public Information Failure”) as a
result of which any of the Investors are unable to sell those Registrable
Securities included in such Registration Statement without restriction under
Rule 144 (including, without limitation, volume restrictions), then, as partial
relief for the damages to any holder by reason of any such delay in, or
reduction of, its ability to sell the underlying shares of Common Stock (which
remedy shall not be exclusive of any other remedies available at law or in
equity), the Company shall pay to each holder of Registrable Securities relating
to such Registration Statement an amount in cash equal to one percent (1%) of
such Investor’s Purchase Price (as defined in the Securities Purchase Agreement)
(1) on the date of such Filing Failure, Effectiveness Failure, Maintenance
Failure or Current Public Information Failure, as applicable, and (2) on every
thirty (30) day anniversary of (I) a Filing Failure until such Filing Failure is
cured; (II) an Effectiveness Failure until such Effectiveness Failure is cured;
(III) a Maintenance Failure until such Maintenance Failure is cured; and (IV) a
Current Public Information Failure until the earlier of (i) the date such
Current Public Information Failure is cured and (ii) such time that such public
information is no longer required pursuant to Rule 144 (in each case, pro rated
for periods totaling less than thirty (30) days). The payments to which a holder
of Registrable Securities shall be entitled pursuant to this Section 2(e) are
referred to herein as “Registration Delay Payments.” Following the initial
Registration Delay Payment for any particular event or failure (which shall be
paid on the date of such event or failure, as set forth above), without limiting
the foregoing, if an event or failure giving rise to the Registration Delay
Payments is cured prior to any thirty (30) day anniversary of such event or
failure, then such Registration Delay Payment shall be made on the third (3rd)
Business Day after such cure. In the event the Company fails to make
Registration Delay Payments in a timely manner in accordance with the foregoing,
such Registration Delay Payments shall bear interest at the rate of one and
one-half percent (1.5%) per month (prorated for partial months) until paid in
full. Notwithstanding the foregoing, (i) in no event shall the aggregate amount
of all Registration Delay Payments paid to an Investor exceed an amount equal to
6% of such Investor’s Purchase Price, (ii) no Effectiveness Failure shall be
deemed to have occurred with respect to a Registration Statement if and only if
(x) no Filing Failure occurred with respect to such Registration Statement and
(y) the Company has complied with the last sentence of Section 3(f) with respect
to all comments received from the SEC relating to such Registration Statement,
(iii) no single event or failure shall give rise to more than one type of
Registration Delay Payments, and (iv) no Registration Delay Payments shall be
owed to an Investor (other than with respect to a Maintenance Failure resulting
from a suspension or delisting of (or a failure to timely list) the shares of
Common Stock on the Principal Market) with respect to any period during which
all of such Investor’s Registrable Securities may be sold by such Investor
without restriction under Rule 144 (including, without limitation, volume
restrictions) and without the need for current public information required by
5
(f) Offering. Notwithstanding anything to the contrary contained in
this Agreement, but subject to the payment of the Registration Delay Payments
pursuant to Section 2(e), in the event the staff of the SEC (the “Staff”) or the
SEC seeks to characterize any offering pursuant to a Registration Statement
filed pursuant to this Agreement as constituting an offering of securities by,
or on behalf of, the Company, or in any other manner, such that the Staff or the
SEC do not permit such Registration Statement to become effective and used for
resales in a manner that does not constitute such an offering and that permits
the continuous resale at the market by the Investors participating therein (or
as otherwise may be acceptable to each Investor) without being named therein as
an “underwriter,” then the Company shall reduce the number of shares to be
included in such Registration Statement by all Investors until such time as the
Staff and the SEC shall so permit such Registration Statement to become
effective as aforesaid. In making such reduction, the Company shall reduce the
number of shares to be included by all Investors on a pro rata basis (based upon
the number of Registrable Securities otherwise required to be included for each
Investor) unless the inclusion of shares by a particular Investor or a
particular set of Investors are resulting in the Staff or the SEC’s “by or on
behalf of the Company” offering position, in which event the shares held by such
Investor or set of Investors shall be the only shares subject to reduction (and
if by a set of Investors on a pro rata basis by such Investors or on such other
basis as would result in the exclusion of the least number of shares by all such
Investors). In addition, in the event that the Staff or the SEC requires any
Investor seeking to sell securities under a Registration Statement filed
pursuant to this Agreement to be specifically identified as an “underwriter” in
order to permit such Registration Statement to become effective, and such
Investor does not consent to being so named as an underwriter in such
Registration Statement, then, in each such case, the Company shall reduce the
total number of Registrable Securities to be registered on behalf
of such Investor, until such time as the Staff or the SEC does not require such
identification or until such Investor accepts such identification and the manner
thereof. Any reduction pursuant to this paragraph will first reduce all
securities that are not Registrable Securities, if any such securities are
permitted by the Required Holders to be included in accordance with the terms of
this Agreement. In the event of any reduction in Registrable Securities pursuant
to this paragraph, an affected Investor shall have the right to require, upon
delivery of a written request to the Company signed by such Investor, the
Company to file a registration statement within thirty (30) days of such request
(subject to any restrictions imposed by Rule 415 or required by the Staff or the
SEC) for resale by such Investor in a manner acceptable to such Investor, and
the Company shall following such request cause to be and keep effective such
registration statement in the same manner as otherwise contemplated in this
Agreement for registration statements hereunder, in each case until such time
as: (i) all Registrable Securities held by such Investor have been registered
and sold pursuant to an effective Registration Statement in a manner acceptable
to such Investor or (ii) all Registrable Securities may be resold by such
Investor without restriction (including, without limitation, volume limitations)
pursuant to Rule 144 (taking account of any Staff position with respect to
“affiliate” status) and without the need for current public information required
by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or (iii) such Investor
agrees to be named as an underwriter in any such Registration Statement in a
manner acceptable to such Investor as to all Registrable Securities held by such
Investor and that have not theretofore been included in a Registration Statement
under this Agreement (it being understood that the special demand right under
this sentence may be exercised by an Investor multiple times and with respect to
limited amounts of Registrable Securities in order to permit the resale thereof
by such Investor as contemplated above).
6
(g) Piggyback Registrations. Without limiting any obligation of the
Company hereunder or under the Securities Purchase Agreement, if there is not an
effective Registration Statement covering all of the Registrable Securities or
the prospectus contained therein is not available for use and the Company shall
an offering for its own account or the account of others under the 1933 Act of
any of its equity securities (other than on Form S-4 or Form S-8 (each as
promulgated under the 1933 Act) or their then equivalents relating to equity
or business or equity securities issuable in connection with the Company’s stock
option or other employee benefit plans), then the Company shall deliver to each
Investor a written notice of such determination and, if within fifteen (15) days
after the date of the delivery of such notice, any such Investor shall so
or any part of such Registrable Securities such Investor requests to be
registered; provided, however, the Company shall not be required to register any
Registrable Securities pursuant to this Section 2(g) that are eligible for
resale pursuant to Rule 144 without restriction (including, without limitation,
volume restrictions) and without the need for current public information
required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or that are the
subject of a then-effective Registration Statement.
(h) Allocation of Registrable Securities. The initial number of
Registrable Securities included in any Registration Statement and any increase
in the number of Registrable Securities included therein shall be allocated pro
rata among the Investors based on the number of Registrable Securities held by
each Investor at the time such Registration Statement covering such initial
number of Registrable Securities or increase thereof is declared effective by
the SEC. In the event that an Investor sells or otherwise transfers any of such
Investor’s Registrable Securities, each transferee or assignee (as the case may
be) that becomes an Investor shall be allocated a pro rata portion of the
then-remaining number of Registrable Securities included in such Registration
Statement for such transferor or assignee (as the case may be). Any shares of
Common Stock included in a Registration Statement and which remain allocated to
any Person which ceases to hold any Registrable Securities covered by such
Registration Statement shall be allocated to the remaining Investors, pro rata
based on the number of Registrable Securities then held by such Investors which
are covered by such Registration Statement.
(i) No Inclusion of Other Securities. In no event shall the Company
include any securities other than Registrable Securities on any Registration
Statement without the prior written consent of the Required Holders. Until the
Applicable Date (as defined in the Securities Purchase Agreement), the Company
shall not enter into any agreement providing any registration rights to any of
its security holders.
3. Related Obligations.
The Company shall use commercially reasonable efforts to effect the registration
of the Registrable Securities in accordance with the intended method of
disposition thereof, and, pursuant thereto, the Company shall have the following
obligations:
7
(a) The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to all the Registrable Securities (but in no
event later than the applicable Filing Deadline) and use commercially reasonable
efforts to cause such Registration Statement to become effective as soon as
practicable after such filing (but in no event later than the Effectiveness
Deadline). Subject to Allowable Grace Periods, the Company shall keep each
Registration Statement effective (and the prospectus contained therein available
for use) pursuant to Rule 415 for resales by the Investors on a delayed or
continuous basis at then-prevailing market prices (and not fixed prices) at all
times until the earlier of (i) the date as of which all of the Investors may
sell all of the Registrable Securities required to be covered by such
Registration Statement (disregarding any reduction pursuant to Section 2(f))
without restriction pursuant to Rule 144 (including, without limitation, volume
Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or (ii) the date on which the
Investors shall have sold all of the Registrable Securities covered by such
Registration Statement (the “Registration Period”). Notwithstanding anything to
the contrary contained in this Agreement, the Company shall ensure that, when
filed and at all times while effective, each Registration Statement (including,
without limitation, all amendments and supplements thereto) and the prospectus
(including, without limitation, all amendments and supplements thereto) used in
connection with such Registration Statement (1) shall not contain any untrue
misleading and (2) will disclose (whether directly or through incorporation by
reference to other SEC filings to the extent permitted) all material information
regarding the Company and its securities. Subject to the provisions of the
definition of “Effectiveness Deadline,” the Company shall submit to the SEC,
within two (2) Business Days after the later of the date that (i) the Company
learns that no review of a particular Registration Statement will be made by the
Staff or that the Staff has no further comments on a particular Registration
Statement (as the case may be) and (ii) the consent of Legal Counsel is obtained
pursuant to Section 3(c) (which consent shall be immediately sought), a request
for acceleration of effectiveness of such Registration Statement to a time and
date not later than forty-eight (48) hours after the submission of such request.
(b) Subject to Section 3(r) of this Agreement, the Company shall
prepare and file with the SEC such amendments (including, without limitation,
post-effective amendments) and supplements to each Registration Statement and
the prospectus used in connection with each such Registration Statement, which
prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act,
as may be necessary to keep each such Registration Statement effective at all
times during the Registration Period for such Registration Statement, and,
during such period, comply with the provisions of the 1933 Act with respect to
the disposition of all Registrable Securities of the Company required to be
covered by such Registration Statement until such time as all of such
Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in
such Registration Statement; provided, however, by 8:30 a.m. (New York time) on
the Business Day immediately following each Effective Date, the Company shall
file with the SEC in accordance with Rule 424(b) under the 1933 Act the final
prospectus to be used in connection with sales pursuant to the applicable
Registration Statement (whether or not such a prospectus is technically required
by such rule). In the case of amendments and supplements to any Registration
Statement which are required to be filed pursuant to this Agreement (including,
without limitation, pursuant to this Section 3(b)) by reason of the Company
filing a report on Form 10-Q or Form 10-K or any analogous report under the
Securities Exchange Act of 1934, as amended (the “1934 Act”), the Company shall
have incorporated such report by reference into such Registration Statement, if
applicable, or shall file such amendments or supplements with the SEC on the
same day on which the 1934 Act report is filed which created the requirement for
the Company to amend or supplement such Registration Statement.
8
(c) The Company shall (A) permit Legal Counsel and legal counsel for
each other Investor to review and comment upon (i) each Registration Statement
at least three (3) Business Days prior to its filing with the SEC and (ii) all
amendments and supplements to each Registration Statement (including, without
limitation, the prospectus contained therein) (except for Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any
similar or successor reports) within a reasonable number of days prior to their
filing with the SEC, and (B) not file any Registration Statement or amendment or
supplement thereto in a form to which Legal Counsel or any legal counsel for any
other Investor reasonably objects. The Company shall not submit a request for
acceleration of the effectiveness of a Registration Statement or any amendment
or supplement thereto or to any prospectus contained therein without the prior
consent of Legal Counsel, which consent shall not be unreasonably withheld. The
Company shall promptly furnish to Legal Counsel and, upon each other Investor’s
written request, legal counsel for each such other Investor, without charge, (i)
copies of any correspondence from the SEC or the Staff to the Company or its
representatives relating to each Registration Statement, provided that such
correspondence shall not contain any material, non-public information regarding
the Company or any of its Subsidiaries (as defined in the Securities Purchase
Agreement), (ii) after the same is prepared and filed with the SEC, one (1) copy
of each Registration Statement and any amendment(s) and supplement(s) thereto,
including, without limitation, financial statements and schedules, all documents
incorporated therein by reference, if requested by an Investor, and all exhibits
and (iii) upon the effectiveness of each Registration Statement, one (1) copy of
the prospectus included in such Registration Statement and all amendments and
supplements thereto. The Company shall reasonably cooperate with Legal Counsel
and legal counsel for each other Investor in performing the Company’s
obligations pursuant to this Section 3.
(d) The Company shall promptly furnish to each Investor whose
Registrable Securities are included in any Registration Statement, without
charge, (i) after the same is prepared and filed with the SEC, at least one (1)
copy of each Registration Statement and any amendment(s) and supplement(s)
thereto, including, without limitation, financial statements and schedules, all
documents incorporated therein by reference, if requested by an Investor, all
exhibits and each preliminary prospectus, (ii) upon the effectiveness of each
Registration Statement, ten (10) copies of the prospectus included in such
Registration Statement and all amendments and supplements thereto (or such other
number of copies as such Investor may reasonably request from time to time) and
(iii) such other documents, including, without limitation, copies of any
preliminary or final prospectus, as such Investor may reasonably request from
time to time in order to facilitate the disposition of the Registrable
Securities owned by such Investor, provided that any such item which is
available on the SEC’s EDGAR System (or successor thereto) need not be furnished
in physical form.
9
(e) Upon the reasonable request of an Investor, the Company shall use
commercially reasonable efforts to (i) register and qualify, unless an exemption
from registration and qualification applies, the resale by Investors of the
Registrable Securities covered by a Registration Statement under such other
securities or “blue sky” laws of all applicable jurisdictions in the United
States, (ii) prepare and file in those jurisdictions, such amendments
(including, without limitation, post-effective amendments) and supplements to
such registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, the Company shall not be
required in connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(e), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify Legal Counsel and each Investor
who holds Registrable Securities of the receipt by the Company of any
notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or “blue sky”
laws of any jurisdiction in the United States or its receipt of actual notice of
the initiation or threatening of any proceeding for such purpose.
(f) The Company shall notify Legal Counsel and each Investor in writing
of the happening of any event, as promptly as practicable after becoming aware
of such event, as a result of which the prospectus included in a Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or necessary to
were made, not misleading (provided that in no event shall such notice contain
any material, non-public information regarding the Company or any of its
Subsidiaries), and, subject to Section 3(r), promptly prepare a supplement or
amendment to such Registration Statement and such prospectus contained therein
to correct such untrue statement or omission and deliver ten (10) copies of such
supplement or amendment to Legal Counsel and each Investor (or such other number
of copies as Legal Counsel or such Investor may reasonably request). The Company
shall also promptly notify Legal Counsel and each Investor in writing (i) when a
prospectus or any prospectus supplement or post-effective amendment has been
filed, when a Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to Legal
Counsel and each Investor by facsimile or e-mail on the same day of such
effectiveness and by overnight mail), and when the Company receives written
notice from the SEC that a Registration Statement or any post-effective
amendment will be reviewed by the SEC, (ii) of any request by the SEC for
amendments or supplements to a Registration Statement or related prospectus or
related information, (iii) of the Company’s reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate; and
(iv) of the receipt of any request by the SEC or any other federal or state
governmental authority for any additional information relating to the
Registration Statement or any amendment or supplement thereto or any related
prospectus. The Company shall respond as promptly as practicable to any comments
received from the SEC with respect to each Registration Statement or any
amendment thereto (it being understood and agreed that the Company’s response to
any such comments shall be delivered to the SEC no later than five (5) Business
Days after the receipt thereof).
10
(g) The Company shall (i) use commercially reasonable efforts to
prevent the issuance of any stop order or other suspension of effectiveness of
each Registration Statement or the use of any prospectus contained therein, or
the suspension of the qualification, or the loss of an exemption from
qualification, of any of the Registrable Securities for sale in any jurisdiction
and, if such an order or suspension is issued, to obtain the withdrawal of such
order or suspension at the earliest possible moment and (ii) notify Legal
Counsel and each Investor who holds Registrable Securities of the issuance of
such order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.
(h) If any Investor may be required under applicable securities law to
be described in any Registration Statement as an underwriter and such Investor
consents to so being named an underwriter, at the request of any Investor, the
Company shall furnish to such Investor, on the date of the effectiveness of such
Registration Statement and thereafter from time to time on such dates as an
Investor may reasonably request (i) a letter, dated such date, from the
Company’s independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the Investors, and (ii) an
opinion, dated as of such date, of counsel representing the Company for purposes
of such Registration Statement, in form, scope and substance as is customarily
given in an underwritten public offering, addressed to the Investors.
(i) If any Investor may be required under applicable securities law to
consents to so being named an underwriter, upon the written request of such
Investor, the Company shall make available for inspection by (i) such Investor,
(ii) legal counsel for such Investor identified by such Investor in a writing
delivered to the Company, and (iii) one (1) firm of accountants or other agents
retained by such Investor (collectively, the “Inspectors”), all pertinent
financial and other records, and pertinent corporate documents and properties of
the Company (collectively, the “Records”), as shall be reasonably deemed
necessary by each Inspector, and cause the Company’s officers, directors and
employees to supply all information which any Inspector may reasonably request;
provided, however, each Inspector shall agree in writing to hold in strict
confidence and not to make any disclosure (except to such Investor) or use of
any Record or other information which the Company’s board of directors
determines in good faith to be confidential, and of which determination the
Inspectors are so notified, unless (1) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the 1933 Act, (2) the release of such
Records is ordered pursuant to a final, non-appealable subpoena or order from a
court or government body of competent jurisdiction, or (3) the information in
such Records has been made generally available to the public other than by
disclosure in violation of this Agreement or any other Transaction Document (as
defined in the Securities Purchase Agreement). Such Investor agrees that it
shall, upon learning that disclosure of such Records is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential. Nothing herein (or in any other
confidentiality agreement between the Company and such Investor, if any) shall
be deemed to limit any Investor’s ability to sell Registrable Securities in a
manner which is otherwise consistent with applicable laws and regulations.
11
(j) The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
misstatement or omission in any Registration Statement or is otherwise required
to be disclosed in such Registration Statement pursuant to the 1933 Act, (iii)
the release of such information is ordered pursuant to a subpoena or other
final, non-appealable order from a court or governmental body of competent
Transaction Document. The Company agrees that it shall, upon learning that
disclosure of such information concerning an Investor is sought in or by a court
prompt written notice to such Investor and allow such Investor, at such
Investor’s expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, such information.
(k) Without limiting any obligation of the Company under the Securities
Purchase Agreement, the Company shall use commercially reasonable efforts either
to (i) cause all of the Registrable Securities covered by each Registration
Statement to be listed on each securities exchange on which securities of the
same class or series issued by the Company are then listed, if any, if the
listing of such Registrable Securities is then permitted under the rules of such
exchange, (ii) secure designation and quotation of all of the Registrable
Securities covered by each Registration Statement on the OTC Bulletin Board, or
(iii) if, despite the Company’s efforts to satisfy the preceding clauses (i) or
(ii), the Company is unsuccessful in satisfying the preceding clauses (i) or
(ii), without limiting the generality of the foregoing, to use commercially
reasonable efforts to arrange for at least two market makers to register with
the Financial Industry Regulatory Authority (“FINRA”) as such with respect to
such Registrable Securities. In addition, the Company shall cooperate with each
Investor and any broker or dealer through which any such Investor proposes to
sell its Registrable Securities in effecting a filing with FINRA pursuant to
FINRA Rule 5110 as requested by such Investor. The Company shall pay all fees
and expenses in connection with satisfying its obligations under this Section
3(k).
(l) The Company shall cooperate with the Investors who hold Registrable
Securities being offered and, to the extent applicable, facilitate the timely
preparation and delivery of certificates representing the Registrable Securities
to be offered pursuant to a Registration Statement and enable such certificates
to be in such denominations or amounts (as the case may be) as the Investors may
reasonably request from time to time and registered in such names as the
Investors may request.
(m) If requested by an Investor, the Company shall as soon as
practicable after receipt of notice from such Investor and subject to Section
3(r) hereof, (i) incorporate in a prospectus supplement or post-effective
amendment such information as an Investor reasonably requests to be included
therein relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the number of
Registrable Securities being offered or sold, the purchase price being paid
incorporated in such prospectus supplement or post-effective amendment; and
(iii) supplement or make amendments to any Registration Statement or prospectus
contained therein if reasonably requested by an Investor holding any Registrable
Securities.
12
(n) The Company shall use commercially reasonable efforts to cause the
Registrable Securities covered by a Registration Statement to be registered with
or approved by such other governmental agencies or authorities as may be
necessary to consummate the disposition of such Registrable Securities.
(o) The Company shall make generally available to its security holders
as soon as practical, but not later than ninety (90) days after the close of the
period covered thereby, an earnings statement (in form complying with, and in
the manner provided by, the provisions of Rule 158 under the 1933 Act) covering
a twelve-month period beginning not later than the first day of the Company’s
fiscal quarter next following the applicable Effective Date of each Registration
Statement.
(p) The Company shall otherwise use commercially reasonable efforts to
comply with all applicable rules and regulations of the SEC in connection with
any registration hereunder.
(q) Within one (1) Business Day after a Registration Statement which
covers Registrable Securities is declared effective by the SEC, the Company
shall deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to the Investors
whose Registrable Securities are included in such Registration Statement)
confirmation that such Registration Statement has been declared effective by the
SEC in the form attached hereto as Exhibit A.
(r) Notwithstanding anything to the contrary herein (but subject to the
last sentence of this Section 3(r)), at any time after the Effective Date of a
particular Registration Statement, the Company may delay the disclosure of
material, non-public information concerning the Company or any of its
Subsidiaries the disclosure of which at the time is not, in the good faith
opinion of the board of directors of the Company, in the best interest of the
Company and, in the opinion of counsel to the Company, otherwise required (a
“Grace Period”), provided that the Company shall promptly notify the Investors
in writing of the (i) existence of material, non-public information giving rise
to a Grace Period (provided that in each such notice the Company shall not
disclose the content of such material, non-public information to any of the
Investors) and the date on which such Grace Period will begin and (ii) date on
which such Grace Period ends, provided further that (I) no Grace Period shall
exceed ten (10) consecutive days and during any three hundred sixty five (365)
day period all such Grace Periods shall not exceed an aggregate of thirty (30)
days, (II) the first day of any Grace Period must be at least five (5) Trading
Days after the last day of any prior Grace Period and (III) no Grace Period may
exist during the sixty (60) Trading Day period immediately following the
Effective Date of such Registration Statement (provided that such sixty (60)
Trading Day period shall be extended by the number of Trading Days during such
period and any extension thereof contemplated by this proviso during which such
Registration Statement is not effective or the prospectus contained therein is
not available for use) (each, an “Allowable Grace Period”). For purposes of
determining the length of a Grace Period above, such Grace Period shall begin on
and include the date the Investors receive the notice referred to in clause (i)
above and shall end on and include the later of the date the Investors receive
the notice referred to in clause (ii) above and the date referred to in such
notice. The provisions of Section 3(g) hereof shall not be applicable during the
period of any Allowable Grace Period. Upon expiration of each Grace Period, the
Company shall again be bound by the first sentence of Section 3(f) with respect
to the information giving rise thereto unless such material, non-public
information is no longer applicable. Notwithstanding anything to the contrary
contained in this Section 3(r), the Company shall cause its transfer agent to
deliver unlegended shares of Common Stock to a transferee of an Investor in
accordance with the terms of the Securities Purchase Agreement in connection
with any sale of Registrable Securities with respect to which such Investor has
entered into a contract for sale, and delivered a copy of the prospectus
included as part of the particular Registration Statement to the extent
applicable, prior to such Investor’s receipt of the notice of a Grace Period and
for which the Investor has not yet settled.
13
(s) The Company shall use commercially reasonable efforts to maintain
eligibility for use of Form S-3 (or any successor form thereto) for the
registration of the resale of all the Registrable Securities.
(t) The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by each Investors of its Registrable
Securities pursuant to each Registration Statement.
4. Obligations of the Investors.
(a) At least five (5) Business Days prior to the first anticipated
filing date of each Registration Statement, the Company shall notify each
Investor in writing of the information the Company requires from each such
Investor with respect to such Registration Statement. It shall be a condition
precedent to the obligations of the Company to complete the registration
pursuant to this Agreement with respect to the Registrable Securities of a
particular Investor that such Investor shall furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it, as
shall be reasonably required to effect and maintain the effectiveness of the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request.
(b) Each Investor, by such Investor’s acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of each Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor’s election to exclude all of such Investor’s Registrable
Securities from such Registration Statement.
(c) Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(g) or
the first sentence of 3(f), such Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until such Investor’s receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3(g) or the
first sentence of Section 3(f) or receipt of notice that no supplement or
amendment is required. Notwithstanding anything to the contrary in this Section
4(c), the Company shall cause its transfer agent to deliver unlegended shares of
Common Stock to a transferee of an Investor in accordance with the terms of the
Securities Purchase Agreement in connection with any sale of Registrable
Securities with respect to which such Investor has entered into a contract for
sale prior to the Investor’s receipt of a notice from the Company of the
happening of any event of the kind described in Section 3(g) or the first
sentence of Section 3(f) and for which such Investor has not yet settled.
14
(d) Each Investor covenants and agrees that it will comply with the
prospectus delivery requirements of the 1933 Act as applicable to it in
connection with sales of Registrable Securities pursuant to a Registration
Statement.
5. Expenses of Registration.
All reasonable expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Sections 2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, FINRA filing fees (if any)
and fees and disbursements of counsel for the Company shall be paid by the
Company. The Company shall also reimburse Cranshire for the fees and
disbursements of Legal Counsel in connection with registration, filing or
qualification pursuant to Sections 2 and 3 of this Agreement which amount shall
be limited to $10,000.
6. Indemnification.
(a) To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each Investor and each of its
directors, officers, shareholders, members, partners, employees, agents,
advisors, representatives (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding the lack of such title or
any other title) and each Person, if any, who controls such Investor within the
meaning of the 1933 Act or the 1934 Act and each of the directors, officers,
shareholders, members, partners, employees, agents, advisors, representatives
(and any other Persons with a functionally equivalent role of a Person holding
such titles notwithstanding the lack of such title or any other title) of such
controlling Persons (each, an “Indemnified Person”), against any losses,
obligations, claims, damages, liabilities, contingencies, judgments, fines,
penalties, charges, costs (including, without limitation, court costs,
reasonable attorneys’ fees and costs of defense and investigation), amounts paid
in settlement or expenses, joint or several, (collectively, “Claims”) incurred
in investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party is or
may be a party thereto (“Indemnified Damages”), to which any of them may become
subject insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or any post-effective amendment thereto or in any filing made in
connection with the qualification of the offering under the securities or other
“blue sky” laws of any jurisdiction in which Registrable Securities are offered
(“Blue Sky Filing”), or the omission or alleged omission to state a material
not misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading or (iii) any violation or alleged violation by the Company
of the 1933 Act, the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder relating to the offer
or sale of the Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being, collectively,
“Violations”). Subject to Section 6(c), the Company shall reimburse the
Indemnified Persons, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (i) shall not apply to a Claim by an Indemnified
Person arising out of or based upon a Violation which occurs in reliance upon
and in conformity with information furnished in writing to the Company by such
Indemnified Person for such Indemnified Person expressly for use in connection
with the preparation of such Registration Statement or any such amendment
thereof or supplement thereto, or any preliminary or final prospectus, and (ii)
shall not be available to a particular Investor to the extent such Claim is
based on a failure of such Investor to deliver or to cause to be delivered the
prospectus made available by the Company (to the extent applicable), including,
without limitation, a corrected prospectus, if such prospectus or corrected
prospectus was timely made available by the Company pursuant to Section 3(d) and
then only if, and to the extent that, following the receipt of the corrected
prospectus no grounds for such Claim would have existed; and (iii) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld or delayed. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of any of the Registrable Securities by
any of the Investors pursuant to Section 9.
15
(b) In connection with any Registration Statement in which an Investor
is participating, such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is set
forth in Section 6(a), the Company, each of its directors, each of its officers
who signs the Registration Statement and each Person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act (each, an
“Indemnified Party”), against any Claim or Indemnified Damages to which any of
them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar
as such Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case, to the extent, and only to the extent, that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in connection with
such Registration Statement or any preliminary or final prospectus; and, subject
to Section 6(c) and the below provisos in this Section 6(b), such Investor will
reimburse an Indemnified Party any legal or other expenses reasonably incurred
by such Indemnified Party in connection with investigating or defending any such
Claim; provided, however, the indemnity agreement contained in this Section 6(b)
and the agreement with respect to contribution contained in Section 7 shall not
without the prior written consent of such Investor, which consent shall not be
unreasonably withheld or delayed, provided further that such Investor shall be
liable under this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to such Investor as a result of the
applicable sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of any of the Registrable Securities by any of the
Investors pursuant to Section 9.
16
(c) Promptly after receipt by an Indemnified Person or Indemnified
Party (as the case may be) under this Section 6 of notice of the commencement of
any action or proceeding (including, without limitation, any governmental action
or proceeding) involving a Claim, such Indemnified Person or Indemnified Party
(as the case may be) shall, if a Claim in respect thereof is to be made against
any indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party (as the
case may be); provided, however, an Indemnified Person or Indemnified Party (as
the case may be) shall have the right to retain its own counsel with the fees
and expenses of such counsel to be paid by the indemnifying party if: (i) the
indemnifying party has agreed in writing to pay such fees and expenses; (ii) the
indemnifying party shall have failed promptly to assume the defense of such
Claim and to employ counsel reasonably satisfactory to such Indemnified Person
or Indemnified Party (as the case may be) in any such Claim; or (iii) the named
parties to any such Claim (including, without limitation, any impleaded parties)
include both such Indemnified Person or Indemnified Party (as the case may be)
and the indemnifying party, and such Indemnified Person or such Indemnified
Party (as the case may be) shall have been advised by counsel that a conflict of
interest is likely to exist if the same counsel were to represent such
Indemnified Person or such Indemnified Party and the indemnifying party (in
which case, if such Indemnified Person or such Indemnified Party (as the case
may be) notifies the indemnifying party in writing that it elects to employ
separate counsel at the expense of the indemnifying party, then the indemnifying
party shall not have the right to assume the defense thereof and such counsel
shall be at the expense of the indemnifying party, provided further that in the
case of clause (iii) above the indemnifying party shall not be responsible for
the reasonable fees and expenses of more than one (1) separate legal counsel for
such Indemnified Person or Indemnified Party (as the case may be). The
Indemnified Party or Indemnified Person (as the case may be) shall reasonably
cooperate with the indemnifying party in connection with any negotiation or
defense of any such action or Claim by the indemnifying party and shall furnish
to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person (as the case may be) which relates to
such action or Claim. The indemnifying party shall keep the Indemnified Party or
Indemnified Person (as the case may be) reasonably apprised at all times as to
the status of the defense or any settlement negotiations with respect thereto.
No indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its prior written consent; provided, however, the
indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written consent of the
Indemnified Party or Indemnified Person (as the case may be), consent to entry
of any judgment or enter into any settlement or other compromise which does not
to such Indemnified Party or Indemnified Person (as the case may be) of a
release from all liability in respect to such Claim or litigation, and such
settlement shall not include any admission as to fault on the part of the
Indemnified Party. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party or
Indemnified Person (as the case may be) with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party (as the case may be) under this Section 6, except to the extent that the
indemnifying party is materially and adversely prejudiced in its ability to
defend such action.
17
(d) No Person involved in the sale of Registrable Securities who is
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) in connection with such sale shall be entitled to indemnification
from any Person involved in such sale of Registrable Securities who is not
guilty of fraudulent misrepresentation.
(e) The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.
(f) The indemnity and contribution agreements contained herein shall be
in addition to (i) any cause of action or similar right of the Indemnified Party
or Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.
7. Contribution.
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however: (i) no contribution
shall be made under circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Section 6 of this
Agreement, (ii) no Person involved in the sale of Registrable Securities which
Person is guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) in connection with such sale shall be entitled to
contribution from any Person involved in such sale of Registrable Securities who
was not guilty of fraudulent misrepresentation; and (iii) contribution by any
seller of Registrable Securities shall be limited in amount to the amount of net
proceeds received by such seller from the applicable sale of such Registrable
Securities pursuant to such Registration Statement. Notwithstanding the
provisions of this Section 7, no Investor shall be required to contribute, in
actually received by such Investor from the applicable sale of the Registrable
Securities subject to the Claim exceeds the amount of any damages that such
Investor has otherwise been required to pay, or would otherwise be required to
pay under Section 6(b), by reason of such untrue or alleged untrue statement or
omission or alleged omission.
8. Reports Under the 1934 Act.
With a view to making available to the Investors the benefits of Rule 144, the
Company agrees to:
18
understood and defined in Rule 144;
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements (it being understood and agreed
that nothing herein shall limit any obligations of the Company under the
Securities Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and
(c) furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company, if
true, that it has complied with the reporting, submission and posting
requirements of Rule 144 and the 1934 Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so filed
by the Company with the SEC if such reports are not publicly available via
EDGAR, and (iii) such other information as may be reasonably requested to permit
the Investors to sell such securities pursuant to Rule 144 without registration.
9. Assignment of Registration Rights.
All or any portion of the rights under this Agreement shall be automatically
assignable by each Investor to any transferee or assignee (as the case may be)
of all or any portion of such Investor’s Registrable Securities or Warrants if:
(i) such Investor agrees in writing with such transferee or assignee (as the
case may be) to assign all or any portion of such rights, and a copy of such
agreement is furnished to the Company within a reasonable time after such
transfer or assignment (as the case may be); (ii) the Company is, within a
reasonable time after such transfer or assignment (as the case may be),
furnished with written notice of (a) the name and address of such transferee or
assignee (as the case may be), and (b) the securities with respect to which such
registration rights are being transferred or assigned (as the case may be);
(iii) immediately following such transfer or assignment (as the case may be) the
further disposition of such securities by such transferee or assignee (as the
case may be) is restricted under the 1933 Act or applicable state securities
laws if so required; (iv) at or before the time the Company receives the written
notice contemplated by clause (ii) of this sentence such transferee or assignee
(as the case may be) agrees in writing with the Company to be bound by all of
the provisions contained herein; (v) such transfer or assignment (as the case
may be) shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreement and the Warrants (as the case may be); and
(vi) such transfer or assignment (as the case may be) shall have been conducted
in accordance with all applicable federal and state securities laws.
10. Amendment of Registration Rights.
Provisions of this Agreement may be amended only with the written consent of the
Company and the Required Holders. Any amendment effected in accordance with this
Section 10 shall be binding upon each Investor and the Company, provided that no
such amendment shall be effective to the extent that it (1) applies to less than
all of the holders of the holders of Registrable Securities, (2) imposes any
monetary obligation or liability, or any material obligation or liability, on
any Investor without such Investor’s prior written consent (which may be granted
or withheld in such Investor’s sole discretion) or (3) applies retroactively. No
waiver shall be effective unless it is in writing and signed by an authorized
representative of the waiving party, provided that the Required Holders (in a
writing signed by all of the Required Holders) may waive any provision of this
Agreement, and any waiver of any provision of this Agreement made in conformity
with the provisions of this Section 10 shall be binding on each Investor,
provided that no such waiver shall be effective to the extent that it (1)
applies to less than all the Investors (unless a party gives a waiver as to
itself only) or (2) imposes any monetary obligation or liability, or any
material obligation or liability, on any Investor without such Investor’s prior
written consent (which may be granted or withheld in such Investor’s sole
discretion). No consideration shall be offered or paid to any Person to amend or
the same consideration also is offered to all of the parties to this Agreement.
19
11. Miscellaneous.
(a) Solely for purposes of this Agreement, a Person is deemed to be a
holder of Registrable Securities whenever such Person owns, or is deemed to own,
of record such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more Persons with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from such record owner of such
Registrable Securities.
(b) Any notices, consents, waivers or other communications required or
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); (iii) with respect to Section 3(c), by electronic mail (provided
confirmation of transmission is electronically generated and kept on file by the
sending party); or (iv) one (1) Business Day after deposit with a nationally
recognized overnight delivery service with next day delivery specified, in each
case, properly addressed to the party to receive the same. The addresses,
facsimile numbers and electronic mail addresses for such communications shall
be:
LightPath Technologies, Inc.
2603 Challenger Tech. Court, Suite 100
Orlando, Florida 32826
Facsimile: (407) 382-4007
E-mail address: [email protected]
With a copy (for informational purposes only) to:
Baker & Hostetler LLP
200 S. Orange Ave., Suite 2300
Orlando, Florida 32801
Facsimile: (407) 841-0168
20
E-mail address: [email protected]
Attention: Jeffrey E. Decker, Esq.
If to the Transfer Agent:
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016
Facsimile: (908) 497-2310
E-mail address: [email protected]
Attention: David Rillera
If to Legal Counsel:
Greenberg Traurig, LLP
77 W. Wacker Drive, Suite 3100
Chicago, Illinois 60601
E-mail addresses: [email protected]
[email protected]
Facsimile: (312) 456-8435
Attention: Peter H. Lieberman, Esq.
Todd A. Mazur, Esq.
If to a Buyer, to its address, facsimile number or electronic mail address (as
the case may be) set forth on the Schedule of Buyers attached to the Securities
Purchase Agreement, with copies to such Buyer’s representatives as set forth on
the Schedule of Buyers, or to such other address and/or facsimile number and/or
to the attention of such other Person as the recipient party has specified by
written notice given to each other party five (5) days prior to the
effectiveness of such change, provided that Greenberg Traurig, LLP shall only be
provided notices sent to Cranshire. Written confirmation of receipt (A) given by
the recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender’s facsimile machine or
electronic mail transmission containing the time, date and recipient facsimile
number or electronic mail address or (C) provided by a courier or overnight
courier service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof. The Company and each Investor acknowledge
and agree that irreparable damage would occur in the event that any of the
specific terms or were otherwise breached. It is accordingly agreed that each
party hereto shall be entitled to an injunction or injunctions to prevent or
cure breaches of the provisions of this Agreement by any other party hereto and
to enforce specifically the terms and provisions hereof (without the necessity
of showing economic loss and without any bond or other security being required),
this being in addition to any other remedy to which any party may be entitled by
law or equity.
21
(d) The parties hereby agree that pursuant to 735 Illinois Compiled
Statutes 105/5-5 they have chosen that all questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of Illinois, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of Illinois or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of Illinois. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in Chicago, Illinois, for the adjudication of any dispute
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
the jurisdiction of any such court, that such suit, action or proceeding is
proceeding is improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
manner permitted by law. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(e) This Agreement, the other Transaction Documents, the schedules and
exhibits attached hereto and thereto and the instruments referenced herein and
therein constitute the entire agreement among the parties hereto and thereto
solely with respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein. This Agreement, the other Transaction
Documents, the schedules and exhibits attached hereto and thereto and the
instruments referenced herein and therein supersede all prior agreements and
understandings among the parties hereto solely with respect to the subject
matter hereof and thereof; provided, however, nothing contained in this
Agreement or any other Transaction Document shall (or shall be deemed to) (i)
have any effect on any agreements any Investor has entered into with, or any
instrument that any Investor received from, the Company or any of its
Subsidiaries prior to the date hereof with respect to any prior investment made
by such Investor in the Company, (ii) waive, alter, modify or amend in any
respect any obligations of the Company or any of its Subsidiaries or any rights
of or benefits to any Investor or any other Person in any agreement entered into
prior to the date hereof between or among the Company and/or any of its
Subsidiaries and any Investor or any instrument that any Investor received prior
to the date hereof from the Company and/or any of its Subsidiaries and all such
agreements and instruments shall continue in full force and effect or (iii)
limit any obligations of the Company under any of the other Transaction
Documents.
(f) Subject to compliance with Section 9 (if applicable), this
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto. This Agreement is not for
the benefit of, nor may any provision hereof be enforced by, any Person, other
than the parties hereto, their respective permitted successors and assigns and
the Persons referred to in Sections 6 and 7 hereof.
22
(g) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof. Unless the
context clearly indicates otherwise, each pronoun herein shall be deemed to
include the masculine, feminine, neuter, singular and plural forms thereof. The
terms “including,” “includes,” “include” and words of like import shall be
construed broadly as if followed by the words “without limitation.” The terms
“herein,” “hereunder,” “hereof” and words of like import refer to this entire
Agreement instead of just the provision in which they are found.
(h) This Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
original thereof.
(i) Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents as any other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
(j) The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party. Notwithstanding anything
to the contrary set forth in Section 10, terms used in this Agreement but
defined in the other Transaction Documents shall have the meanings ascribed to
such terms on the Closing Date in such other Transaction Documents unless
otherwise consented to in writing by each Investor.
(k) All consents and other determinations required to be made by the
Investors pursuant to this Agreement shall be made, unless otherwise specified
in this Agreement, by the Required Holders, and shall be binding upon all
Investors.
23
(l) The obligations of each Investor under this Agreement and the other
Transaction Documents are several and not joint with the obligations of any
other Investor, and no Investor shall be responsible in any way for the
performance of the obligations of any other Investor under this Agreement or any
other Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Investor pursuant hereto or thereto, shall
be deemed to constitute the Investors as, and the Company acknowledges that the
Investors do not so constitute, a partnership, an association, a joint venture
or any other kind of group or entity, or create a presumption that the Investors
are in any way acting in concert or as a group or entity with respect to such
obligations or the transactions contemplated by the Transaction Documents or any
matters, and the Company acknowledges that the Investors are not acting in
concert or as a group, and the Company shall not assert any such claim, with
respect to such obligations or the transactions contemplated by this Agreement
or any of the other the Transaction Documents. Each Investor shall be entitled
to independently protect and enforce its rights, including, without limitation,
the rights arising out of this Agreement or out of any other Transaction
Documents, and it shall not be necessary for any other Investor to be joined as
an additional party in any proceeding for such purpose. The use of a single
agreement with respect to the obligations of the Company contained herein was
solely in the control of the Company, not the action or decision of any
Investor, and was done solely for the convenience of the Company and not because
it was required or requested to do so by any Investor. It is expressly
each other Transaction Document is between the Company and an Investor, solely,
and not between the Company and the Investors collectively and not between and
among Investors.
24
IN WITNESS WHEREOF, Buyer and the Company have caused their respective signature
page to this Registration Rights Agreement to be duly executed as of the date
first written above.
COMPANY: LightPath Technologies, Inc. By: /s/ J. James Gaynor
J. James Gaynor Chief Executive Officer
first written above.
BUYER: CRANSHIRE CAPITAL MASTER FUND, LTD. By: Cranshire Capital
Advisors, LLC Its: Investment Manager /s/ Keith A. Goodman By: Keith
A. Goodman Its: Chief Operating Officer
first written above.
BUYER: PYRAMID TRADING, L.P. /s/ Keith A. Goodman By: Keith A.
Goodman Its: Chief Operating Officer
first written above.
BUYER: /s/ Brett A. Moyer Brett A. Moyer
first written above.
BUYER: /s/ Ami Silberman Ami Silberman
first written above.
BUYER: /s/ David Diamant David Diamant /s/ Ronni Diamant Ronni
Diamant
first written above.
BUYER: THE BART MARCY TRUST /s/ Barton C. Marcy By: Barton C.
Marcy Its: Trustee
first written above.
BUYER: DYETT-RICHARDSON FAMILY TRUST /s/ Michael Dyett By:
Michael Dyett Its: Trustee
first written above.
BUYER: /s/ Lester B. Boelter Lester B. Boelter
first written above.
BUYER: /s/ Richard Straeter Richard Straeter
first written above.
BUYER: /s/ Raymond Smullyan Raymond Smullyan
first written above.
BUYER: /s/ Mark Grinbaum Mark Grinbaum
first written above.
BUYER: /s/ William S. Lapp William S. Lapp
first written above.
BUYER: /s/ Eric Handorf Eric Handorf
first written above.
BUYER: SHADOW CAPITAL LLC /s/ B. Kent Garlinghouse By: B. Kent
Garlinghouse Its: Manager
page to this Agreement to be duly executed as of the date first written above.
BUYER: /s/ Richard J. Lemming Richard J. Lemming /s/ Emily M.
Lemming Emily M. Lemming
first written above.
BUYER: OCTAGON CAPITAL PARTNERS /s/ Steven Hart By: Steven Hart
Its: General Partner
first written above.
BUYER: SCHOTTENSTEIN CAPITAL PARTNERS, LP /s/ Gary L.
Schottenstein By: Gary L. Schottenstein Its: General Partner
first written above.
BUYER: Next View Capital LP /s/ Stewart Flink By: Stewart Flink
Its: Manager
first written above.
BUYER: /s/ Nicholas Carosi III Nicholas Carosi III
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
Registrar and Transfer Company
10 Commerce Drive
Attention: David Rillera
Re: LightPath Technologies, Inc.
Ladies and Gentlemen:
We are counsel to LightPath Technologies, Inc., a Delaware corporation (the
“Company”), and have represented the Company in connection with that certain
Securities Purchase Agreement (the “Securities Purchase Agreement”) entered into
by and among the Company and the buyers named therein (collectively, the
“Holders”) pursuant to which the Company issued to the Holders shares of the
Company’s common stock, Class A, $.01 par value per share (the “Common Stock”),
and warrants exercisable for shares of Common Stock (the “Warrants”). Pursuant
to the Securities Purchase Agreement, the Company also has entered into a
Registration Rights Agreement with the Holders (the “Registration Rights
Agreement”) pursuant to which the Company agreed, among other things, to
register the Registrable Securities (as defined in the Registration Rights
Agreement), including the shares of Common Stock issuable upon exercise of the
Warrants, under the Securities Act of 1933, as amended (the “1933 Act”). In
connection with the Company’s obligations under the Registration Rights
Agreement, on ____________ ___, 20__, the Company filed a Registration Statement
on Form [S-1][S-3] (File No. 333-_____________) (the “Registration Statement”)
with the Securities and Exchange Commission (the “SEC”) relating to the
Registrable Securities which names each of the Holders as a selling stockholder
thereunder.
In connection with the foregoing, we advise you that a member of the SEC’s staff
has advised us by telephone that the SEC has entered an order declaring the
Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC’s staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
This letter shall serve as our standing opinion to you that the shares of Common
Stock and the shares of Common Stock underlying the Warrants are freely
transferable by the Holders pursuant to the Registration Statement. You need not
require further letters from us to effect any future legend-free issuance or
reissuance of such shares of Common Stock to the Holders as contemplated by the
Company’s Irrevocable Transfer Agent Instructions dated _________ __, 20__.
Very truly yours, [ISSUER’S COUNSEL] By:
CC: [LIST NAMES OF HOLDERS]
EXHIBIT B
SELLING STOCKHOLDERS
The shares of common stock being offered by the selling stockholders are those
issued to the selling stockholders and those issuable to the selling
stockholders upon exercise of the warrants. For additional information regarding
the issuance of the common stock and the warrants, see “Private Placement of
Common Stock and Warrants” above. We are registering the shares of common stock
in order to permit the selling stockholders to offer the shares for resale from
time to time. Except for the ownership of the common stock and the warrants
issued pursuant to the Securities Purchase Agreement, the selling stockholders
have not had any material relationship with us within the past three years.
The table below lists the selling stockholders and other information regarding
the beneficial ownership (as determined under Section 13(d) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder) of
the shares of common stock held by each of the selling stockholders. The second
column lists the number of shares of common stock beneficially owned by the
selling stockholders, based on their respective ownership of shares of common
stock and warrants, as of ________, 20___, assuming exercise of the warrants
held by each such selling stockholder on that date but taking account of any
limitations on exercise set forth therein.
The third column lists the shares of common stock being offered by this
prospectus by the selling stockholders and does not take into account any
limitations on exercise of the warrants set forth therein.
In accordance with the terms of a registration rights agreement with the holders
of the common stock and the warrants, this prospectus generally covers the
resale of the sum of (i) the shares of common stock issued to the selling
stockholders and (ii) the maximum number of shares of common stock issuable upon
exercise of the warrants determined as if the outstanding warrants were
exercised in full (without regard to any limitations on exercise contained
therein) as of the trading day immediately preceding the date this registration
statement was initially filed with the SEC. The fourth column assumes the sale
of all of the shares offered by the selling stockholders pursuant to this
prospectus.
Under the terms of the warrants, a selling stockholder may not exercise the
warrants to the extent (but only to the extent) such selling stockholder or any
of its affiliates would beneficially own a number of shares of our common stock
which would exceed 4.9% or 9.9% (as applicable). The number of shares in the
second column reflects these limitations. The selling stockholders may sell all,
some or none of their shares in this offering. See “Plan of Distribution.”
Name of Selling Stockholder Number of Shares of
Common Stock Owned
Prior to Offering Maximum Number of
Shares of Common Stock to
be Sold Pursuant to this
Prospectus Number of Shares of
Common Stock Owned
After Offering Cranshire Capital Master Fund, Ltd.
Pyramid Trading L.P. Brett A. Moyer
Ami Silberman David and Ronni
Diamant The Bart Marcy Trust
Dyett-Richardson Family Trust Lester B. Boelter
Richard Straeter Raymond Smullyan
Mark Grinbaum William S.
Lapp Eric Handorf Shadow
Capital LLC Richard J. and Emily M. Lemming
Octagon Capital Partners Schottenstein
Capital Partners, LP Next View Capital LP
Nicholas Carosi III
(1) Cranshire Capital Advisors, LLC (“CCA”) serves as the investment manager to
Cranshire Capital Master Fund, Ltd. (“Cranshire Master Fund”) and consequently
has voting control and investment discretion over securities held by Cranshire
Master Fund. Mitchell P. Kopin (“Mr. Kopin”) has voting control over CCA. As a
result, each of Mr. Kopin and CCA may be deemed to have beneficial ownership (as
determined under Section 13(d) of the Securities Exchange Act of 1934, as
amended) of the securities held by Cranshire Master Fund which are covered
hereunder.
PLAN OF DISTRIBUTION
We are registering the shares of common stock issued to the selling stockholders
and the shares of common stock issuable upon exercise of the warrants to permit
the resale of these shares of common stock by the selling stockholders from time
to time after the date of this prospectus. We will not receive any of the
proceeds from the sale by the selling stockholders of the shares of common
stock. We will bear all fees and expenses incident to our obligation to register
the shares of common stock.
The selling stockholders may sell all or a portion of the shares of common stock
held by them and offered hereby from time to time directly or through one or
more underwriters, broker-dealers or agents. If the shares of common stock are
sold through underwriters or broker-dealers, the selling stockholders will be
responsible for underwriting discounts or commissions or agent’s commissions.
The shares of common stock may be sold in one or more transactions at fixed
determined at the time of sale or at negotiated prices. These sales may be
effected in transactions, which may involve crosses or block transactions,
pursuant to one or more of the following methods:
·on any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of sale;
·in the over-the-counter market;
over-the-counter market;
on an options exchange or otherwise;
·ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
facilitate the transaction;
its account;
·an exchange distribution in accordance with the rules of the applicable
exchange;
·privately negotiated transactions;
·short sales made after the date the Registration Statement is declared
effective by the SEC;
·broker-dealers may agree with a selling securityholder to sell a specified
number of such shares at a stipulated price per share;
·a combination of any such methods of sale; and
·any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares of common stock under Rule 144
promulgated under the Securities Act of 1933, as amended, if available, rather
than under this prospectus. If the selling stockholders effect such transactions
by selling shares of common stock to or through underwriters, broker-dealers or
agents, such underwriters, broker-dealers or agents may receive commissions in
the form of discounts, concessions or commissions from the selling stockholders
or commissions from purchasers of the shares of common stock for whom they may
act as agent or to whom they may sell as principal (which discounts, concessions
or commissions as to particular underwriters, broker-dealers or agents may be in
excess of those customary in the types of transactions involved). In connection
with sales of the shares of common stock or otherwise, the selling stockholders
may enter into hedging transactions with broker-dealers, which may in turn
engage in short sales of the shares of common stock in the course of hedging in
positions they assume. The selling stockholders may also sell shares of common
stock short and deliver shares of common stock covered by this prospectus to
close out short positions and to return borrowed shares in connection with such
short sales. The selling stockholders may also loan or pledge shares of common
stock to broker-dealers that in turn may sell such shares.
The selling stockholders may pledge or grant a security interest in some or all
of the warrants or shares of common stock owned by them and, if they default in
the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock from time to time pursuant to this
prospectus or any amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act amending, if necessary, the list of
selling stockholders to include the pledgee, transferee or other successors in
interest as selling stockholders under this prospectus. The selling stockholders
also may transfer and donate the shares of common stock in other circumstances
in which case the transferees, donees, pledgees or other successors in interest
will be the selling beneficial owners for purposes of this prospectus.
To the extent required by the Securities Act and the rules and regulations
thereunder, the selling stockholders and any broker-dealer participating in the
distribution of the shares of common stock may be deemed to be “underwriters”
within the meaning of the Securities Act, and any commission paid, or any
discounts or concessions allowed to, any such broker-dealer may be deemed to be
underwriting commissions or discounts under the Securities Act. At the time a
particular offering of the shares of common stock is made, a prospectus
supplement, if required, will be distributed, which will set forth the aggregate
amount of shares of common stock being offered and the terms of the offering,
including the name or names of any broker-dealers or agents, any discounts,
commissions and other terms constituting compensation from the selling
stockholders and any discounts, commissions or concessions allowed or re-allowed
or paid to broker-dealers. Each selling stockholder has informed us that it does
with any person to distribute the shares of common stock in violation of any
applicable securities laws. In no event shall any broker-dealer receive fees,
(8%).
in such states only through registered or licensed brokers or dealers. In
from registration or qualification is available and is complied with.
There can be no assurance that any selling stockholder will sell any or all of
the shares of common stock registered pursuant to the registration statement, of
which this prospectus forms a part.
The selling stockholders and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder, including, without
limitation, to the extent applicable, Regulation M of the Exchange Act, which
may limit the timing of purchases and sales of any of the shares of common stock
by the selling stockholders and any other participating person. To the extent
applicable, Regulation M may also restrict the ability of any person engaged in
activities with respect to the shares of common stock. All of the foregoing may
shares of common stock.
We will pay all expenses of the registration of the shares of common stock
pursuant to the registration rights agreement, estimated to be $[ ] in
total, including, without limitation, Securities and Exchange Commission filing
fees and expenses of compliance with state securities or “blue sky” laws;
provided, however, a selling stockholder will pay all underwriting discounts and
selling commissions, if any. We will indemnify the selling stockholders against
liabilities, including some liabilities under the Securities Act in accordance
with the registration rights agreements or the selling stockholders will be
entitled to contribution. We may be indemnified by the selling stockholders
against civil liabilities, including liabilities under the Securities Act that
may arise from any written information furnished to us by the selling
stockholder specifically for use in this prospectus, in accordance with the
related registration rights agreements or we may be entitled to contribution.
which the shares may be resold by the selling stockholders without registration
and without regard to any volume or manner-of-sale limitations by reason of Rule
144, without the requirement for us to be in compliance with the current public
information under Rule 144 under the Securities Act or any other rule of similar
Rule 144 under the Securities Act or any other rule of similar effect.
Once sold under the registration statement, of which this prospectus forms a
part, the shares of common stock will be freely tradable in the hands of persons
other than our affiliates.
|
FIRST AMENDED AND RESTATED CONSTRUCTION LOAN AGREEMENT
dated as of
April 16, 2012
among
RED TRAIL ENERGY, LLC,
FIRST NATIONAL BANK OF OMAHA, as Agent and a Lender,
and
THE LENDERS PARTY HERETO
This First Amended and Restated Construction Loan Agreement is made as of April
16, 2012 by and among RED TRAIL ENERGY, LLC, a North Dakota limited liability
company ("Borrower"), FIRST NATIONAL BANK OF OMAHA, a national banking
association ("First National"), in its capacity as a Lender hereunder, and in
its capacity as collateral agent and administrative agent for the Lenders
hereunder (in such capacity, the "Agent"), and the lenders from time to time
party hereto as Lenders, such initial lenders being signatories to this
Agreement.
WHEREAS, Borrower, First National and the lenders party thereto are parties to a
Construction Loan Agreement dated as of December 16, 2005, as amended (as so
amended and as in effect prior to the date hereof, the "Current Credit
Agreement"), pursuant to which First National and the lenders party thereto have
made the loans and financial accommodations provided for therein available to
Borrower;
WHEREAS, Borrower has requested that the Current Credit Agreement be amended and
restated on the terms and conditions set forth herein;
WHEREAS, it is intended that the indebtedness of Borrower under this Agreement
be a continuation of the indebtedness of Borrower under the Current Credit
Agreement; and
WHEREAS, under the terms and conditions of this Agreement, Lenders have approved
and are extending to Borrower a line of credit in the maximum principal amount
of $5,000,000 (the “Revolving Credit Loan”), a Declining Revolving Credit Loan
in the principal amount of $5,000,000 (the "Declining Revolving Credit Loan"),
and a term loan in the principal amount of $20,000,000 (the "Term Loan").
NOW, THEREFORE, in consideration of the mutual agreements herein set forth and
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. For all purposes of this Agreement unless the
context otherwise requires, the terms defined below shall have the respective
meanings hereinafter specified.
“Adjusted EBITDA” means EBITDA less taxes, less capital expenditures and less
Tax Distributions and other distributions permitted under this Agreement, in
each case for the applicable reporting period, with adjustments to non-cash
items as the Borrower and Agent may mutually agree to from time to time.
"Adjusted Libor Rate" means the Libor Rate determined in accordance with this
Agreement plus the Applicable Margin at such time.
"Advance" means any loan or other credit extension under the Revolving Credit
Loan.
"Agent" means the Agent identified in the introductory paragraph of this
Agreement and any successor Agent appointed pursuant to the terms of this
Agreement.
"Agreement" means this First Amended and Restated Construction Loan Agreement,
as amended, renewed, restated, replaced or otherwise modified from time to time.
"Agreement Year" has the meaning set forth in Section 2.01(b) of this Agreement.
"Applicable Margin" means, at any date, (a) in the case of Revolving Credit Loan
Advances, 3.5%, (b) in the case of Declining Revolving Credit Loans, 3.5%, (c)
in the case of the Term Loan, 3.5%, and (d) in the case of the Non-Use Fee,
0.5%.
"Applicable Rate" means the Adjusted Libor Rate.
"Borrowing" means a borrowing by Borrower pursuant to this Agreement or the
other Loan Documents, whether evidenced by or arising under Loans or other
advances.
"Borrowing Base" means, at any time, an amount equal to the sum of (without
duplication):
(a)
75% of the Borrower's corn inventory valued at the lower of cost or Market Price
on the date reported; plus
(b)
75% of the Borrower's Eligible Finished Goods-Ethanol, Corn Oil and Distiller's
Grains Inventory (both wet and dry), valued at Market Price; plus
(c)
80% of the amount of the Borrower's Ethanol and Distillers Grains Eligible
Accounts aged thirty (30) days or less, excluding any such accounts reasonably
deemed ineligible by the Agent; plus
(d)
90% of Eligible Margin Account Equity; minus
(e)
100% of Debt outstanding under the Revolving Credit Loan, all deferred payments,
grain drafts payable, delayed price contracts, accounts payable that have a Lien
superior to Lenders' Liens or other expenses due on inputs, inventory or
otherwise and 100% of the exposure under letters of credit issued for the
account of Borrower.
If an item of Collateral could be included in the Borrowing Base under more than
one subparagraph above, such item shall only be included in the Borrowing Base
under the subparagraph that produces the lowest value for such item for purposes
of the Borrowing Base.
"Borrowing Base Certificate" means a certificate to be delivered pursuant to
Section 4.11(c) of this Agreement and substantially in the form of Exhibit E to
this Agreement.
"Business Day" means any day other than a Saturday, Sunday or other day on which
commercial banks in Omaha, Nebraska and New York, New York are authorized or
required to close, and, when used in conjunction with the Libor Rate, such day
shall also be a London Banking Day.
"Closing Date" means the date of this Agreement, as reflected in the
introductory paragraph hereof.
"Collateral" means all property (real and personal, tangible and intangible) of
the Borrower with respect to which a security interest, assignment, mortgage or
other Lien has been or is hereafter granted to or for the benefit of the
Lenders. The term includes, but is not limited to, all property encumbered at
any time pursuant to the Mortgage (subject to any limitation in any Mortgage
which expressly limits the principal amount of the obligations secured thereby),
all property encumbered at any time pursuant to the Security Agreements and the
Control Agreements, the assignment, and consents thereto, of the Material
Contracts, and the property pledged under any other Loan Documents. The term
includes, but is not limited to, all "Collateral" referred to in the Current
Credit Agreement and the loan documentation issued thereunder.
"Compliance Certificate" means a certificate required to be delivered pursuant
to Section 4.11(f) of this Agreement and substantially in the form of Exhibit B
to this Agreement.
"Control Agreements" means, collectively, the Security Agreement and Assignment
of Hedging Accounts relating to the Borrower's Hedge Accounts with ADM Investor
Services, Inc. and the Account Control Agreements among Borrower, Agent and ADM
Investor Services, Inc. relating thereto; together with all amendments,
renewals, restatements, replacements and other modifications of each of the
foregoing agreements. Control Agreements includes,
without limitation, all control agreements entered into in connection with the
Current Credit Agreement, which will remain in full force and effect.
"Daily Credit Balance" means, on any day, the aggregate principal amount of all
Revolving Credit Loans and all Declining Revolving Credit Loans outstanding at
the end of such day.
"Debt" with respect to any Person means (a) all obligations of such Person for
borrowed money or with respect to deposits or advances of any kind, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person upon which interest charges are
customarily paid, (d) all obligations of such Person under conditional sale or
other title retention agreements relating to property acquired by such Person,
(e) all obligations of such Person in respect of the deferred purchase price of
property or services (excluding current accounts payable incurred in the
ordinary course of business), (f) all Debt of others secured by (or for which
the holder of such Debt has an existing right, contingent or otherwise, to be
secured by) any Lien on property owned or acquired by such Person, whether or
not the Debt secured thereby has been assumed, (g) all guarantees by such Person
of Debt of others, (h) all capital lease obligations (as determined in
accordance with generally accepted accounting principles) of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty, (j) all liabilities in
respect of unfunded vested benefits under plans covered by Title IV of the
Employee Retirement Income Security Act of 1974, as amended, (k) all
obligations, contingent or otherwise, of such Person in respect of bankers'
acceptances, (l) obligations under Financial Instrument Agreements and (m)
obligations and exposure under letters of credit issued for the account of such
Person. The Debt of any Person shall include the Debt of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Debt provide that such Person is not liable therefor.
"Debt for Borrowed Money" means Debt of the types set forth in clauses (a), (b),
(c), (l), (i) and (m) of the definition of "Debt" in this Section.
"Declining Revolving Credit Commitment" means, with respect to any Lender, the
amount set opposite such Lender's name under the column entitled "Declining
Revolving Credit Loan Commitments" on Exhibit A hereto.
"Declining Revolving Credit Loans" has the meaning provided in Section
2.01(a)(ii) of this Agreement.
"Declining Revolving Credit Notes" has the meaning provided in Section 2.03(b)
of this Agreement.
"Default" means any condition or event which constitutes an Event of Default or
which with the giving of notice or the lapse of time or both would, unless cured
or waived, become an Event of Default.
"Defaulting Lender" means any Lender that (a) has failed to advance to the Agent
any portion of the Loans required to be funded by such Lender pursuant to this
Agreement on the date required to be funded by such Lender pursuant to this
Agreement and such failure is continuing on the date of determination, (b) has
otherwise failed to pay over to the Agent any other amount required to be paid
by such Lender under this Agreement or under any Loan Document within one (1)
Business Day of the date when due, unless the subject of a good faith dispute
and such failure is continuing on the date of determination, or (c) has been
deemed insolvent, become the subject of a bankruptcy or insolvency proceeding or
had its assets and/or control frozen or seized by the applicable banking
regulators or other governmental agency.
"EBITDA" means, for any period and determined in accordance with GAAP, an amount
equal to (a) Net Income for such period, plus (b) to the extent deducted in
determining Net Income for such period, the sum of (1) Interest Expense, (2)
federal, state or local income tax expense, (3) depreciation and amortization
and (4) all other non-cash charges, in each case for such period.
"Eligible Account" means an account owing to Borrower arising in the ordinary
course of Borrower's business out of the sale of ethanol and/or distiller's
grains in which the Agent for the benefit of the Lenders has a perfected first
priority security interest and which meets all of the following specifications
at the time it came into existence and continues to meet the same until it is
collected in full:
(a)
The account is due and payable no later than thirty (30) days after the date of
the applicable invoice or other writing evidencing such account, and the account
has been due and payable not more than thirty (30) days after the due date
stated in the applicable invoice or other writing evidencing such account;
(b)
The account is not owing by an account debtor who has failed to pay twenty-five
percent (25%) or more of the aggregate outstanding amount of its accounts owing
to Borrower within thirty (30) days after the due date stated in the applicable
invoices or other writings evidencing such accounts;
(c)
The account is due and payable from an account debtor located in the continental
United States which is not a subsidiary or affiliate (under common ownership
and/or control) of Borrower;
(d)
The account arose from a bona fide, outright sale of goods by Borrower or from
the performance of services by Borrower and Borrower has possession of and will
deliver to the Agent, if requested, shipping and delivery receipts evidencing
shipment of the goods or inventory and, if representing services, receipts
and/or invoices evidencing that the services have been fully performed for the
respective account debtor;
(e)
The account is not subject to any Lien created by Borrower, or claimed under or
through Borrower, except the security interest of the Agent for the benefit of
the Lenders, and Borrower will not make any other assignment thereof or create
any further security interest therein nor permit its or their rights therein to
be reached by attachment, levy, garnishment or other judicial process;
(f)
The account is the valid and legally enforceable obligation of the account
debtor thereunder and is not subject to any claim for credit, netting, set-off,
allowance or adjustment by the account debtor or any counterclaim, and the
account debtor has not returned any of the goods from the sale of which the
account arose, nor has any partial payment been made thereon;
(g)
The account arose in the ordinary course of Borrower's business, and the account
debtor has not filed bankruptcy, is not insolvent or no material adverse change
in the financial condition of the account debtor has occurred;
(h)
The account is not owing by an account debtor who has died or dissolved or
terminated its existence, the account debtor's business has not failed, the
account debtor has not disappeared, a receiver has not been appointed for any
part of the property of the account debtor, the account debtor has not made an
assignment for the benefit of creditors or filed, or has had filed against it, a
petition under or the commencement of any proceeding under any bankruptcy code
or process;
(i)
The account is not evidenced by a judgment, an instrument or chattel paper;
(j)
The account debtor is not an employee of Borrower;
(k)
The account is not owing by any account debtor whose aggregate outstanding
accounts with the Borrower exceed thirty percent (30%) of the aggregate of all
accounts by all account debtors owing to the Borrower, provided, however, that
thirty percent (30%) of the aggregate amount outstanding on such accounts will
be deemed Eligible Accounts, and provided further that such threshold shall not
apply to accounts owed to Borrower by any marketer under a Sales and Marketing
Contract collaterally assigned to the Agent; and
(l)
The account or any portion thereof is acceptable to the Agent or is not
otherwise deemed ineligible
by the Agent in its sole discretion.
An account which is at any time an Eligible Account but which subsequently fails
to meet any of the foregoing requirements shall forthwith cease to be an
Eligible Account. The Agent shall determine whether accounts qualify as Eligible
Accounts from time to time in its sole and absolute discretion and any such
determination shall be conclusive and binding for all purposes, absent manifest
error.
“Eligible Finished Goods - Ethanol, Corn Oil and Distiller's Grains Inventory”
means all ethanol, corn oil and distiller's grains (wet and dry) inventory of
Borrower (i) that is owned by (and in the possession or under the control of)
Borrower as of such date and is not consigned or covered by or subject to a
seller's right to repurchase or any consensual or nonconsensual Lien (including,
without limitation, purchase money Liens) in favor of any party other than the
Agent, (ii) that is located at a facility owned by Borrower and listed in
Schedule A of the Security Agreement defined below and is in Borrower's
exclusive possession, (iii) that is in good and marketable condition, (iv) that
meets all standards imposed by any governmental agency or department or division
thereof having regulatory authority over such inventory, its use or sale, (v)
that is either currently usable or currently saleable in the normal course of
Borrower's business without any notice to, or consent of, any governmental
agency or department or division thereof (excluding however, any such inventory
that has been shipped to a customer of Borrower, even if on a consignment or
“sale or return” basis), (vi) is not work-in-process, in transit, obsolete or
slow-moving and (vii) no prepayment has been received for such inventory;
provided that the Agent may at any time exclude from Eligible Finished Goods -
Ethanol, Corn Oil and Distiller's Grains Inventory any type of ethanol, corn oil
or distiller's grains inventory that the Agent reasonably determines to be
unmarketable or ineligible in its sole discretion. The Agent shall have the
right, in the exercise of reasonable discretion, to determine whether finished
goods ethanol, corn oil and distiller's grains inventory is eligible for
inclusion in the Borrowing Base at any particular time.
"Eligible Margin Account Equity" means the positive equity value in margin
accounts maintained by Borrower with a broker for hedging and not speculative
purposes and which have been collaterally assigned by Borrower to the Agent for
the benefit of the Lenders, in which the Agent has a first priority security
interest, as determined by the Agent in its good faith business judgment, and in
which the broker has acknowledged in writing the security interest of the Agent
therein and has agreed, to the Agent's satisfaction, that the Agent has
"control" of such account for purposes of perfecting the Agent's security
interest therein. Such equity value shall be determined by the Agent from the
brokers' statements and shall be net of all losses.
"Excess Cash Flow" means Adjusted EBITDA, less scheduled payments on the Loans,
in each case for the applicable reporting period.
"Event of Default" has the meaning set forth in Section 7.01 of this Agreement.
"Financial Instrument Agreements" means any agreements with respect to any
transaction now existing or hereafter entered into among Borrower and a Lender
or any of a Lender's subsidiaries or affiliates or their successors, or any
other third party, which is a rate swap, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap, equity or equity
index option, bond option, interest rate option, foreign exchange transaction,
cap transaction, floor transaction, collar transaction, forward transaction,
financial measures; provided that such transaction is entered into by Borrower
for hedging purposes and not speculation.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of (a) Adjusted
EBITDA to (b) Fixed Charges for such period.
"Fixed Charges" means, for any period, the sum of (a) scheduled principal on the
Loans that is payable during such period, including, without limitation, (b)
scheduled interest and other finance charges paid or payable with respect to the
Loans, and (c) scheduled principal and interest payments on Subordinated Debt
approved by the Agent that is
payable during such period.
applied on a consistent basis and subject to the terms of Section 1.02.
“Interest Expense” means, for any period determined on a consolidated basis in
accordance with GAAP, the sum of (i) total interest expense, including without
limitation the interest component of any payments in respect of capital lease
obligations capitalized or expensed during such period (whether or not actually
paid during such period), plus (ii) the net amount payable (or minus the net
amount receivable) under Financial Instrument Agreements related to interest
rates during such period (whether or not actually paid or received during such
period).
"Lender" and "Lenders" means each of the Lenders identified in the introductory
paragraph of this Agreement, and any other person which may hereafter become a
lender under this Agreement, and the successors and assigns of each of the
foregoing.
“LIBOR Rate” means the London Interbank Offered Rate for U.S. Dollar deposits
published in The Wall Street Journal as the Three (3) Month LIBOR Rate with
respect to the Declining Revolving Credit Loan and Term Loan and as the One (1)
Month LIBOR Rate with respect to the Revolving Credit Loan. The LIBOR Rate will
be adjusted and determined without notice to the Borrower as set forth herein,
as of the date of the Revolving Credit Notes, Declining Revolving Credit Notes
and Term Notes, and on the first (1st) day of every third calendar month
thereafter with respect to the Declining Revolving Credit Notes and Term Notes
and on the first day of each calendar month thereafter with respect to the
Revolving Credit Notes (each such date, an “Interest Rate Change Date”) to the
Three (3) Month LIBOR Rate with respect to the Declining Revolving Credit Notes
and Term Notes and to the One (1) Month LIBOR Rate with respect to the Revolving
Credit Notes, which is published in The Wall Street Journal as the reported rate
for the date that is two London Banking Days prior to each Interest Rate Change
Date. The published LIBOR Rate will be rounded upwards to the next higher one
one hundredth (1/100th) of one percent (1%). If the initial Advance under the
Revolving Credit Notes or the initial funding of the Declining Revolving Credit
Notes or Term Notes occurs on any day other than the first London Banking Day of
a month, the initial LIBOR Rate to be in effect until the beginning of the next
succeeding month shall be that Three (3) Month LIBOR Rate or One (1) Month LIBOR
Rate, as applicable, in effect on the date that is two London Banking Days prior
to the first day of the month in which the Revolving Credit Notes, Declining
Revolving Credit Notes and Term Notes are dated. If for any reason the LIBOR
Rate published by The Wall Street Journal is no longer available and/or the
Agent is unable to determine the LIBOR Rate for any Interest Rate Change Date,
the Agent may, in its sole discretion, select an alternate source to determine
the LIBOR Rate and will provide notice to Borrower and Lenders of the source
selected. The LIBOR Rate determined as set forth above shall be referred to
herein as the “Index”. The Index is not necessarily the lowest rate charged by
Lenders on their loans. If the Index becomes unavailable during the term of the
Loans, the Agent may designate a substitute index after notifying Borrower. The
Agent will tell Borrower the current Index rate upon Borrower's request. The
interest rate change will not occur more often than each month on the first
(1st) day of each month with respect to the Revolving Credit Loan and once every
three months on the first (1st) day of the applicable month with respect to the
Declining Revolving Credit Loan and Term Loan. Borrower understands that Lenders
may make loans based on other rates as well. The Index for the one month LIBOR
Rate currently is ___% per annum and the Index for the three month LIBOR Rate
currently is ___% per annum.
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
assignment, security interest or other encumbrance of any kind in respect of
such asset.
"Loan Documents" means this Agreement, the Notes, the Security Agreement, the
Control Agreements, the Mortgage, the assignments of the Material Contracts, an
Assignment of Permits, the Subordination Agreement
referenced below and any documents relating to any letters of credit issued for
the account of Borrower, Financial Instrument Agreements and all other
documents, instruments and agreements executed and/or delivered in connection
therewith at any time, all as the same may be amended, renewed, replaced,
restated, consolidated or otherwise modified from time to time in accordance
with the terms thereof and hereof.
"Loans" means, collectively, the Revolving Credit Loan and Advances thereunder,
the Declining Revolving Credit Loans, the Term Loan and any letters of credit
issued for the account of Borrower.
“London Banking Day” means any day other than a Saturday or Sunday, on which
commercial banking institutions in London, England are generally open for
business.
"Market Price" of any inventory means, at any time, the then-current market
price of such inventory as reasonably determined by the Agent.
"Material Adverse Effect" means, with respect to any event, act, condition or
occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singularly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences whether or not related, a
material adverse change in, or a material adverse effect on, (i) the business,
operations, results of operations, financial condition, assets, Collateral or
liabilities, of Borrower taken as a whole, (ii) the ability of Borrower to
perform any of its obligations under the Loan Documents, (iii) the rights and
remedies of the Agent and/or Lenders under any of the Loan Documents or (iv) the
legality, validity or enforceability of any of the Loan Documents.
“Material Contracts” means (a) the Supply Contracts, Sales and Marketing
Contracts, Transportation Contracts, Utility Contracts, (b) any other contract
or any other agreement, written or oral, of Borrower involving monetary
liability of or to any such person in an amount in excess of One Hundred
Thousand and No/100 Dollars ($100,000.00) per year, and (c) any other contract
or agreement, written or oral, of Borrower, the failure to comply with which
could reasonably be expected to have a Material Adverse Effect on the Borrower.
“Material Indebtedness” means Debt (other than the Loans) or obligations in
respect of one or more Financial Instrument Agreements of Borrower in an
aggregate principal amount exceeding $100,000.
"Maturity Date" means the earlier of April 16, 2017 or the date the Loans are
accelerated pursuant to Section 6.02 or any other applicable provision of this
Agreement, on which date the outstanding principal balance of the Term Loan
together with all accrued and unpaid interest is due and payable in full.
“Maximum Availability” has the meaning provided in Section 2.01(a)(ii)(2) of
this Agreement.
"Mortgage" means the First Amended and Restated Mortgage, Security Agreement,
Assignment of Leases and Rents and Fixture Financing Statement, dated of even
date herewith given by the Borrower in favor of the Agent for the benefit of the
Lenders, which creates a Lien against the Project and the other property
described therein, and all amendments, restatements, renewals, replacements and
other modifications of the foregoing.
"Mortgaged Property" has the meaning given to such term in the Mortgage.
“Negative Termination Value” means, with respect to any Financial Instrument
Agreement of Borrower, the amount (if any) that Borrower would be required to
pay if such Financial Instrument Agreement were terminated by reason of a
default by or other termination event relating to Borrower, such amount to be
determined on the basis of a good faith estimate made by the Agent, in
consultation with Borrower. The Negative Termination Value of any such Financial
Instrument Agreement at any date shall be determined (i) as of the end of the
most recent fiscal quarter ended on or prior to such date if such Financial
Instrument Agreement was then outstanding or (ii) as of the date such Financial
Instrument Agreement is terminated. However, if an applicable agreement between
Borrower and the relevant counterparty provides that, upon any such termination
by such counterparty, one or more other Financial Instrument
Agreements (if any exist) between Borrower and such counterparty would also
terminate and the amount (if any) payable by Borrower would be a net amount
reflecting the termination of all the Financial Instrument Agreements so
terminated, then the Negative Termination Value of all the Financial Instrument
Agreements subject to such netting shall be, at any date, a single amount equal
to such net amount (if any) payable by Borrower, determined as of the later of
(i) the end of the most recently ended fiscal quarter or (ii) the date on which
the most recent Financial Instrument Agreement subject to such netting was
terminated.
“Net Income” means, for any period, the net income (or loss) of Borrower for
such period determined in accordance with GAAP, but excluding therefrom (to the
extent otherwise included therein) (a) any extraordinary gains or losses, (b)
any gains attributable to write-ups of assets, (c) any equity interest in the
un-remitted earnings of any Person that is not a subsidiary of Borrower, and (d)
any income (or loss) of any Person accrued prior to the date it becomes a
subsidiary of, or is merged into or consolidated with, Borrower on the date that
such Person's assets are acquired by Borrower.
"Notes" means, collectively, the Revolving Credit Notes, the Declining Revolving
Credit Notes and the Term Notes.
"Obligations" means, collectively, all indebtedness, liabilities and obligations
whatsoever of Borrower to the Agent and/or the Lenders whether now existing or
hereafter arising, regardless of the form the liability takes or its purpose,
including, without limitation, overdrafts and deposit account liabilities and
liabilities under any credit or purchasing cards of Borrower to the Agent and
all indebtedness, liabilities and obligations under or in connection with this
Agreement and/or any of the other Loan Documents, including without limitation,
the principal of, and interest on, the Loans, all future advances thereunder,
and all other amounts now or hereafter owing to the Lenders under this
Agreement, the Notes, letters of credit or any of the other Loan Documents.
"Percentage" means, at any time, with respect to a Lender, in each case
expressed as a percentage:
(a)
in the case of a Lender's obligation to make Revolving Credit Loans, a fraction
(i) the numerator of which is such Lender's Revolving Credit Commitment at such
time, and (ii) the denominator of which is the Total Revolving Credit Commitment
at such time;
(b)
in the case of a Lender's obligation to make Declining Revolving Credit Loans, a
fraction (i) the numerator of which is such Lender's Declining Revolving Credit
Commitment at such time, and (ii) the denominator of which is the Total
Declining Revolving Credit Commitment at such time;
(c)
in the case of the Term Loan, a fraction (i) the numerator of which is such
Lender's Term Loan Commitment at such time, and (ii) the denominator of which is
the Total Term Loan Commitment;
(d)
in the case of a Lender's right to receive payment of principal or interest with
respect to its outstanding Loans, a fraction (i) the numerator of which is the
amount of the unpaid principal balance of such Lender's Loans giving rise to
such principal or interest payment, and (ii) the denominator of which the
aggregate unpaid principal balance of all Loans giving rise to such principal or
interest payment; and
(e)
in the case of a Lender's indemnification or similar obligations to the Agent
under this Agreement or the other Loan Documents or in any other cases not
addressed in clauses (a) though (c) above, a fraction (i) the numerator of which
is such Lender's Revolving Credit Commitment plus Declining Revolving Credit
Commitment plus the outstanding balance of the Term Note payable to such Lender
Commitment plus the Total Declining Revolving Credit Commitment plus the
aggregate outstanding principle balance of the Term Loan at such time (and the
foregoing fraction shall be calculated without regard to whether such Lender or
any other Lender has any commitment to make Revolving Credit Loans or Declining
Revolving Credit Loans at such time).
“Permits” means all licenses, consents, approvals authorizations and permits of
Governmental Authorities which Borrower is required to obtain in connection with
the Project and operation of Borrower's business as contemplated following
completion of the Project, including but not limited to any of the foregoing
related to environmental laws (including an air emissions permit and a national
pollution discharge elimination system construction permit, each of which will
allow Borrower to operate its facilities at maximum capacity), zoning and
land-use laws (including any requirement to obtain a special exception, if
applicable), water use laws, waste disposal laws, laws requiring construction
permits and occupancy certificates, and laws relating to construction and
operation of above or below ground storage tanks.
"Permitted Debt" means: (a) Debt under this Agreement and the other Loan
Documents; and (b) Debt incurred on or after the Closing Date in an aggregate
principal amount not to exceed $100,000 outstanding at any one time.
"Permitted Liens" has the meaning given to such term in Section 4.16 of this
Agreement
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, governmental department
or authority or other entity.
“Project” means the dry milling ethanol plant constructed on the Real Estate
located in Stark County, North Dakota, capable of producing 50 million gallons
of fuel grade ethanol per year, and related byproducts of dried, distillers
grains with solubles, together with all necessary and appropriate fixtures,
equipment, attachments, and accessories.
"Regulation D" means Regulation D of the Board of Governors of the Federal
“Real Estate” means the real property on which the Project is constructed and
all other real property owned or leased by Borrower.
"Required Lenders" means nonaffiliated Lenders (other than a Defaulting Lender)
having more than 51% of the outstanding aggregate principal balance of the Notes
then outstanding other than to a Defaulting Lender.
"Revolving Credit Commitment" means, with respect to any Lender, the amount set
opposite such Lender's name under the column entitled "Revolving Credit Loan
-Commitment" on Exhibit A hereto.
"Revolving Credit Loans" has the meaning provided in Section 2.01(a)(i) of this
Agreement.
"Revolving Credit Notes" has the meaning provided in Section 2.03(a) of this
Agreement.
“Sales and Marketing Contracts” means all agreements and contracts in effect
presently and entered into from time to time hereafter which are material to the
sale or disposal of products and by-products produced by Borrower including the
marketing and sale of ethanol and distillers grains (“DDGS”), including that
certain Ethanol Fuel Marketing Agreement dated June 25, 2010 between Borrower
and RPMG, Inc., that certain Distiller's Grain Marketing Agreement dated March
10, 2008 between Borrower and CHS Inc. (which provides for the marketing and
sale of DDGS and other products) and that certain Crude Corn Oil Purchase
Agreement dated March 6, 2012 between Borrower and RPMG, Inc., as such
agreements and contracts are amended, restated, supplemented or otherwise
"Security Agreements" means the First Amended and Restated Security Agreement to
be executed by the Borrower on or about the Closing Date in favor of the Agent
for the benefit of the Lenders and by which the Borrower shall grant to the
Agent, as security for the Obligations, a security interest in all of Borrower's
presently owned or hereafter acquired personal property, including without
limitation, all of Borrower's inventory, equipment, other goods, accounts
receivable, general intangibles, hedging accounts, deposit accounts and
investment property, as the same may be amended, renewed, replaced, restated,
consolidated or otherwise modified from time to time.
“Supply Contracts” means all agreements and contracts related to the supply of
inputs material to operation of Borrower's business in effect presently
involving monetary liability of or to any such person in an amount in excess of
One Hundred Thousand and No/100 Dollars ($100,000.00) per year, and entered into
from time to time hereafter, as the same such agreements and contracts are
amended, restated, supplemental or otherwise modified from time to time.
“Tax Distributions” means cash distributions to each or any of Borrower's
members or limited or general partners in an amount equal to such member's or
limited or general partner's estimated combined federal, state and local tax
liability, after application of all available federal, state and local tax
credits allocable to such members, in respect of Borrower's income, gain and/or
earnings.
"Term Loan Commitment" means, with respect to any Lender, the amount set
opposite such Lender's name under the column entitled "Term Loan -Commitment" on
Exhibit A hereto.
"Term Notes" has the meaning provided in Section 2.01(a)(iii) of this Agreement.
"Termination Date" with respect to the Revolving Credit means April 15, 2013,
with respect to the Declining Revolving Credit means April 16, 2017, and with
respect to the Term Loan means the Maturity Date, or, in each case, the earlier
date of termination in whole of the commitments pursuant to Section 6.02 or any
other applicable provision of this Agreement, on which date the outstanding
principal balance of the Loans together with all accrued and unpaid interest is
due and payable in full.
"Total Declining Revolving Credit Commitment" means, at any time, the sum of all
Lenders' Declining Revolving Credit Commitments at such time.
"Total Revolving Credit Commitment" means, at any time, the sum of all Lenders'
Revolving Credit Commitments at such time.
"Total Term Loan Commitment" means, at any time, the sum of all Lenders' Term
Loan Commitments at such time.
“Transportation Contracts” means all agreements and contracts in effect
presently and entered into from time to time hereafter related to the provision
of transportation or shipping services which are material to the operation of
Borrower's business involving monetary liability of or to any such person in an
amount in excess of One Hundred Thousand and No/100 Dollars ($100,000.00) per
year, as the same such agreements and contracts are amended, restated,
supplemented or otherwise modified from time to time.
“Utility Contracts” means all contracts and agreements in effect presently and
entered into from time to time hereafter which are material to the provision to
Borrower of necessary electricity, coal, natural gas, water, fuel oil, coal and
other energy resources in connection with the operation of Borrower's plant,
equipment and offices involving monetary liability of or to any such person in
year, including, but not limited to that certain Coal Sales Order dated December
16, 2011 between Borrower and Westmoreland Coal Sales Company as sales agent for
Absaloka Coal LLC on behalf of Western Energy Company, as the same such
“Working Capital” means current assets at the time of determination (including,
without limitation, the amount available to Borrower for drawing under the
Declining Revolving Credit Loan at the time of determination, less the sum of
(x) investments in or other amounts due from any member, manager, employee or
any person or entity related to or affiliated with Borrower, other than amounts
due to Borrower under a Sales and Marketing Agreement, (y) insurance prepayments
(coal prepayments are permitted) and (z) current liabilities (all at the time of
determination and without duplication).
Section 1.02. General; Fiscal Year. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles, as in effect in the United States. Unless the context
clearly requires otherwise, all references to "dollars" or "$" are to United
States dollars. "Including” (and with correlative meaning “include”) means
including without limiting the generality of any description preceding such
term. This Agreement and the other Loan Documents shall be construed without
regard to any presumption or rule requiring construction against the party
causing any such document or any portion thereof to be drafted. The Section and
other headings in this Agreement and any index in this Agreement are for
convenience of reference only and shall not limit or otherwise affect any of the
terms of this Agreement. Similarly, any page footers or headers or similar word
processing, document or page identification numbers in this Agreement or any
index or exhibit are for convenience of reference only and shall not limit or
otherwise affect any of the terms of this Agreement, nor shall there be any
requirement that any such footers or other numbers be consistent from page to
page. Unless the context clearly requires otherwise, any reference to a Section
of this Agreement refers to all Sections and Subsections thereunder. Any pronoun
used herein shall be deemed to cover all genders. Defined terms used in this
Agreement may be set forth in Section 1.01 or other Sections of this Agreement,
and all such definitions defined in the singular shall have a corresponding
meaning when used in the plural and vice versa. Unless the context requires
otherwise, references herein to "fiscal year" or "fiscal quarter" shall mean the
fiscal year or fiscal quarter, as the case may be, of the Borrower.
ARTICLE II
AMOUNT AND TERMS OF LOANS
Section 2.01. Commitments to Lend.
(a)The Revolving Credit Facility, the Declining Revolving Credit Facility and
the Term Loan.
(i) Revolving Credit Loans. Each Lender with a Revolving Credit Commitment
(severally, but not jointly) agrees, subject to the terms and conditions of this
Agreement, to make revolving credit loans (collectively, the "Revolving Credit
Loans") to the Borrower from time to time from the Closing Date to the Business
Day immediately preceding the Termination Date applicable to the Revolving
Credit Loan up to a maximum principal amount at any time outstanding equal to
such Lender's Revolving Credit Commitment at such time; provided, however, that
no Lender shall be obligated to make a Revolving Credit Loan if: (1) the
aggregate amount of all Revolving Credit Loans then outstanding exceeds, or
would exceed if the requested Revolving Credit Loan were to be made, (1) the
Total Revolving Credit Commitment, (2) the Borrowing Base at such time, (3) such
Lender's Revolving Credit Commitment, or (4) any Default or Event of Default
exists or would result from the making of such Revolving Credit Loan. Subject to
the terms and conditions of this Agreement, the Borrower may borrow, repay and
re-borrow under the Revolving Credit Loans.
(ii) Declining Revolving Credit Loans. Each Lender with a Declining Revolving
Credit Commitment (severally, but not jointly) agrees, subject to the terms and
conditions of this Agreement, to make revolving credit loans (collectively, the
"Declining Revolving Credit Loans") to the Borrower from time to time from the
Closing Date to the Business Day immediately preceding the Termination Date
applicable to the Declining Revolving Credit Loan up to a maximum principal
amount at any time outstanding equal to such Lender's Declining Revolving Credit
Commitment at such time; provided, however, that no Lender shall be obligated to
make a Declining Revolving Credit Loan if: (1) the aggregate amount of all
Declining Revolving Credit Loans then outstanding exceeds, or would exceed if
the requested Declining Revolving Credit Loan were to be made, the Maximum
Availability at such time; (2) such Lender's Revolving Credit Commitment or (3)
any Default or Event of Default exists or would result from the making of such
Declining Revolving Credit Loan. Subject to the terms and conditions of this
Agreement, the Borrower may borrow, repay and re-borrow under the Declining
Revolving Credit Loans up to the Maximum Availability at such time.
(1) Initially, the maximum amount available to be borrowed on the Declining
Revolving Credit is $5,000,000. Commencing on June 1, 2012 and quarterly
thereafter on the dates indicated in the table below until the Termination Date
of the Declining Revolving Credit Loan (each a “Reduction Date”), the maximum
amount available (the “Maximum Availability”) on the Declining Revolving Credit
Loan shall decrease by $125,000.00. The Maximum Availability on each Reduction
Date is shown in the following table:
REDUCTION DATE
MAXIMUM AVAILABILITY
June 1, 2012
$4,875,000.00
September 1, 2012
$4,750,000.00
December 1, 2012
$4,625,000.00
March 1, 2013
$4,500,000.00
June 1, 2013
$4,375,000.00
September 1, 2013
$4,250,000.00
December 1, 2013
$4,125,000.00
March 1, 2014
$4,000,000.00
June 1, 2014
$3,875,000.00
September 1, 2014
$3,750,000.00
December 1, 2014
$3,625,000.00
March 1, 2015
$3,500,000.00
June 1, 2015
$3,375,000.00
September 1, 2015
$3,250,000.00
December 1, 2015
$3,125,000.00
March 1, 2016
$3,000,000.00
June 1, 2016
$2,875,000.00
September 1, 2016
$2,750,000.00
December 1, 2016
$2,625,000.00
March 1, 2017
$2,500,000.00
April 16, 2017
$—
On each Reduction Date, the Borrower will pay and apply to the then outstanding
principal balance of the Declining Revolving Credit Loan the amount necessary to
reduce the outstanding principal balance of the Declining Revolving Credit Loan
so that it is within the Maximum Availability applicable on each such Reduction
Date. Such payments will be applied by the Agent pro rata to each Lender's
Declining Revolving Credit Note based on their respective Percentage in the
Declining Revolving Credit Loan.
(iii) Term Loan. Subject to the terms of this Agreement, Lenders with a Term
Loan Commitment severally agree to lend to Borrower in the aggregate Twenty
Million and No/100 Dollars ($20,000,000). The Term Loan will be evidenced by
those certain Term Notes (as defined in Section 2.03(c) below) of even date with
this Agreement in the amount of each Lender's Term Loan Commitment.
(iv) Financial Instrument Agreements. Lenders or their subsidiaries or
affiliates may, but shall not be obligated, to enter into from time to time with
the Borrower, one or more Financial Instrument Agreements. Each such Financial
Instrument Agreement will be subject to separate documentation, including
without limitation an ISDA Master Swap Agreement, a schedule and confirmation
with respect to such Financial Instrument Agreement. The obligations of the
Borrower related to any Financial Instrument Agreement will be as set forth in
such separate documentation, provided such obligations will be cross defaulted
to the obligations of the Borrower hereunder, and shall be additional
Obligations secured by the Collateral.
(v) Use of Proceeds. The Loans shall be used solely for purposes of: (1)
re-financing the loans and financial accommodations extended under the Current
Credit Agreement; (2) the Borrower's general working capital needs and other
general corporate purposes; and (3) capital expenditures by the Borrower, to
the extent not inconsistent with the terms of this Agreement. Notwithstanding
anything herein to the contrary, the Borrower shall not, directly or indirectly,
use any part of the Loan proceeds for the purpose of purchasing or carrying any
margin stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System, or to extend credit to any person for the purpose of
or is inconsistent with, Regulation X of such Board of Governors. In addition,
the Revolving Credit Loan may be used to support the issuance of letters of
credit for the account of Borrower.
Section 2.02. Manner of Borrowing.
(b)The Borrower shall give the Agent notice of the Borrower's intention to
borrow under the Revolving Credit Loan or Declining Revolving Credit Loan at
least one Business Day before the requested funding date, in each case
specifying: (1) the proposed funding date of such Loan; (2) the amount of such
Loan; (3) whether the principal amount of any such Revolving Credit Loan,
together with the principal amount of all Revolving Credit Loans then
outstanding, is within the Borrowing Base at such time and is within the Total
Revolving Credit Commitment at such time; and (4) whether the principal amount
of any such Declining Revolving Credit Loan, together with the principal amount
of all Declining Revolving Credit Loans then outstanding, is within the Maximum
Availability at such time and is within the Total Declining Revolving Credit
Commitment at such time. The Agent shall promptly forward a copy of each such
notice to each Lender. Not later than 1:00 p.m. Omaha, Nebraska time on the date
such Loan is to be funded, each Lender will make available to the Agent in
immediately available funds, such Lender's Percentage of such Loan. After the
Agent's receipt of such funds, the Agent shall make such Loan available to the
Borrower. All notices given under this Section by the Borrower shall be
irrevocable and shall be given not later than 12:00 p.m. Omaha, Nebraska time on
the day which is not less than the number of Business Days specified above for
such notice. For purposes of this Section, the Borrower agrees that the Agent
may rely and act upon any request for a Loan from any individual who the Agent,
absent gross negligence or willful misconduct, believes to be a representative
of the Borrower. The Agent shall promptly give notice to each Lender of each
request for a Revolving Credit Loan or Declining Revolving Credit Loan and, in
any event, at least by 12:00 p.m., Omaha, Nebraska time, on the second Business
Day before the Business Day such Loan is to be made.
(b) Unless the Agent shall have received notice from a Lender prior to the
date on which such Lender is to provide funds to the Agent for a Loan to be made
by such Lender that such Lender will not make available to the Agent such funds,
the Agent may assume that such Lender has made such funds available to the Agent
on the date of such Loan in accordance with Section 2.02(a) of this Agreement
and the Agent (in its sole discretion) may, but shall not be obligated to, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent such Lender shall not have so made
such funds available to the Agent (a "Funding Default"), such Lender agrees to
repay to the Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
the Borrower until the date such amount is repaid to the Agent, at the customary
rate reasonably set by the Agent for the correction of errors among banks. If
such Lender shall repay to the Agent such corresponding amount, such amount so
repaid shall constitute such Lender's Loan for purposes of this Agreement. Once
a Funding Default has occurred, then the Agent shall no longer have the
discretion under this Section 2.02(b) to make funds available to the Borrower on
the assumption that the Lenders will make the corresponding funds available to
the Agent. In no event shall the Agent be obligated to advance funds to the
Borrower (and in no event shall any other Lender have any liability to the
Borrower) if a Defaulting Lender fails to advance its share of such funds to the
Agent in accordance with the requirements of Section 2.02(a) of this Agreement.
Section 2.03. Notes.
(c)The Revolving Credit Loans shall be evidenced by promissory notes payable to
each Lender with a Revolving Credit Loan Commitment substantially in the form of
Exhibit B-1 hereto (collectively, as amended, renewed, restated, replaced,
consolidated or otherwise modified from time to time, the "Revolving Credit
Notes").
(b) The Declining Revolving Credit Loans shall be evidenced by promissory
notes payable to each Lender with a Declining Revolving Credit Commitment
substantially in the form of Exhibit B-2 hereto (collectively, as amended,
renewed, restated, replaced, consolidated or otherwise modified from time to
time, the "Declining Revolving Credit Notes").
(c) The Term Loan shall be evidenced by the Term Notes substantially in the
form of Exhibit B-3 hereto.
Section 2.04. Payment.
(d)Revolving Credit Loans.
(i)Accrued interest on the outstanding principal balance of each Revolving
Credit Loan is due and payable on the first (1st) calendar day of each month
until the Termination Date applicable to the Revolving Credit Loan when all
accrued but unpaid interest on each Revolving Credit Loan is due and payable in
full.
(ii)The outstanding principal balance of each Revolving Credit Loan is payable
in full on the Termination Date applicable to the Revolving Credit Loan.
(e)Declining Revolving Credit Loans.
(i)Accrued interest on the outstanding principal balance of each Declining
Revolving Credit Loan is due and payable on each Reduction Date, until the
Termination Date applicable to the Declining Revolving Credit Loan when all
accrued but unpaid interest on each Declining Revolving Credit Loan is due and
payable in full.
(ii)Sums sufficient to reduce the outstanding principal balance of each
Declining Revolving Credit Loan to the then applicable Maximum Availability is
due and payable on each Reduction Date, and the remaining outstanding principal
balance is due and payable in full on the Termination Date applicable to the
(c) Term Loan. The principal balance of the Term Loan will be payable in
equal quarterly installments of $500,000.00, commencing on June 1, 2012, and
continuing on the first day of each calendar quarter thereafter until the
Maturity Date when the outstanding principal balance, together with accrued and
unpaid interest, will be due and payable in full.
(d) General. All payments due under this Agreement and the other Loan
Documents shall be made in immediately available funds to the Agent at its
office described in its signature page hereto unless the Agent gives notice to
the contrary. Payments so received at or before 1:00 p.m. Omaha, Nebraska time
on any Business Day shall be deemed to have been received by the Agent on that
Business Day. Payments received after 1:00 p.m. Omaha, Nebraska time on any
Business Day shall be deemed to have been received on the next Business Day, and
interest, if payable in respect of such payment, shall accrue thereon until such
next Business Day. The Agent shall remit to each Lender its Percentage of all
payments of principal and interest received by the Agent on the Business Day the
Agent is deemed to have received such payment. With respect to any payment due
on any Obligation which is 10 days or more late, in addition to any rights and
remedies Lenders may have Borrower will be charged a late fee equal to 3% of the
scheduled payment or $25 whichever is greater.
Section 2.05. Interest Rates.
(f)Interest shall accrue on the outstanding principal balance at the end of the
day of each Loan at the Applicable Rate in effect for such Loan on such day.
(g)Upon or after the occurrence and during the continuation of any Event of
Default and after the maturity date of any Loan, the principal amount of each
Loan shall bear interest at a rate per annum equal to six percent (6%) above the
interest rate that would otherwise apply under Section 2.05(a) above (the
"Default Rate").
(h)In all cases, interest on the outstanding principal balance of all Loans and
any other Obligations with respect to which interest accrues pursuant to the
terms of this Agreement is computed on a 360 day basis; that is, by applying the
ratio of the interest rate over a year of 360 days, multiplied by the
outstanding principal balance, multiplied by the actual number of days the
principal balance is outstanding. All interest payable under the Loans and other
Obligations is computed using this method.
(i)In no contingency or event whatsoever shall the aggregate of all amounts
deemed interest hereunder or under the Notes and charged or collected pursuant
to the terms of this Agreement or any other Loan Documents exceed the highest
rate permissible under any law which a court of competent jurisdiction shall, in
a final determination, deem applicable thereto. If such a court determines that
the Lenders have charged or received interest hereunder or under the other Loan
Documents in excess of the highest applicable rate, the Agent shall apply such
excess to any other Obligations then due and payable, whether principal,
interest, fees or otherwise, and shall refund the remainder of such excess
interest, if any, to the Borrower, and such rate shall automatically be reduced
to the maximum rate permitted by such law.
Section 2.06. Prepayments.
(a) If, at any time, the outstanding principal balance of all Revolving
Credit Loans exceeds the Total Revolving Credit Commitment at such time, the
Borrower shall immediately pay to the Agent an amount sufficient to reduce the
aggregate unpaid principal amount of Revolving Credit Loans by an amount equal
to such excess.
(b) If, at any time, the outstanding principal balance of all Declining
Revolving Credit Loans exceeds the Total Declining Revolving Credit Commitment
or Maximum Availability at such time, the Borrower shall immediately pay to the
Agent an amount sufficient to reduce the aggregate unpaid principal amount of
Declining Revolving Credit Loans by an amount equal to such excess.
(c) If, at any time, the aggregate outstanding principal balance of all
Revolving Credit Loans exceeds the Borrowing Base at such time, the Borrower
shall immediately pay to the Agent an amount sufficient to reduce the aggregate
unpaid principal amount of Revolving Credit Loans by an amount equal to such
excess.
(d) Borrower will pay to the Agent for the pro rata benefit of the Lenders
with a Term Loan Commitment a prepayment fee equal to one percent (1%) of the
original principal balance of the Term Loan (or $20,000,000.00) if prepayment of
the Term Loan is made during the first year following the Closing Date as a
result of a refinance with a lending institution(s) other than Lenders.
2.07. Excess Cash Flow. Within 120 days after the end of each of Borrower's
fiscal years, Borrower shall calculate and report to the Agent the amount of
Borrower's Excess Cash Flow for such ended fiscal year. Within 120 days
following the end of each such fiscal year, Borrower will pay to the Agent
twenty-five percent (25%) of such Excess Cash Flow calculated by Borrower for
such fiscal year. Borrower's payment of Excess Cash Flow shall be
applied by the Agent to the then outstanding principal installments due on the
Term Loan in the inverse order of their maturity. Such Excess Cash Flow payments
shall not release Borrower from making the payments of principal or interest
otherwise required by this Agreement or the Term Loan. Upon payment in full of
the Term Loan, Borrower shall no longer be obligated to make the payments of
Excess Cash Flow required in this Section. No payment of Excess Cash Flow shall
trigger or obligate Borrower to pay to the Agent any prepayment fees or
premiums.
2.08. Libor Loans. If any payment or prepayment is made or applied in respect
of any Loan before the due date thereof (whether due to voluntary prepayment,
acceleration of the Loan, or otherwise), the Borrower shall pay to the Lenders,
as liquidated damages for the loss of the bargain and/or anticipated resulting
damages and not as a penalty, the amount payable as a result thereof pursuant to
Section 4.19 hereof.
2.09. Non-Use Fee. The Borrower agrees to pay to the Agent, for the benefit of
the Lenders with a Commitment in the Revolving Credit Loan and/or Declining
Revolving Credit Loan in accordance with their respective Percentages, on the
first day of each calendar quarter for the immediately preceding calendar
quarter, a fee (the "Non-Use Fee") equal to the sum of, for each day during such
preceding calendar quarter, (i) the amount obtained by multiplying (a) the
difference between the Total Revolving Credit Commitment and the Daily Credit
Balance applicable to the Revolving Credit Loan for such day, times (b) the
Applicable Margin for the Non-Use Fee, times (c) the fraction, 1/360, plus (ii)
the amount obtained by multiplying (a) the difference between the Total
Declining Revolving Credit Commitment and the Daily Credit Balance applicable to
the Declining Revolving Credit Loan for such day, times (b) the Applicable
2.10. Origination Fee. The Borrower shall pay to the Agent at closing, for
the benefit of the Lenders on a pro rata basis in accordance with their
respective Percentages, a fee equal to $50,000. Such fee shall be deemed fully
earned and nonrefundable at the closing of the transactions contemplated hereby
and shall be paid on the Closing Date. This fee shall compensate the Lenders for
the costs associated with the origination, structuring, processing, approving
and closing of the transactions contemplated by this Agreement, including, but
not limited to, administrative, general overhead and lost opportunity costs, but
not including any out-of-pocket or other costs, fees or expenses for which the
Borrower has agreed to reimburse any of the Lenders or any other persons
pursuant to any other provision of this Agreement or the other Loan Documents or
any commitment letter, letter of intent or similar agreement.
2.11. Application of Payments and Collections. The Borrower irrevocably
waives the right to direct the application of any and all payments and
collections at any time or times received by the Agent from or on behalf of the
Borrower, and the Borrower agrees that the Agent has the continuing exclusive
right to apply and reapply any and all such payments and collections received at
any time or times by such persons against the Obligations, in such manner as the
Agent may deem advisable, notwithstanding any entry by the Agent upon any of its
books and records.
2.12. Sharing of Payments. Except as provided for in Section 2.13 below
relating to allocation of Collateral proceeds, if any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
setoff or otherwise except as provided for in Section 2.13 below) on account of
the Notes in excess of its Percentage of payments on account of the Notes
obtained by all the Lenders, such Lender shall purchase from the other Lenders
such participations in the Notes held by them as shall be necessary to cause
such purchasing Lender to share the excess payment ratably with each of the
other Lenders, provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase from
each Lender shall be rescinded and each Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery together with an amount
equal to such Lender's ratable share (according to the proportion of (1) the
amount of such Lender's required repayment to (2) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section may, to the fullest extent permitted by law, exercise
all its rights of payment (including the right of setoff) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
2.13. Allocation of Collateral Proceeds. Each Lender and the Borrower
acknowledge and agree that the Collateral secures the Obligations on a
cross-collateralization basis. However, the Borrower and each Lender agree
that the proceeds from any realization on the Mortgaged Property (other than
inventory and accounts receivable and the proceeds thereof) as defined in the
Mortgage, equipment and fixtures will be first applied to the Lenders' costs and
expenses payable by Borrower pursuant to Section 7.05 and any other costs and
expenses of foreclosure or otherwise realizing on such Mortgaged Property,
equipment and fixtures, next to the Borrower's obligations to Lenders with a
Term Loan Commitment under the Term Loan pro rata based on such Lenders'
respective Percentage with respect to the Term Loan, next to the Borrower's
obligations to Lenders with a Declining Revolving Credit Commitment under the
Declining Revolving Credit Loan pro rata based on such Lenders' respective
Percentage with respect to the Declining Revolving Credit Loan, next to the
Borrower's obligations to Lenders with a Revolving Credit Commitment under the
Revolving Credit Loan pro rata based on such Lenders' respective Percentage with
respect to the Revolving Credit Loan and last to any other Obligations which
remain outstanding pro rata based on each Lender's respective Percentage in such
Obligations. Proceeds from any realization on such Mortgaged Property, equipment
and fixtures will only be applied to the Revolving Credit Loans if any proceeds
remain after the full and indefeasible payment of the Term Loan and Declining
Revolving Credit Loans. In addition, the Borrower and each Lender acknowledge
and agree that the proceeds from any realization on Collateral consisting of
inventory, accounts receivable, Margin Account Equity and the products and
proceeds thereof will be applied first to the Lenders' costs and expenses
payable by Borrower pursuant to Section 7.05 and any other costs and expenses of
foreclosure or otherwise realizing on such inventory, accounts receivable and
Margin Account Equity Collateral, next to the Borrower's obligations to Lenders
with a Revolving Credit Commitment under the Revolving Credit Loan pro rata
based on such Lenders' respective Percentage with respect to the Revolving
Credit Loan, next to the Borrower's obligations to Lenders with a Declining
Revolving Credit Commitment under the Declining Revolving Credit Loan pro rata
based on such Lenders' respective Percentage with respect to the Declining
Revolving Credit Loan, next to the Borrower's obligations to Lenders with a Term
Loan Commitment under the Term Loan pro rata based on such Lenders' respective
Percentage with respect to the Term Loan, and last to any other Obligations
which remain outstanding pro rata based on each Lender's respective Percentage
in such Obligations. With respect to the proceeds of any other Collateral not
specified in this Section above, the proceeds of such Collateral will be applied
first to the Lenders' costs and expenses payable by Borrower pursuant to Section
7.05 and any other costs and expenses of foreclosure or otherwise realizing on
such Collateral and next to the Obligations in such order and priority as is
required by applicable law, or in the absence of any such requirement, as
determined by the Agent, pro rata based on each Lenders' respective Percentage
in such Obligations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties. The Borrower represents and
warrants to the Agent and the Lenders that:
(j)Borrower is a limited liability company duly organized, validly existing, and
in good standing under the laws of the state of its organization. Borrower is
duly qualified and in good standing as a foreign limited liability company, and
authorized to do business, in all states and jurisdictions wherein the character
of the properties owned or held by it or the business being transacted by it
makes such qualification necessary, except where the failure to so qualify would
(k)Borrower has full power to own or lease its property and carry on its
business as now conducted, and Borrower has full power to make the Borrowings
herein provided for, to execute and deliver this Agreement, the Notes and the
other Loan Documents and to perform its obligations hereunder and thereunder.
Borrower has full power to execute and deliver all other instruments referred to
or mentioned herein to which it is a party and to perform its obligations
thereunder. This Agreement, the Notes and other Loan Documents when executed and
delivered by the Borrower will constitute the legal, valid and binding
obligations of the Borrower enforceable in accordance with their respective
terms, except as enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
enforceability of creditors' rights generally and by general principles of
equity.
(l)The Borrowings herein provided for and the execution and delivery of this
Agreement, the Notes, and all other Loan Documents and the performance of the
obligations hereunder and thereunder, have
been duly authorized by all appropriate and required proceedings and action and
will not contravene any provisions of law or any regulation, order, writ,
judgment, injunction, decree, permit, or license applicable to Borrower or any
of Borrower's property or conflict with or breach or constitute a default under
Borrower's Articles of Organization, Operating Agreement or any members
agreement or other governing or organizational agreement of Borrower or
Borrower's members or under any indenture, agreement or security agreement to
which Borrower is a party or by which Borrower is bound. No consent or approval
of the officers, general or limited partners, members, managers, or directors of
Borrower or any other Person or creditor are required as a condition to the
effectiveness and validity of the Loan Documents.
(m)All of the issued and outstanding membership interests of the Borrower are
validly issued, fully paid and non-assessable.
(n)The Borrower maintains its books on a fiscal year basis ending on September
30 of each year. The audited financial statements and schedules of the Borrower
for and as of the fiscal year ended September 30, 2011 and the unaudited
financial statements and statement of operations and members' equity and the
balance sheet of the Borrower for the period ending January 31, 2012, certified
by a financial officer of the Borrower, copies of which have been delivered to
the Agent, fairly present the financial condition of the Borrower at such dates
and the results of operations for such periods, and since January 31, 2012,
there has been no Material Adverse Effect. No information, exhibit or report
furnished by or on behalf of the Borrower to the Agent contains any material
misstatement of fact or omits to state a material fact or any fact or
information necessary to make the statements and information contained therein
incomplete or not materially misleading.
(o)Except as described in the above financial statements or disclosed in
Schedule 3.01(f), there are no actions, suits, arbitration proceedings or other
proceedings of any nature pending or, to the knowledge of Borrower, threatened,
or to the knowledge of Borrower any basis therefor, against Borrower at law or
in equity, in any court or before any governmental department or agency or
arbitrator or arbitration panel, which could reasonably be expected to result in
any Material Adverse Effect. No proceedings of any nature for the revocation,
suspension or liquidation of any Permit have been commenced or threatened
against Borrower.
(p)Borrower has filed all required federal, state and local tax returns and has
paid all taxes as shown on such returns and all other taxes, assessments, FICA
and other withholding taxes as they have become due. Except as described in the
financial statements and reports referenced above, there are no tax claims which
have been asserted against Borrower, which are unpaid, and which could
(q)Borrower has good and marketable title to all of its real, personal and mixed
properties, and such properties are free and clear of all Liens except Permitted
Liens. In respect of leased property, the Borrower has valid and enforceable
leasehold interests therein.
(r)Borrower is not in violation of any term of its Articles of Organization or
Operating Agreement or any term of any agreement, instrument, judgment, decree
or order applicable to it, or in violation of any term of any statute, rule or
governmental regulation applicable to it, including without limitation any
Permit, the violation of which could reasonably be expected to have a Material
Adverse Effect.
(s)To the best of Borrower's knowledge, the business and operations of the
Borrower comply in all respects with all applicable federal, state, regional,
county and local laws, including without limitation statutes, rules, regulations
and ordinances relating to public health, safety or the environment or disposals
to air, water, land or groundwater, to the withdrawal or use of groundwater, to
the use, handling or disposal of polychlorinated biphenyls (PCBs), asbestos or
urea formaldehyde, to the treatment, storage, disposal or management of
hazardous substances (including, without limitation, petroleum, its derivatives,
by-products or other hydrocarbons), to exposure to toxic, hazardous, or other
controlled, prohibited or regulated substances, to the transportation, storage,
disposal, management or release of gaseous or liquid substances, and any
regulation, order, injunction, judgment, declaration, notice or demand issued
thereunder, except where the
failure to so comply (individually or in the aggregate) would not reasonably be
(t)Borrower has not given, nor is it required to give, nor has it received, any
notice, letter, citation, order, warning, complaint, inquiry, claim or demand to
or from any Governmental Authority or in connection with any court proceeding
that: (i) Borrower has violated, or is about to violate, any federal, state,
regional, county or local statute, law, rule, regulation, ordinance, Permit,
judgment or order, including without limitation those relating to environmental,
health or safety; (ii) there has been a release, or there is a threat of
release, of hazardous substances (including, without limitation, petroleum, its
by-products or derivatives, or other hydrocarbons) from Borrower's property,
facilities, equipment or vehicles; (iii) Borrower may, or is liable, in whole or
in part, for the costs of cleaning up, remediating or responding to a release of
hazardous substances (including, without limitation, petroleum, its by-products
or derivatives, or other hydrocarbons); or (iv) any of Borrower's property or
assets are subject to a Lien in favor of any Governmental Authority for any
liability, costs or damages, under any federal, state or local environmental
law, rule or regulation arising from, or costs incurred by such Governmental
Authority in response to, a release of a hazardous substance (including, without
limitation, petroleum, its by-products or derivatives, or other hydrocarbons).
(u)All statements by the Borrower contained in any certificate, statement,
document or other instrument or writing delivered by or on behalf of the
Borrower at any time pursuant to this Agreement or the other Loan Documents
shall constitute representations and warranties made by the Borrower hereunder.
No representation or warranty of the Borrower contained in this Agreement or any
other Loan Document, and no statement contained in any certificate, schedule,
list, financial statement or other instrument furnished to the Agent or any
Lender by or on behalf of the Borrower contains, or will contain, any untrue
statement of a material fact, or omits, or will omit, to state a material fact
necessary to make the statements contained herein or therein not misleading. To
the best of Borrower's knowledge, all information material to the transactions
contemplated in this Agreement has been disclosed to the Agent and Lenders.
(v)No part of the proceeds of the Borrowings will be used to purchase or carry
any margin stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock or to reduce or retire any indebtedness incurred
for any such purpose. If requested by the Agent, the Borrower will furnish to
the Agent a statement in conformity with the requirements of Federal Reserve
Form U 1 referred to in Regulation U to the foregoing effect.
(w)Borrower has no commodity accounts or similar commodity hedging accounts
except for those described in the Control Agreements.
(o) Each “employee benefit plan”, “employee pension benefit plan”, “defined
benefit plan” or “multi-employer benefit plan” (as such terms are defined in the
Employee Retirement Income Security Act of 1974, as amended) which Borrower has
established, maintained or to which it is required to contribute (collectively,
the “Plans”) is in compliance with all applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended (as amended, replaced or
supplemented from time to time, “ERISA”), and the Internal Revenue Code and the
rules and regulations thereunder as well as the Plan's terms and conditions.
There have been no “prohibited transactions” and no “reportable event” (as such
terms are defined in ERISA) has occurred with respect to any Plan. Borrower does
not have a “multi-employer benefit plan”. Borrower has not incurred any
liability to the Pension Benefit Guaranty Corporation in connection with a Plan,
other than for premiums due in the ordinary course.
(p) Borrower is and, after consummation of the transactions contemplated by
this Agreement, will be Solvent. “Solvent” shall mean that, as of a particular
date, (i) Borrower is able to realize upon its assets and pay its debts and
other liabilities, contingent obligations and other commitments as they mature
in the ordinary course of business; (ii) Borrower is not engaged in a business
or a transaction, and is not about to engage in a business or a transaction, for
which Borrower's property would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the industry in which
Borrower is engaged,
(iii) the fair value of the property of Borrower is greater than the total
amount of liabilities, including, without limitation, contingent liabilities, of
Borrower and (iv) the present fair salable value of the assets of Borrower is
not less than the amount that will be required to pay the probable liability of
Borrower on its debts as they become absolute and matured. In computing the
amount of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability. The Borrower shall execute
and deliver to the Agent a Solvency Certificate in form attached as Schedule
3.01(p) and incorporated herein by reference.
(q) As of the date hereof, Borrower has no subsidiaries or affiliates other
than those listed on Schedule 3.01(q) attached hereto and made a part hereof.
(r) Borrower is not in default under or with respect to, or a party to, any
contractual obligation that could, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. No Event of Default
has occurred and is continuing or would result from the consummation of the
transactions contemplated by the Loan Documents.
(s) Borrower is not an “investment company” within the meaning of the
(t) Each Permit is listed on Schedule 3.01(t), including each Permit in
effect presently and those Permits to be obtained after the Closing Date as
necessary or appropriate for operation of Borrower's ethanol plant at maximum
capacity.
(u) As of the Closing Date, there are no Material Contracts other than the
agreements and contracts disclosed to the Lenders pursuant to this Section.
(i) Management Contracts. As of the Closing Date, there are no management
contracts material to the management of Borrower's business or operation of the
Project other than those listed on Schedule 3.01(u)(i).
(ii) Supply Contracts. As of the Closing Date, there are no Supply Contracts
other than those listed on Schedule 3.01(u)(ii). Borrower has made adequate
provision for all storage facilities, equipment and inputs, including corn, as
specified by Borrower's engineers for the maximum output and operation of the
Project.
(iii) Sales and Marketing Contracts. As of the Closing Date, there are no
Sales and Marketing Contracts other than those listed on Schedule 3.01(u)(iii).
(iv) Transportation Contracts. As of the Closing Date, there are no
Transportation Contracts other than those listed on Schedule 3.01(u)(iv).
(v) Utility Contracts. As of the Closing Date, there are no Utility Contracts
other than those listed on Schedule 3.01(u)(v). Borrower has made suitable
arrangements so that the Project has all necessary electrical, coal, water,
storm and sewer facilities in place for the proper construction and operation of
the Project at maximum efficiency.
Each Material Contract is in full force and effect and there are no defaults now
existing or which would or may occur with the giving of notice or the passage of
time. The parties intend and agree that the assignments and consents listed in
Schedule 3.01(u) issued under and in support of the Current Credit Agreement
shall remain in full force effect and shall secure and support the Loans. Any
reference in such assignments to a "Loan Agreement" shall hereby be deemed
amended to reference this Agreement.
(v) As of the Closing Date, the Projections fairly present Borrower's
reasonable forecast of the results of operations and changes in cash flows for
the periods covered thereby, based on the assumptions set forth therein, which
assumptions are reasonable based on historical experience and presently known
facts. Since the date of such Projections, there have been no changes with
respect to Borrower or its Subsidiaries which could reasonably be expected to
result in, singly or in the aggregate, a material discrepancy between such
Projections and Borrower's actual results for the periods stated.
(w) The Project was constructed in material compliance with its plans and
specifications and the applicable Permits and is being operated in accordance
with the Permits and applicable law. The exterior lines of the improvements
related to the Project are, and at all times will be, within the boundary lines
of the Real Estate, and Borrower has examined and is familiar with all
applicable covenants, conditions, restrictions and reservations and with all
applicable requirements of all Governmental Authorities, including without
limitation, building codes and zoning, environmental, hazardous substance,
energy and pollution control laws, ordinances and regulations affecting the
Project.
ARTICLE IV
COVENANTS
Borrower covenants and agrees with the Agent and Lenders that so long as any
Obligations remain outstanding or Lenders have any duty to extend credit
hereunder, except to the extent compliance in any case is waived in writing by
the Agent:
Section 4.01. Existence. Borrower will maintain in good standing its
existence and its right to transact business in each state in which the
character of the properties owned or held by it or the business being transacted
by it require it to be qualified as a foreign limited liability company or
limited partnership, as the case may be, and will continue to engage in the same
lines of business in which it is presently engaged.
Section 4.02. Inspection and Records. The Borrower will permit the Agent and
any agent of the Agent to visit and inspect any of its respective properties,
corporate books, financial records, grain and inventory warehouses, and grain
and ethanol, corn oil and distiller's grains inventory records, and to discuss
its affairs, finances and accounts with their principal officers and independent
public accountants, all at such reasonable times and as often as the Agent may
reasonably request. At the request of the Agent, the Borrower shall permit, and
will cooperate with the Agent in arranging for, inspections from time to time of
Borrower's facilities and audits of the Collateral. The Borrower acknowledges
that any reports and inspections conducted or generated by the Agent or its
agents or representatives, shall be made for the sole benefit of the Lenders and
not for the benefit of the Borrower or any third party, and the Agent and
Lenders do not assume any liability, responsibility or obligation to the
Borrower or any third party by reason of such inspections or reports. The costs
and expenses of such audits and inspections made by the Agent shall be paid or
reimbursed by the Borrower.
Section 4.03. Insurance and Maintenance of Properties. The Borrower will
maintain insurance of the kinds, covering the risks, and in such amounts and
deductibles acceptable to the Agent, which policies (except policies of
liability insurance) shall cover all operating, physical properties of the
Borrower and will keep all its operating, physical properties in good repair,
ordinary wear and tear and damage by fire or other casualty, however caused,
excepted. All policies of casualty insurance providing coverage for Collateral
shall name the Agent as additional insured and as additional loss payee. All
such endorsements shall comply with the terms and conditions of the Mortgage and
Security Agreement and shall provide, in any event, that no such policy shall be
cancelled, materially reduced in amount or materially changed in coverage
without at least thirty (30) days prior written notice to the Agent of such
cancellation, reduction or change. The policies of insurance required below
shall be in form and content satisfactory to the Agent and shall be placed with
financially sound and reputable insurers. Acceptance of insurance policies
referred to below shall not bar the Agent from requiring additional insurance,
which it deems reasonably deems necessary. Specifically, the Borrower will
maintain the following policies of insurance:
(a) An All Risk property policy of insurance with coverage equal to the
replacement cost of the Project,
as well as casualty/umbrella (Commercial General Liability) insurance) insuring
the Project against all risks, including flood, earthquake, and mechanical and
electrical breakdown including testing to the full value of the Project (subject
to reasonable loss deductible provisions). Lenders' interest shall be protected
by naming the Agent as additional insured on the liability policies and loss
payee on the property policies;
(b) Casualty (Commercial General Liability) & Umbrella insurance (including
products and completed operations, operations of subcontractors, and contractual
liability insurance) with coverage in the amount of $2,000,000.00 in the form of
either a $2,000,000.00 primary policy or a $1,000,000.00 primary policy and a
$1,000,000.00 Umbrella policy. Agent's interest shall be protected by naming the
Agent as an additional named insured on all such policies;
(c) State worker's compensation insurance, with statutory limits, and
Employer's Liability coverage with coverage of no less than $500,000.00;
(d) Business automobile liability insurance insuring all vehicles on the
site, including hired and non-owned liability with coverage in the amount of
$2,000,000.00 in the form of either a $2,000,000.00 primary policy or a
$1,000,000.00 primary policy and a $1,000,000.00 Umbrella policy;
(e) Environmental insurance shall be provided covering clean up and removal,
in policy amounts and coverages reasonably acceptable to the Agent;
(f) Directors/Officers errors and omissions coverage of no less than
$2,000,000.00;
(g) Business Interruption and Extra Expense insurance equal to 100% of the
projected revenue loss during a potential interruption of production of not less
than six months; and
(h) Such other coverages as the Agent reasonably requires from time to time.
Section 4.04. Notices. The Borrower will notify the Agent immediately if it
becomes aware of (a) the occurrence of any Default, (b) any other event or
circumstance that could reasonably be expected to result in a Material Adverse
Effect, (c) a material adverse change in the business, operations, financial
condition (including, without limitation, proceedings in bankruptcy, insolvency,
reorganization, or the appointment of a receiver or trustee), or (d) any failure
of Borrower to observe any of its undertakings under the Loan Documents. The
Borrower shall also notify the Agent in writing of any default under any
Material Contract or any other indenture, agreement, contract, lease, license,
licensing agreement or other instrument to which Borrower is a party or under
which Borrower is obligated, and of any acceleration of the maturity of any
indebtedness of either Borrower which default or acceleration could have a
Material Adverse Effect on Borrower or on the Collateral. The Borrower shall
also notify the Agent of any revocation, proceeding or investigation of any
nature with respect to such Borrower's Permits. The Borrower shall take all
steps necessary to remedy promptly any of the foregoing defaults, investigations
or proceedings, to protect against any such adverse claim, to defend any such
proceeding and to resolve all such controversies.
Section 4.05. Compliance with Laws; Payment of Debts, Taxes and Claims. The
Borrower will comply in all material respects with all statutes, laws and
governmental rules, regulations, Permits and orders applicable to its business,
properties and assets. In addition, the Borrower shall maintain in full force
and effect all Permits, licenses and licensing agreements and the Borrower shall
comply in all material respects with the provisions and requirements of such
Permits and licenses and/or licensing agreements. The Borrower will promptly pay
and discharge prior to delinquency all debts, accounts, liabilities, taxes,
assessments and other governmental charges or levies imposed upon, or due from,
the Borrower, as well as all claims of any kind (including claims for labor,
materials and supplies) which, if unpaid, might by law become a Lien upon any of
their respective property, except that nothing herein contained shall be
interpreted to require the payment of any such debt, account, liability, tax,
assessment or charge so long as its validity is being contested in good faith by
appropriate legal proceedings and against which, if requested by the Agent or
required by GAAP, reserves satisfactory to and deposited with the Agent have
been made therefor. Such reserves shall constitute additional Collateral and the
Borrower hereby grants the Agent a first priority security interest in such
reserves.
Section 4.06. Fundamental Changes; Acquisitions. Borrower shall not dissolve,
wind up, liquidate, merge into or consolidate with, or suffer or permit itself
to be merged into or consolidated with, any other corporation, or sell, convey
or transfer all or substantially all of its assets to any person, firm or
corporation. Borrower shall not change its name without the prior written
consent of the Agent. Borrower shall not purchase or otherwise acquire the
assets or equity interests of any other Person or Persons; provided, however,
that the term "acquisition," as used in the sentence, shall not include the
purchase of grain, inputs or inventory in the ordinary course of Borrower's
business.
Section 4.07. Working Capital. The Borrower must maintain at all times
minimum Working Capital of not less than $5,000,000.00, measured monthly.
Section 4.08. Fixed Charge Coverage Ratio. The Borrower must maintain a Fixed
Charge Coverage Ratio, measured on a rolling four quarters trailing basis at the
end of each full fiscal quarter, of no less than 1.15:1.0. The Fixed Charge
Coverage Ratio shall be tested by the Agent quarterly on a fiscal quarter basis.
Section 4.09. Capital Expenditures. The Borrower shall not make any
expenditures for fixed or capital assets if, after giving effect thereto, the
aggregate of all such expenditures by the Borrower exceeds $4,100,000 during
Borrower's 2012 fiscal year, or $1,000,000 in any fiscal year after 2012.
Section 4.10. Material Contracts. The Borrower will notify the Agent of the
existence of any Material Contract promptly upon entering into the same. The
Borrower agrees to promptly execute and deliver to the Agent such collateral
assignments and take such other actions as the Agent requests to perfect Agent's
security interest in Borrower's rights under such Material Contracts. In
addition, the Borrower will assign to the Agent, in form acceptable to the
Agent, all equipment and systems warranties relating to the Project, all
operational, design and intellectual property licenses applicable to the
Project, together with all Utility Contracts, grain procurement contracts,
grain, corn oil and ethanol Financial Instrument Agreements, as the same are
obtained by Borrower from time to time, together with all consents from the
vendors and other parties under such contracts.
Section 4.11. Financial Reports. The Borrower will maintain a system of
accounting in accordance with GAAP, consistently applied, and will furnish to
the Agent and to Agent's authorized representatives such information respecting
the business and financial condition of the Borrower as Agent may reasonably
request; and without request Borrower will furnish each of the following to
Agent:
(x)Borrower's year end audited financial statements (to include, but not be
limited to, balance sheet, income statement, and net worth reconciliation, each
setting forth in comparative form figures for the preceding fiscal year of the
Borrower), audited and accompanied by an unqualified audit report by a certified
public accounting firm acceptable to the Agent as soon as available and in any
event within one hundred twenty (120) days after the end of the Borrower's
fiscal years;
(y)The Borrower's interim monthly financial statements (to include its unaudited
balance sheet as of the end of each such period and the related unaudited
statements of income and retained earnings, and statement of changes in
financial position for such period and the portion of the fiscal year through
such date, setting forth in each case in comparative form the figures for the
previous year) as soon as available, but in any event within thirty (30) days
after the end of each month, signed and certified complete and as fairly
presenting the financial condition and results of operations of the Borrower by
the Chief Financial Officer or equivalent of the Borrower (subject to normal
year-end adjustments and the absence of footnotes);
(z)A borrowing base certificate (in form satisfactory to the Agent and with all
supporting documentation, and including, without limitation, finished
goods-ethanol, corn oil and distiller's grain inventory detail, accounts
receivable detail, corn inventory, and Margin Account Equity) at the initial
Advance on the Revolving Credit Loan and monthly thereafter as soon as available
but in any event no later than thirty (30) days after the last day of each month
or at such other time as requested by the Agent;
(aa)The Borrower's daily commodity position reports which states Borrower's
ownership position in grains, ethanol and coal and, for each, the amount thereof
hedged, as soon as available but in any event no later than thirty (30) days
after the last day of each month and at such other time as the Agent may
request, and Borrower's hedging account brokerage statements on a daily basis as
soon as available;
(e) as soon as available and in any event within 30 days after the end of
each month, a production report certified by the Chief Financial Officer or
equivalent of the Borrower as to accuracy, which sets forth pertinent
information in respect of the amount of ethanol, corn oil and DDGS produced,
input, output and utility costs, transportation costs, utilization and other
information as the Agent may reasonably specify from time to time;
(f) Within thirty (30) days after the end of each quarter, a certificate of
the Borrower signed by the chief financial officer of the Borrower substantially
in the form of Exhibit D attached hereto and incorporated herein by reference,
(i) demonstrating compliance with the financial covenants contained in this
Agreement above by calculation thereof as of the end of each such fiscal period,
and compliance with the capital expenditure limitations provided for in this
Agreement above, (ii) stating that no Event of Default exists, or if any Event
of Default does exist, specifying the nature and extent thereof and what action
the Borrower proposes to take with respect thereto and (iii) certifying that all
of the representations and warranties made by the Borrower in this Agreement
and/or in any other Loan Document are true and correct on and as of such date as
if made on and as of such date;
(g) concurrently with the delivery of the financial statements referred to in
clause (a) above, a copy of the Borrower's pro forma budget and business plan
for the subsequent fiscal year of the Borrower, containing a combined and
combining pro forma balance sheet of the Borrower as of the end of such
subsequent fiscal year and the related pro forma combined and combining
statements of income, owners' equity and cash flows (together with all footnotes
thereto) of the Borrower for such subsequent fiscal year, and including the
Borrower's projected capital projects and expenditures for such year;
(h) The Borrower shall authorize all Governmental Authorities to furnish
reports of examinations, records and other information relating to the condition
and affairs of the Borrower and the Project, and any information from reports,
returns, files and records of such Governmental Authorities regarding the
Borrower upon request to the Agent;
(i) a monthly Risk Management Policy Compliance Certificate, completed and
certified correct by the general manager of the Project, certifying that
Borrower is in compliance with Borrower's Risk Management Policy approved by the
Agent, within thirty (30) days after the end of each month; and
(j) promptly following any request therefor, such other information regarding
the results of operations, business affairs and financial condition of the
Borrower and such information about the Project as the Agent may reasonably
request.
All financial statements required hereunder shall be complete and correct in all
material respects and shall be prepared in reasonable detail and in accordance
with generally accepted accounting principles (consistent with the financial
statements referred to above) and applied consistently throughout the periods
reflected therein. Without the prior written consent of the Agent, the Borrower
will not change in any material way the accounting principles upon which the
financial statements referenced above were prepared and based except for changes
made as a result of changes in or to generally accepted accounting principles.
Section 4.12. Debt. Borrower shall not create, incur or assume any Debt
except for Permitted Debt.
Section 4.13. Redemption; Distributions. Borrower shall not redeem, purchase
or acquire units or shares of its outstanding membership interests without the
prior written consent of the Agent; provided, however, that so long
as no Event of Default has occurred and is continuing or would occur after
giving effect to the payment of the redemption or purchase, Borrower has
delivered to the Agent Borrower's annual audited financial statements and
compliance certificates as required in this Agreement and Borrower is in
compliance with all of the financial and other covenants provided for in this
Agreement and will remain so after giving effect to the payment of such
redemption or purchase, Borrower may redeem or purchase outstanding membership
interests, or units or shares thereof, in an aggregate amount not to exceed
$100,000.00 in any fiscal year. Further, Borrower may not declare or pay any
dividends or distributions; or make any distribution of assets to its members,
whether in cash, assets or obligations of the Borrower; or allocate or otherwise
set apart any funds or assets for the payment of any dividend or distribution
without the prior written consent of the Agent except as provided for in this
Section as follows:
(a) So long as no Event of Default has occurred and is continuing or would
occur after giving effect to the payment of the Tax Distribution described in
this subsection, the Borrower may make Tax Distributions to its members within
thirty (30) days prior to each June 15, September 15 and January 15, each in an
amount equal to one fourth (¼) of the estimated income tax liability to be
incurred for such year by the Borrower's members or partners by reason of their
membership interest in the Borrower, based upon the most recent financial
information available to the Borrower.
(b) The Borrower may make a final Tax Distribution to its members within
thirty (30) days prior to each April 15, so long as (a) no Event of Default has
occurred and is continuing or would occur after giving effect to the payment of
such final Tax Distribution described in this Section and the distributions
permitted in Section 4.14(c), (b) the Borrower has delivered to the Agent the
Borrower's annual audited financial statements and compliance certificates as
required in this Agreement and (c) the Borrower is in compliance with all of the
financial and other covenants provided for in this Agreement and will remain so
after giving effect to the payment of such final Tax Distribution described in
this Section and the distributions permitted in Section 4.14(c), in an amount
not to exceed the positive difference between the total tax liability of the
Borrower's members incurred by reason of their membership interest in Borrower
and the amounts previously distributed to such members pursuant to Section
4.13(a), provided, that if the difference between the total tax liability of the
Borrower's members incurred by reason of their membership interest in the
Borrower and the amounts previously distributed to such members pursuant to
Section 4.13(a) is zero or a negative number, then no final Tax Distributions
may be made by Borrower under this Section.
(c) So long as (a) no Event of Default has occurred and is continuing or
would occur after giving effect to the payment of the distribution described in
this Section and the year ending quarter Tax Distribution described in Section
4.13(b), (b) Borrower has delivered to the Agent Borrower's annual audited
financial statements and compliance certificates as required in this Agreement
and (c) Borrower is in compliance with all of the financial and other covenants
provided for in this Agreement and will remain so after giving effect to the
payment of such distribution described in this Section and the year ending
quarter Tax Distribution described Section 4.13(b), Borrower may make one
distribution of net income each fiscal year, less any Tax Distributions
previously made pursuant to Sections 4.13(a) and 4.13(b), based upon the Net
Income of Borrower for the immediately preceding fiscal year in an amount not to
exceed 40% of such preceding fiscal year's Net Income.
(d) The foregoing Tax Distributions and Net Income distributions described in
Section 4.13(c) above may only be made if (a) no Event of Default has occurred
and is continuing or would occur after giving effect to the payment of the
applicable Tax Distribution, (b) Borrower has delivered to the Agent Borrower's
annual audited financial statements and compliance certificates as required in
this Agreement, (c) Borrower is in compliance with all of the financial and
other covenants provided for in this Agreement and will remain so after giving
effect to the payment of the applicable Tax Distribution or Net Income
Distribution and (d) such Tax Distributions and Net Income Distributions in the
aggregate for any fiscal year do not exceed forty percent (40%) of Borrower's
Net Income for the immediately preceding fiscal year. Notwithstanding anything
contained in this Agreement to the contrary, in no event shall any
distributions, including, but not limited to Tax Distributions, be made prior to
Borrower's full payment and satisfaction of all of Borrower's Obligations which
have accrued to the date of payment of such distributions including Tax
Distributions.
Section 4.14. Hedge Agreements. The Borrower shall maintain hedging contracts
with respect to its ethanol, coal and grain positions; provided, however, in no
event shall the Borrower's unhedged grain position violate the requirements of
the State of North Dakota Grain Code and/or the USDA Federal Grain Code, and any
regulations and interpretations issued thereunder, as they may be amended from
time to time.
Section 4.15. Negative Pledge. The Borrower shall not incur or permit to
exist any Liens against any of its property except (collectively, "Permitted
Liens"):
(a) pledges or deposits in connection with or to secure worker's compensation
employment insurance, pensions or other employee benefits, or in connection with
leases or other contracts, or to secure public or statutory obligations, or to
secure surety or appeal bonds;
(b) Liens for taxes, assessments or governmental charges or levies to the
extent not delinquent or that are being diligently contested in good faith by
appropriate proceedings and for which Borrower has set aside adequate reserves
in accordance with generally accepted accounting principles;
(c) Liens arising under the Loan Documents;
(d) purchase money Liens upon or in property acquired or held by Borrower in
the ordinary course of business to secure the purchase price of such property or
to secure indebtedness incurred solely for the purpose of financing the
acquisition of any such property to be subject to such Liens, or Liens existing
on any such property at the time of acquisition, or extensions, renewals or
replacements of any of the foregoing for the same or a lesser amount, provided
that no such Lien shall extend to or cover any property other than the property
being acquired and no such extension, renewal or replacement shall extend to or
cover property not theretofore subject to the Lien being extended, renewed or
replaced, and provided, further, that the aggregate principal amount of debt at
any one time outstanding secured by Liens permitted by this clause (d) shall not
exceed $100,000.00;
(e) Liens imposed by law, such as carriers', workmen's and repairmen's liens
and other similar Liens arising in the ordinary course of business securing
obligations which are not overdue by more than 60 days or which have been fully
bonded or are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves have been set aside in accordance
with generally accepted accounting principles;
(f) easements, rights-of-way, zoning and other similar restrictions and
encumbrances, which do not (individually or in the aggregate) materially detract
from the use of the property to which they attach by the Borrower;
(g) Liens of Commodity Intermediaries as described in the Control Agreements;
(h) the Permitted Encumbrances defined in the Mortgage; and
(i) Liens disclosed in Exhibit C attached to this Agreement and incorporated
herein by reference.
Section 4.16. Environmental, Health and Safety Laws. Borrower will comply in
all material respects with the requirements of all federal, state and local
environmental and health and safety laws, rules, regulations and orders
applicable to or pertaining to its properties or business operations. Without
limiting the foregoing, Borrower will not, except in accordance with applicable
law, dispose of any hazardous substance into, onto or from any real property
owned or operated by Borrower. The Borrower shall promptly provide the Agent
with copies of any notice or other instrument of the type described in Section
3.01(k) hereof, after an officer of the Borrower receives such notice or
instrument.
Section 4.17. Capital Adequacy. If the Agent shall have determined that the
adoption after the date hereof, of any applicable law, rule or regulation
regarding capital adequacy, or any change after the date hereof therein, or any
change after the date hereof in the interpretation or administration thereof by
any Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency made subsequent
to the date hereof, has or would have the effect of reducing the rate of return
on such Lender's capital as a consequence of its obligations hereunder to a
level below that which such Lender could have achieved but for such adoption,
change or compliance by an amount deemed by such Lender to be material, then
from time to time, within sixty (60) days after demand by the Agent the Borrower
shall pay to the Agent for the benefit of such Lender such additional amount or
amounts as will compensate such Lender for such reduction. Such Lender will
promptly notify the Agent and the Borrower of any event of which it has
knowledge, occurring after the date hereof, which will entitle a Lender to
compensation pursuant to this Section. A certificate of the Lender claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error determining such amount, such Lender may use any reasonable
averaging and attribution methods.
Section 4.18. Funding Losses. If the Borrower makes any prepayment of
principal with respect to any Loan on a day other than the due date, the
Borrower shall reimburse the applicable Lenders, on demand, for any resulting
loss, breakage fees or expense (including without limitation, administrative
costs) incurred by such Lenders including any loss incurred in obtaining,
liquidating, or employing deposits from third parties, provided that such
Lenders shall have delivered to the Agent and the Borrower a certificate as to
the amount of such loss or expense, which certificate shall be conclusive in the
absence of manifest error.
Section 4.19. Contingent Liabilities. Borrower will not guarantee, endorse,
agree to furnish funds for the payment of, or otherwise become or be
contingently liable upon the indebtedness of any Person, except (a) endorsements
of negotiable instruments in the ordinary course of business, and
(b) commercially reasonable indemnity agreements by the Borrower in favor of its
officers, members, managers, partners and directors.
Section 4.20. Commodity Accounts. Borrower will not establish or maintain any
commodity account or similar commodity hedging account unless the commodity
intermediary in respect of such account has entered into a control agreement
with the Borrower and the Agent which provides that the Agent, as secured party,
has "control" of such commodity account and all commodity contracts carried in
such commodity account for purposes of Section 9-106(b)(2) of the Uniform
Commercial Code as in effect in the applicable jurisdiction and which control
agreement is otherwise reasonably acceptable in form and content to the Agent.
Section 4.21. Property Maintenance. The Borrower will keep its properties in
good repair, working order, and condition and from time to time make any needful
and proper repairs, renewals, replacements, extensions, additions, and
improvements thereto so that the business of the Borrower will be conducted at
all times in accordance with prudent business management.
Section 4.22. Litigation; Adverse Events. The Borrower will promptly inform
the Agent of the commencement of any material action, suit, proceeding,
arbitration, mediation or investigation against the Borrower, or the making of
any counterclaim against the Borrower and of all material Liens against any of
the Borrower's property and promptly advise the Agent in writing of any other
condition, event or act which comes to their attention that would or might
materially prejudice the Agent's or any Lender's rights under this Agreement or
the Loan Documents or otherwise result in a Material Adverse Effect.
Section 4.23. Location of Collateral. The Borrower shall maintain all
tangible Collateral, including, but not limited to grain and inventory, at the
facilities described in Schedule A of the Security Agreements and the Borrower
shall not move grain, inventory or other tangible Collateral from such
facilities or otherwise locate grain or any other tangible Collateral at any
other facility without the prior written consent of the Agent. In addition, the
Borrower shall maintain its books and records relating to the Collateral at the
facilities described in Schedule A of the Security Agreements. Notwithstanding
the foregoing, the Borrower may move Collateral between facilities identified on
Schedule A of the Security Agreements and may sell inventory in the ordinary
course of business without the consent of the Agent.
Section 4.24. Cash Management Services. The Borrower shall maintain its
primary deposit accounts with First National.
Section 4.25. Loans to Members. Borrower will not directly or indirectly loan
amounts to or guarantee the debts of any Person, including, but not limited to
an affiliate, subsidiary, parent of the Borrower, or any member, officer or
employee thereof or to any entity controlled by such entity, officer,
shareholder, member or employee.
Section 4.26. Permits. Borrower will not permit any federal, state or local
license, Permit, registration, consent or approval of any nature which is
required or desirable in connection with the Borrower's business and the
operation thereof to expire, lapse, terminate, be suspended or revoked for any
reason. In addition, the Borrower will timely apply for any renewals of any
Permit required for the continued operation of the Project such that the
operation of the Project will not be interrupted or suspended.
Section 4.27. Transactions With Affiliates and/or Members. Borrower will not
enter into, or cause, suffer or permit to exist, any arrangement or contract
with any of its affiliates or subsidiaries or members, in each case unless such
arrangement or contract (i) is otherwise permitted by this Agreement, (ii) is in
the ordinary course of business of the Borrower or such affiliate or subsidiary
or member, as the case may be, and (iii) is on terms no less favorable to the
Borrower or such affiliate or subsidiary or member than if such arrangement or
contract had been negotiated in good faith on an arm's-length basis with a
Person that is not an affiliate or subsidiary or member of the Borrower.
Section 4.28. Management. Borrower will not consent to the replacement of the
general manager of the Project or Borrower's manager(s) without the prior
written consent of the Agent. In the event the general manager of the Project
notifies Borrower that such general manager is leaving Borrower, Borrower will
promptly notify the Agent along with all information regarding the proposed
replacement general manager when available. Any new or replacement general
manager of the Project shall be subject to the prior written approval of the
Agent.
Section 4.29. Material Contracts. Except to the extent as could not
reasonably be expected to result in a Material Adverse Effect, the Borrower will
not terminate, amend, modify, or waive any of its rights under (a) its Articles
of organization, Operating Agreement or other organizational documents, or (b)
any Material Contract.
ARTICLE V
CONDITIONS PRECEDENT
The obligation of Lenders to make any Loan hereunder, shall be subject to the
following conditions precedent:
Section 5.01. Initial Advance on Loans. Before or concurrently with the
initial Borrowing by the Borrower on the Loans:
(ab)The Agent shall have received duly executed copies of each Loan Document;
(ac)The Agent shall have received copies (executed or certified as may be
appropriate) of all resolutions, consent actions, legal documents or proceedings
taken by the Borrower in connection with the execution and delivery of this
Agreement, the Notes, and the other Loan Documents to the extent the Agent may
reasonably request;
(ad)The Agent shall have received copies of the Borrower's Articles of
Organization and Operating Agreement, and any amendments thereto, certified in
each instance by its Secretary or Assistant Secretary or equivalent and a
Certificate of Good Standing from the North Dakota Secretary of State;
(ae)The Agent shall have received copies of resolutions of the Borrower's Board
of Directors or
equivalent authorizing the execution and delivery of the Loan Documents to which
it is a party and the consummation of the transactions contemplated thereby
together with specimen signatures of the persons authorized to execute such
documents on Borrower's behalf, all certified in each instance by its Secretary
or Assistant Secretary or equivalent;
(af)The Agent shall have received evidence satisfactory to the Agent that the
Liens granted by the Mortgage, Security Agreement and the Control Agreements
create perfected first priority security interests;
(ag)The Agent shall have received a duly executed Borrowing Base Certificate
dated as of the Business Day preceding the Closing Date;
(ah)All legal matters incident to the execution and delivery of the Loan
Documents shall be satisfactory to the Agent and its counsel;
(h) The Agent shall have received the favorable written opinion of legal
counsel to the Borrower with respect to the transactions described herein, in
form and substance acceptable to the Agent;
(i) The Agent has received all fees and other amounts due and payable on or
prior to the Closing Date, including the Origination Fee and amounts for
or paid by the Borrower pursuant to this Agreement, under any other Loan
Document, or any other agreement with Lenders;
(j) The Agent has received copies of favorable UCC, tax, judgment, bankruptcy
and fixture lien search reports (or other evidence of the same satisfactory to
the Agent) in all necessary or appropriate jurisdictions and under all legal and
trade names of Borrower and all other parties requested by the Agent, indicating
that there are no prior Liens on any of the Collateral other than Permitted
Liens;
(k) Phase I Environmental Site Assessment Reports on all of the Real Estate,
along with such further environmental review and audit reports as the Agent
requests (which may include Phase II reports) all in form and content
satisfactory to the Agent and establishing the environmental condition of the
Real Estate as satisfactory to the Agent, and letters by the firms preparing
such environmental reports authorizing the Agent and Lenders to rely on such
reports;
(l) Evidence satisfactory to the Agent that all necessary utilities are
available to the Project, and a copy of each executed Utility Contract and the
assignments thereof and consents thereto required in this Agreement and the
other Loan Documents, all of the foregoing in form and substance acceptable to
the Agent;
(m) Copies of certificates of insurance demonstrating the types, levels,
deductibles, endorsements and other coverage parameter issues to the
satisfaction of the Agent for casualty insurance, commercial general liability,
an umbrella policy, business automobile liability insurance, environmental
liability insurance, worker's compensation insurance, and permanent all risk
property insurance, all as required under this Agreement and the other Loan
Documents, with all such insurance in full force and effect and approved by the
Agent, in the exercise of its reasonable discretion, and naming the Agent as an
additional insured and loss payee together with appropriate flood insurance, if
the Real Estate is in a flood hazard area. In addition, Borrower shall provide
to the Agent proof of insurance for business interruption/extra expense coverage
for six months of operating expenses, and also directors/officers errors and
omissions coverage in a minimum amount of $2,000,000.00. Such certificates of
insurance must describe the types and amounts of insurance (property and
liability) carried by Borrower, and in each case must name the Agent as loss
payee or additional insured, as the case may be, and must include a stipulation
that coverages will not be cancelled or diminished without at least 30 days'
prior written notice to the Agent, together with a lender's loss payable
endorsement;
(n) The Agent has received and is satisfied with a commitment by the Title
Company to issue
an ALTA mortgagee title insurance policy assuring Agent that the Mortgage
creates a valid and enforceable encumbrance on the Real Estate, free and clear
of all defects and encumbrances except Permitted Liens and containing: (A) a
comprehensive endorsement (ALTA form 9); (B) a zoning endorsement (ALTA form
3.0) specifying an ethanol production facility as a permitted use for all of the
parcels included in the Real Estate; (C) coverage against mechanic and
materialmen's liens to the extent the mechanics' liens are not Permitted Liens,
(D) an access endorsement (ALTA form 17), (E) a contiguity endorsement (ALTA
form 19), (F) a tax parcel endorsement (ALTA Form 18), (G) survey location
coverage, (H) a variable rate endorsement (ALTA form 6), (I) environmental lien
endorsement, (J) a doing business endorsement, (K) a usury endorsement, (L) a
revolving credit endorsement, and (M) deletion of any creditor's rights and
arbitration provisions and such additional coverages and endorsements as the
Agent may require; [EDITOR'S NOTE: Working with title company to just get an
endorsement to our current policy.]
(o) The Agent has received and is satisfied with three copies of a ALTA/ACSM
survey prepared in accordance with the current accuracy standards jointly
adopted by ALTA (American Land Title Association), ACSM (American Congress on
Surveying and Mapping) and NSPS (National Society of Professional Surveyors)
together with optional survey requirements #2 (vicinity map showing the property
surveyed in reference to nearby highway(s) or major street intersections); #6
(identify setbacks); #7 (identify exterior dimensions of all existing and
proposed buildings “As-Built”, including square footage of exterior footprint of
all buildings, gross floor area of all buildings); #11 (location of utilities)
and such other matters as may be reasonably required by the Agent. The survey
shall show the location of all easements and encroachments onto or from the Real
Estate that are visible on the Real Estate, known to the surveyor preparing the
survey or of record, identifying easements of record by recording data. Such
surveyor shall certify there are no easements or encroachments upon the Real
Estate except as shown on the survey. Such survey shall be certified to the
Agent and the Title Company in a manner reasonably satisfactory to Agent and the
Title Company, and dated a date reasonably satisfactory to each of the Agent and
the Title Company;
(p) The Agent has received Federal Emergency Management Agency Standard Flood
Hazard Determination Certificates certifying, among other things, that none of
the Real Estate is located within a flood hazard area;
(q) An as built appraisal performed by Natwick Associates Appraisal Services
which shows the as-completed value of the Real Estate and Project addressed to
and otherwise acceptable to the Agent and the Lenders;
(r) A copy of each executed Material Contract and the assignments thereof and
consents thereto required in this Agreement and the other Loan Documents, all of
the foregoing in form and substance acceptable to the Agent;
(s) Copies of all Permits and other documents from the appropriate state,
federal, city or county authority having jurisdiction over the Real Estate and
the Project that provide to the reasonable satisfaction of the Agent that the
Project complies in all material respects with all applicable Permits,
ordinances, zoning, subdivision, platting, and land use requirements, without
special variance or exception, and such other evidence as the Agent shall
reasonably request to establish that the Project and the contemplated use and
operation thereof are permitted by and comply in all material respects with all
applicable use or other restrictions and requirements in prior conveyances,
zoning ordinances, water shed district regulations and all other applicable laws
or regulations, and governmental authorities having jurisdiction over the
Project and provided further that with respect to compliance with environmental
laws and regulations, evidence satisfactory to the Agent that the Project has
obtained all applicable environmental permits for the construction and operation
of the Project from the State of North Dakota Department of Health,
Environmental Health Section ("NDOH") or the United States Environmental
Protection Agency, or applicable department thereof, and, either (a) an
independent emissions testing company engaged by the Agent has confirmed that
the Project complies with the applicable emission requirements of the Permits,
including all emission control efficiency requirements,
or (b) the Project has entered into a consent decree, consent order, consent
agreement, or similar administrative action with the NDOH that authorizes
continued operation of the Project;
(t) Such other matters as the Agent may reasonably require.
In the event the Agent or Required Lenders waive any of the foregoing conditions
precedent to the initial advance, Borrower agrees to take all steps required to
satisfy the same within thirty (30) days of the funding of the initial Advance
and further agree that failure to do so within such thirty (30) day period shall
Section 5.02. All Advances. As of the time of each Advance or Declining
Revolving Credit Loan hereunder:
(ai)Each of the representations and warranties of the Borrower set forth in
Section 3.01 hereof shall be and remain true and correct `as of said time,
except to the extent that any such representation or warranty relates solely to
an earlier date;
(aj)The Borrower shall be in full compliance with all of the terms and
conditions hereof, and no Default or Event of Default shall have occurred and be
continuing or would occur as a result of such Borrowing;
(ak)Such Borrowing shall not violate any order, judgment or decree of any court
or other authority or any provision of law or regulation applicable to the Agent
or the Lenders (including, without limitation, Regulation U of the Board of
Governors of the Federal Reserve System) as then in effect.
Each request for an Advance or Declining Revolving Credit Loan shall be deemed
to be a representation and warranty by the Borrower on the date of such Advance
or Declining Revolving Credit Loan as to the facts specified in paragraphs (a)
through (c) of this Section 5.02.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01. Events of Default. Any one or more of the following events
shall constitute an event of default (each, an "Event of Default"):
(al)The Borrower shall fail to pay when due, by scheduled due date, maturity,
acceleration or otherwise, any installment of principal and/or interest on any
Note or any fee, expense or other sum owing under this Agreement or any other
Loan Document; or
(am)(i) If any of the representations or warranty set forth in Section 3.01
hereof shall fail to be and remain true and correct in all respects as of said
time, except to the extent that any such representation or warranty relates
solely to an earlier date or (ii) if any certificate, statement, representation,
warranty or audit furnished by or on behalf of the Borrower in connection with
this Agreement, including those contained herein, or as an inducement by the
Borrower to enter into, modify, extend, or renew this Agreement shall prove to
be false in any material respect, or if the Borrower shall have omitted the
listing of a substantial contingent or unliquidated liability or claim against
Borrower or, if on the date of execution of this Agreement there shall have been
any materially adverse change in any of the facts disclosed by any such
certificate, statement, representation, warranty or audit, which change shall
not have been disclosed by the Borrower to the Agent at or prior to the time of
execution; or
(an)If the Borrower shall default in the due performance or observance of any of
the covenants found in Sections 4.01, 4.04, 4.06, 4.07, 4.08, 4.09, 4.11, 4.13,
4.15 or 4.17; or
(ao)If the Borrower shall default in the due performance or observance of any
other covenant undertaken by them under the Loan Documents and such default
shall not have been remedied within ten (10)
days after written notice thereof by the Agent to the Borrower; or
(ap)The Borrower shall (i) fail to pay any Debt, or any interest or premium
thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue after the
applicable grace period, or (ii) fail to perform or observe any term, covenant,
or condition on its part to be performed or observed under any agreement or
instrument relating to any such Debt, when required to be performed or observed,
if the effect of such failure is to accelerate, or permit the acceleration of,
the maturity of such Debt, where the affected Debt exceeds $100,000.00 in the
aggregate; or
(aq)The Borrower (i) shall generally not pay, or shall be unable to pay, or
shall admit in writing its inability to pay its debts as such debts become due;
or (ii) shall make an assignment for the benefit of creditors, or petition or
apply to any tribunal for the appointment of a custodian, receiver, or trustee
for it or for a substantial part of its assets; or (iii) shall commence any
proceeding under any bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution, or liquidation law or statute of any jurisdiction, whether
now or hereafter in effect; or (iv) shall have had any such petition or
application filed or any such proceeding commenced against it and which remains
undismissed for a period of thirty (30) days or more; or (v) shall take any
corporate action indicating its consent to, approval of, or acquiescence in any
such petition, application, proceeding, or order for relief or the appointment
of a custodian, receiver, or trustee for all or any substantial part of its
properties; or (vi) shall suffer any such custodianship, receivership, or
trusteeship to continue undischarged for a period of thirty (30) days or more;
or
(ar)Any judgment against the Borrower in excess of $100,000 or any attachment or
other levy against the property of the Borrower with respect to a claim remains
unpaid, stayed on appeal, undischarged, unbonded or not dismissed for a period
of thirty (30) days; or
(as)This Agreement or any of the Loan Documents shall cease for any reason to be
in full force and effect other than by reason of any action or inaction of the
Agent or the Lenders, or the Borrower shall so assert in writing, or the
security interests created by the Loan Documents shall cease to be enforceable
or shall not have the priority purported to be created thereby other than by
reason of any action or inaction by the Agent or the Lenders or the Borrower
shall so assert in writing; or
(at)There shall occur the loss, theft, substantial damage to or destruction of
any portion of the Collateral which, in the reasonable judgment of the Agent, is
not adequately covered by insurance actually collected or in the process of
collection, or the Borrower has not deposited with the Agent, in the manner
provided for in the Loan Documents, funds which in the reasonable judgment of
the Agent are sufficient to restore the Collateral to an equal or better
capacity and functionality or there shall occur the exercise of the right of
condemnation or eminent domain for any portion of the Collateral which by itself
or with other such exercises of the right of condemnation or eminent domain has
a Material Adverse Effect; or
(j) The occurrence of any event or transaction or series of events or
transactions in connection with or as a consequence of which (i) the voting
equity interests in the Borrower entitling the holders thereof to cast more than
50% of the total votes that may be cast by all holders of Borrower's voting
equity interests shall cease to be owned beneficially by the holder or holders
of such voting stock as of the date of this Agreement, or (ii) Borrower, or all
or substantially all of the assets of Borrower, shall be acquired by, or shall
be combined with, any “person” (as defined in Section 13(d) of the Securities
Exchange Act of 1934 as in effect on the date of this Agreement); or
(k) Borrower transfers, sells, assigns, or conveys all or such part of its
assets or property which could be reasonably expected to have a Material Adverse
Effect other than in the ordinary course of Borrower's business consistent with
past practices without the prior written consent of the Agent; or
(l) Borrower replaces the general manager of the Project without the prior
written consent of the Agent; or
(m) The termination, suspension or non-renewal of any Permit which causes the
Project to cease operations or otherwise which could have a Material Adverse
Effect in the discretion or determination of the Agent; or
(n) Borrower fails to perform or observe any term, covenant, or condition on
its part to be performed or observed under any agreement, lease or instrument to
which Borrower is a party which results in a Material Adverse Effect; or
(o) A breach by Borrower or the occurrence of a default under any Financial
Instrument Agreement or any other loan agreement, promissory note, security
agreement or other agreement, contract, lease or document between Borrower and
Agent or any Lender or any affiliate or subsidiary of any Lender, beyond any
applicable grace or notice and cure period; or
(p) Borrower fails to bring the Declining Revolving Credit Loans to within
the Maximum Availability on each Reduction Date; or
(q) any default (after giving effect to any applicable grace period) by
Borrower under any Material Contract or any Material Contract terminates for any
reason without the prior written consent of the Agent; or
(r) any event occurs which could reasonably be expected to result in a
(s) The filing of any Liens in excess of $100,000.00 individually or in the
aggregate, including mechanics', construction, materialmens' or similar liens,
upon the Real Estate and/or against the Project which are not released or bonded
against (in a manner satisfactory to the Agent) for a period in excess of thirty
(30) days after the filing date of such Lien, unless such Lien is being
contested by the Borrower in good faith by appropriate proceedings which prevent
foreclosure and has established reserves which the Agent reasonably deems
sufficient to satisfy such lien in the event of an adverse determination; or
(t) On or before December 31, 2012, Borrower is still operating under its
Permit to Construct air permit issued by the North Dakota Department of Health,
Environment Health Section, Division of Air Quality and has not been issued a
Permit to Operate air permit from the North Dakota Department of Health,
Environment Health Section, Division of Air Quality.
Section 6.02. Remedies. Upon the occurrence of a Default or an Event of
Default, Lenders' commitments and obligations of Lenders to make Loans shall
automatically stop until cured or waived or until the Loans are accelerated
pursuant to this Section 6.02. Upon the occurrence of an Event of Default other
than an Event of Default described in Section 6.01(f) the Agent may by notice to
the Borrower, declare all of the Obligations (as well as any other Debt of
Borrower to the Lenders) then outstanding to be and become due and payable in
full, together with interest thereon, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower. Upon the occurrence of an Event of Default described in Section
6.01(f) all Obligations (as well as any other Debt of the Borrower to the
Lenders) then outstanding shall immediately become due and payable in full,
together with interest thereon, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower.
The Agent may resort to any and all security and to any remedy available under
the Loan Documents or otherwise existing at law or in equity for the collection
of all outstanding Obligations and the enforcement of the covenants and
provisions of the Loan Documents against the Borrower. The Agent's resort to any
remedy, shall not prevent the concurrent and subsequent employment of any joint
or several remedy or claim against Borrower. The Agent may rescind any
acceleration of the Obligations without in any way waiving or affecting its
right to accelerate the Obligations in the future. Acceptance of partial payment
or partial performance shall not in any way affect or rescind any acceleration
of the Obligations made by the Agent. Any collections or payments made after the
Agent commences collection efforts shall, after payment of all expenses relating
thereto, be applied (i) first to
interest and principal on the Loans in such manner and order as is provided for
in this Agreement, and in the absence of any such provision, as determined by
the Agent in its sole discretion, and (ii) next to any Debt owing to First
National under any cash management or deposit account relationships with
Borrower and (iii) last to any other Debt owed to Lenders or retained by Lenders
as cash collateral for Obligations or draws which may arise after such date.
Section 6.03. Set Off. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, each Lender and each subsequent holder of
any Note is hereby authorized by the Borrower at any time or from time to time,
without notice to the Borrower or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, including, but not limited to, indebtedness
evidenced by certificates of deposit, whether matured or unmatured, but not
including trust accounts, and in whatever currency denominated) and any other
indebtedness at any time held or owing by such Lender or that subsequent holder
to or for the credit or the account of Borrower whether or not matured, against
and on account of the obligations and liabilities of the Borrower to Lenders or
that subsequent holder under the Loan Documents, including, but not limited to,
all claims of any nature of description arising out of or connected with the
Loan Documents, irrespective of whether or not (a) such Lender or that
subsequent holder shall have made any demand hereunder or (b) the principal of
or the interest on the Loans or Notes and other amounts due hereunder shall have
become due and payable pursuant to Section 6.02 and although said obligations
and liabilities, or any of them, may be contingent or unmatured.
Section 6.04. Waiver, Etc. Any waiver of an Event of Default by the Required
Lenders shall not extend to or affect any subsequent Default, whether it be the
same Event of Default or not, or impair any right consequent thereon. No failure
or delay or discontinuance on the part of the Agent or Lenders in exercising any
power or right hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power preclude any other or further
exercise thereof or the exercise of any other right or power thereunder or be
deemed an election of remedies or a waiver of any other right, power, privilege,
option or remedy. All remedies herein and by law afforded will be cumulative and
will be available to the Agent until the debt of the Borrower hereunder is fully
and indefeasibly paid.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Notices. All notices, requests, consents, and other
communications directed to a party hereunder shall be in writing and shall be
deemed to have been given to that party when hand delivered, delivered by next
day courier or three Business Days after being mailed, certified mail, return
receipt requested, postage prepaid, to the address listed on that party's
signature page to this Agreement.
Section 7.02. Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation made by the Lenders, all representations,
warranties, agreements and statements made by the Borrower in or under this
Agreement shall survive the making of the loans provided for hereunder. All
statements by the Borrower contained in any certificate or other instrument
delivered by or on behalf of the Borrower under this Agreement shall constitute
representations and warranties made by the Borrower hereunder.
Section 7.03. Binding Effect; Severability. This Agreement shall continue
until the payment in full of all Obligations and the termination of all
commitments on the part of Lenders to extend or maintain the extension of credit
to or for the benefit of the Borrower. This Agreement shall be binding upon and
inure to the benefit of the Agent and the Lenders and their successors and
assigns and all other holders of the Notes or any part thereof, or of any other
indebtedness provided for herein, and all rights conferred upon the Lenders may
be exercised by its successors and assigns and by all such other holders. If any
provision of this Agreement is held to be illegal, invalid, or unenforceable
under present or future laws effective during the term of this Agreement, such
provisions shall be fully severable and this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement, and the remaining provisions of the
Agreement shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance from this
Agreement.
Section 7.04. Transfer or Assignment; Participations. This Agreement shall
the successors and assigns of the parties hereto; provided, however, that
Borrower may not assign or transfer its rights or obligations under this
Agreement or any Loan Document without the prior written consent of the Agent,
and any such assignment or transfer without such consent shall be void. Lenders
may assign their Commitments or sell participations in the Loans with the prior
written consent of the Agent but without notice to Borrower. In addition, the
Agent may at any time in its discretion, but shall not be obligated to, purchase
any or all of any Lender's interest in any Note at the then outstanding
principal balance along with accrued and unpaid interest on the applicable Note
payable to such Lender. Nothing in this Agreement, expressed or implied, shall
be construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, each participant and, to the
extent contemplated hereby, the affiliates of the Lender) any legal or equitable
Section 7.05. Legal Fees, Other Costs and Indemnification. The Borrower
agrees to pay the reasonable attorneys fees and disbursements of the Agent in
connection with the preparation and execution of this Agreement and the Loan
Documents, and any amendment, waiver or consent related hereto, whether or not
the transactions contemplated herein are consummated, and all reasonable
recording, filing, title insurance or other fees, costs and taxes incident to
perfecting a lien upon the Collateral. The Borrower further agrees to pay the
reasonable attorney's fees and disbursements of the Agent and the Lenders in
connection with the enforcement of the Loan Documents and to indemnify the Agent
and the Lenders and any security trustee and their respective directors,
officers and employees, against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without limitation, all expenses
of litigation or preparation therefor, whether or not the indemnified person is
a party thereto) which any of them may pay or incur arising out of or relating
to this Agreement or any Loan Document or any of the transactions contemplated
thereby or the direct or indirect application or proposed application of the
proceeds of any Advance or Declining Revolving Credit Loan except as may arise
from the gross negligence or willful misconduct of the party claiming
indemnification. The Borrower upon demand by the Agent, at any time, shall
reimburse each such indemnified party for any legal or other expenses incurred
in connection with investigating or defending against any of the foregoing
except if the same is directly due to the gross negligence or willful misconduct
of such indemnified party.
Section 7.06. Amendments. Any provision of the Loan Documents may be amended
or waived if, but only if, such amendment or waiver is in writing and is signed
by (a) the Borrower (b) the Required Lenders, and (c) the Agent; provided that
the Agent will not:
(a) increase any Total Revolving Credit Commitment, Total Declining Revolving
Credit Commitment of any Lender, or extend the Termination Date, Maturity "Date
or any Reduction Date without the written consent of each Lender;
(b) reduce the principal amount of any Loan or reduce the rate of interest
thereon, or reduce any fees payable hereunder, without the written consent of
each Lender;
(c) postpone the scheduled date of payment of the principal amount of any
Loan or any interest thereon, or any fees payable hereunder, or reduce the
amount of, waive or excuse any such payment, or postpone the scheduled date of
expiration of any Total Revolving Credit Commitment or Total Declining Revolving
Credit Commitment, without the written consent of each Lender;
(d) change any of the provisions of this Section or the percentage in the
definition of the term “Required Lenders” or any other provision hereof
specifying the number or percentage of Lenders required to waive, amend or
modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender; or
(e) release any Collateral for the Loans prior to the time the Loans are
indefeasibly paid in full and the Lenders' commitment to make Advances and
Revolving Credit Advances has terminated without the written consent of each
Lender. Any provision of the this Agreement or any other Loan Document may be
signed by (a) the Borrower, (b) the Agent and (c) the Lenders.
Section 7.07. Setoffs. Each Lender agrees that if it shall, by exercising any
right of setoff or counterclaim or otherwise, receive payment of a proportion of
the aggregate amount of principal and interest owing with respect to the Notes
held by it which is greater than the proportion received by any other Lender in
respect of the aggregate amount of all principal and interest owing with respect
to the Notes held by such other Lender, the provisions of Section 2.06 above
will apply. The Borrower agrees, to the fullest extent it may effectively do so
under applicable law, that any holder of a participation in a Note, whether or
not acquired, pursuant to the foregoing arrangements, may exercise rights of
setoff or counterclaim and other rights with respect to such participation as
fully as if such holder of a participation were a direct creditor of the
Borrower in the amount of such participation. No right or action of any Lender
under this Section with regard to enforcing sharing of setoffs shall result in
any setoff being applied at less than the full amount thereof to the
indebtedness of the Borrower to any one or more Lenders.
Section 7.08. Entire Agreement. The Loan Documents constitute the entire
understanding of the parties thereto with respect to the subject matter thereof
and any prior or contemporaneous agreements, whether written or oral, with
respect thereto are superseded hereby. The following statement is given pursuant
to Nebraska law: A CREDIT AGREEMENT MUST BE IN WRITING TO BE ENFORCEABLE UNDER
NEBRASKA LAW. TO PROTECT YOU (BORROWER) AND US (LENDER) FROM ANY
MISUNDERSTANDINGS OR DISAPPOINTMENTS, ANY CONTRACT, PROMISE, UNDERTAKING, OR
OFFER TO FOREBEAR REPAYMENT OF MONEY OR TO MAKE ANY OTHER FINANCIAL
ACCOMMODATION IN CONNECTION WITH THIS LOAN OF MONEY OR GRANT OR EXTENSION OF
CREDIT, OR ANY AMENDMENT OF, CANCELLATION OF, WAIVER OF, OR SUBSTITUTION FOR ANY
OR ALL OF THE TERMS OR PROVISIONS OF ANY INSTRUMENT OR DOCUMENT EXECUTED IN
CONNECTION WITH THIS LOAN OF MONEY OR GRANT OR EXTENSION OF CREDIT, MUST BE IN
WRITING TO BE EFFECTIVE. All of the terms of the other Loan Documents are
incorporated in and made part of this Agreement by reference; provided, however,
that to the extent of any direct conflict between this Agreement and such other
Loan Documents, this Agreement shall prevail and govern.
Section 7.09. Collateral Protection Notice. The following notice is given to
Borrower: Unless the Borrower provides evidence of the insurance coverage
required by the Borrower's agreement with the Agent and the Lenders, the Lenders
may purchase insurance at the Borrower's expense to protect the Agent's and
Lenders' interests in the Collateral. This insurance may, but need not, protect
the Borrower's interests. The coverage that the Lenders purchases may not pay
any claim that the Borrower makes or any claim that is made against the Borrower
in connection with the Collateral. The Borrower may later cancel any insurance
purchased by the Lenders, but only after providing evidence that the Borrower
has obtained insurance as required by in this Agreement and the other Loan
Documents. If the Lenders purchase insurance for the Collateral, the Borrower
will be responsible for the costs of that insurance, including the insurance
premium, interest and any other charges the Agent may impose in connection with
the placement of the insurance, until the effective date of the cancellation or
expiration of the insurance. The costs of the insurance may be added to the
Borrower's total outstanding balance or Obligations. The costs of the insurance
may be more than the cost of insurance the Borrower may be able to obtain on its
own.
Section 7.10. Governing Law. This Agreement and the other Loan Documents, and
the rights and duties of the parties hereto, shall be construed and determined
in accordance with the internal laws of the State of Nebraska.
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial. The Borrower
hereby submits to the nonexclusive jurisdiction of the United States District
Court for the District of Nebraska and of any Nebraska state court sitting in
the city of Omaha for purposes of all legal proceedings arising out of or
relating to this Agreement, the other Loan Documents or the transactions
contemplated hereby or thereby. The Borrower irrevocably waives, to the fullest
laying of the venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought in an
inconvenient forum. The Borrower, the Agent and the Lenders hereby irrevocably
waive any and all right to trial by jury in any legal proceeding arising out of
or relating to any Loan Document or the transactions contemplated thereby.
Section 7.12. Execution in Counterparts; Faxes. This Agreement may be
executed in any number of counterparts, and by the different parties on
different counterparts, each of which when executed shall be deemed an original
but all such counterparts taken together shall constitute one and the same
instrument. This Agreement and any of the other Loan Documents may be validly
executed and delivered by fax or other electronic means and by use of multiple
counterpart signature pages.
Section 7.13. USA Patriot Act Notice. Each Lender and the Agent (for itself
and not on behalf of any Lender) hereby notifies the Borrower that pursuant to
the requirements of the USA Patriot Act (Title III of Pub. L. 107-56, signed
into law October 26, 2001) (the “Act”), it is required to obtain, verify and
record information that identifies the Borrower, which information includes the
name and address of the Borrower and other information that will allow such
Lender or the Agent, as applicable, to identify the Borrower in accordance with
the Act.
Section 7.14. Exclusion of Consequential and Special Damages. Notwithstanding
anything to the contrary in this Agreement, neither the Agent nor any Lender
will be liable for, nor will any measure of damages against the Agent or any
Lender include, under any theory of liability (whether legal, strict or
equitable), any indirect, consequential, incidental, special or punitive damages
or amounts for business interruption, loss of income, revenue, profits or
savings arising out of or relating to their performance or non-performance under
this Agreement or any Loan Document, and Borrower hereby waives any right to
pursue or recover any of the foregoing damages.
Section 7.15. Farm Credit Law. Borrower acknowledges and agrees that, to the
extent the provisions of the Agricultural Credit Act of 1987, including 12
U.S.C. §§ 2199 through 2202e, and the implementing Farm Credit Administration
regulations, 12 C.F.R. § 617.7000, et seq. (collectively, the “Farm Credit Law”)
apply to Borrower or to the transactions contemplated by this Agreement,
Borrower hereby irrevocably waives all Borrower Rights, including all statutory
or regulatory rights of a borrower to disclosure of effective interest rates,
differential interest rates, review of credit decisions, distressed loan
restructuring, and rights of first refusal. Borrower acknowledges and agrees
that the waiver of Borrower Rights provided by this Section is knowingly and
voluntarily made after Borrower has consulted with legal counsel of its choice
and has been represented by counsel of its choice in connection with the
negotiation of this Agreement and the waiver of such Borrower set forth in this
Section. Borrower acknowledges that its waiver of Borrower Rights set forth in
this Section is based on its recognition that such waiver is material to induce
commercial banks and other non-Farm Credit System institutions to participate in
the extensions of credit contemplated by this Agreement and to provide
extensions of credit to Borrower. Nothing contained in this Section, nor the
delivery to Borrower of any summary of any rights under, or any notice pursuant
to, the Farm Credit Law shall be deemed to be, or be constructed to indicate the
determination or agreement by any Borrower, any Agent, or any Lender that the
Farm Credit Law, or any rights thereunder, are or will be applicable to any
Borrower or to the transactions contemplated by this Agreement. It is the intent
of the parties that the waiver of Borrower Rights contained in this Section
complies with and meets all of the requirements of 12 C.F.R. § 617.7010(c).
ARTICLE VIII
THE AGENT
Section 8.01. Appointment and Authorization of Agent. Each Lender hereby
appoints First National Bank of Omaha as the Agent under the Loan Documents and
hereby authorizes the Agent to take such action as Agent on its behalf and to
exercise such powers under the Loan Documents as are delegated to the Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto.
Section 8.02 Agent and its Affiliates. The Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any other Lender
and may exercise or refrain from exercising the same as though it were not the
Agent, and the Agent and its affiliates may accept deposits from, lend money to,
and generally engage in any kind of business with the Borrower or any affiliate
of the Borrower as if it were not the Agent under the Loan Documents. The term
"Lender" as used herein and in all other Loan Documents, unless the context
otherwise clearly requires, includes the Agent in its individual capacity as a
Lender.
Section 8.03 Action by Agent. The obligations of the Agent under the Loan
Documents are only those expressly set forth therein. Without limiting the
generality of the foregoing, the Agent shall not be required to take
any action hereunder with respect to any Default or Event of Default, except as
expressly provided in Section 6.02. Upon the occurrence of an Event of Default,
the Agent shall take such action with respect to the enforcement of the Liens on
the Collateral under the Loan Documents and the preservation and protection
thereof as it shall be directed to take by the Required Lenders, but unless and
until the Required Lenders have given such direction the Agent shall take or
refrain from taking such actions as it reasonably deems appropriate, provided,
however, that the Agent will not take any action without the consent of the
Required Lenders contrary to the provisions of Sections 6.02, 6.04 or 6.06. In
no event, however, shall the Agent be required to take any action in violation
of applicable law or of any provision of any Loan Document, and the Agent shall
in all cases be fully justified in failing or refusing to act hereunder or under
any other Loan Document unless it shall be first indemnified to its reasonable
satisfaction by the Lenders against any and all costs, expense, and liability
which may be incurred by it by reason of taking or continuing to take any such
action. The Agent shall be entitled to assume that no Default or Event of
Default exists unless notified to the contrary by a Lender or the Borrower. In
all cases in which this Agreement and the other Loan Documents do not require
the Agent to take certain actions, the Agent shall be fully justified in using
its discretion in failing to take or in taking any action hereunder and
thereunder.
Section 8.04. Consultation with Experts. The Agent may consult with legal
counsel, independent public accountants and other experts reasonably selected by
it and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts.
Section 8.05 Liability of Agent; Credit Decision. Neither the Agent nor any
of its directors, officers, agents, or employees shall be liable for any action
taken or not taken by it in connection with the Loan Documents (a) with the
consent or at the request of the Required Lenders, (b) in the absence of its own
gross negligence or willful misconduct or (c) consistent with and not in breach
of the Loan Documents. Without limiting the generality of the foregoing, the
Agent shall not be subject to any fiduciary or other implied duties, regardless
of whether an Event of Default has occurred and is continuing. The Agent shall
disclose to Lenders any information which could be reasonably expected to have a
Material Adverse Effect on the Borrower, but shall not be liable for the failure
to disclose any other information relating to the Borrower or any of its
subsidiaries or affiliates that is communicated to or obtained by the Agent or
any of the Agent's affiliates in any capacity. Neither the Agent nor any of its
directors, officers, agents or employees shall be responsible for or have any
duty to ascertain, inquire into or verify (a) any statement, warranty or
representation made in connection with this Agreement, any other Loan Document
or any Advance or Declining Revolving Credit Advance; (b) the performance or
observance of any of the covenants or agreements of the Borrower contained
herein or in any other Loan Document; (c) the satisfaction of any condition
specified in Article V hereof, except receipt of items required to be delivered
to the Agent; or (d) the validity, effectiveness, genuineness, enforceability,
perfection, value, worth or collectability hereof or of any other Loan Document
or of the Liens provided for thereunder or of any other documents or writing
furnished in connection with any Loan Document or of the Collateral; and the
Agent makes no representation of any kind or character with respect to any such
matter mentioned in this sentence. The Agent may execute any of its duties under
any of the Loan Documents by or through employees, agents, and attorneys-in-fact
and shall not be answerable to the Lenders, the Borrower or any other person for
the default or misconduct of any such agents or attorneys-in-fact selected with
reasonable care. The Agent shall not incur any liability by acting in reliance
upon any notice, consent, certificate, other document or statement (whether
written or oral) reasonably believed by it to be genuine or to be sent by the
proper party or parties. In particular and without limiting any of the
foregoing, the Agent shall have no responsibility for confirming the existence
or worth of any Collateral or the accuracy of any Borrowing Base Certificate,
compliance certificate or other document or instrument received by it under the
Loan Documents and shall be entitled to rely exclusively on Borrowing Base
Certificates prepared by the Borrower in taking any action or calculation with
respect to the Borrowing Base. The Agent may treat the owner of any Note as the
holder thereof until written notice of transfer shall have been filed with the
Agent signed by such owner in form satisfactory to the Agent. Each Lender
acknowledges that it has independently and without reliance on the Agent or any
other Lender, and based upon such information, investigations and inquiries as
it deems appropriate, made its own credit analysis and decision to extend credit
to the Borrower in the manner set forth in the Loan Documents. It shall be the
responsibility of each Lender to keep itself informed as to the creditworthiness
of the Borrower and the value of the Collateral, and the Agent shall have no
liability to any Lender with respect thereto.
Section 8.06. Costs and Expenses. To the extent not paid or reimbursed
pursuant to Section 2.14 or 7.05
of this Agreement, each Lender agrees to reimburse the Agent for all reasonable
and customary out-of-pocket costs and expenses (other than attorneys' fees)
suffered or incurred by Agent or any security trustee in performing its duties
hereunder and under the other Loan Documents or in the exercise of any right or
power imposed or conferred upon the Agent hereby or thereby (except to the
extent that such costs and expenses arise out of the Agent's or such security
trustee's gross negligence or willful misconduct), all such costs and expenses
shall be borne by the Lenders ratably in accordance with their respective
Percentages.
Section 8.07. Indemnity. The Lenders other than First National shall ratably,
in accordance with their respective Percentages, indemnify and hold the Agent,
and its directors, officers, employees, agents and representatives harmless from
and against any liabilities, losses, costs or expenses suffered or incurred by
it or by any security trustee to any third party not a Lender or the Borrower or
any affiliate thereof in connection with the transactions contemplated hereby,
regardless of when asserted or arising, except to the extent they are promptly
reimbursed for the same by the Borrower or out of the proceeds of the Collateral
and except to the extent that any event giving rise to a claim was caused by the
gross negligence or willful misconduct of the party seeking to be indemnified or
arising out of the Agent's breach of Section 8.03. The obligations of the
Lenders under this Section and Section 8.06 above shall survive termination of
this Agreement.
Section 8.08. Resignation of Agent and Successor Agent. The Agent may resign
at any time by giving written notice thereof to the Lenders and the Borrower.
Upon any such resignation of the Agent, the Required Lenders shall have the
right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment,
within thirty (30) days after the retiring Agent's giving of notice of
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be any Lender hereunder or any commercial bank
organized under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $100,000,000. Upon the
acceptance of its appointment as the Agent hereunder, such successor Agent shall
thereupon succeed to and become vested with all the rights and duties of the
retiring Agent under the Loan Documents, and the retiring Agent shall be
discharged from its duties and obligations thereunder. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 8.08 and
all protective provisions of the other Loan Documents shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent.
[signature pages to follow]
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the date and year first hereinabove written.
RED TRAIL ENERGY, LLC
By: /s/ Ambrose Hoff
Title: Secretary
By: /s/ Gerald Bachmeier
By: /s/ Kent Anderson
Borrower's address for notices:
3682 Highway 8 South
P.O. Box 11
Richardton, North Dakota 58652-0011
Attention:
Telephone:
Telefax:
FIRST NATIONAL BANK OF OMAHA, as Agent and a Lender
By: /s/ Fallon Savage
Name: Fallon Savage
Title: Vice President
Address: 1620 Dodge Street
Stop 1050
Omaha, Nebraska 68197
Attention: Fallon Savage
Telephone: 402-602-3031
Telefax: 402-602-3519
AMARILLO NATIONAL BANK
By: /s/ Craig L. Sanders
Name: Craig L. Sanders
Address: 410 South Taylor
Amarillo, TX 79101
Attention: Craig Sanders
Telephone: (806) 378-8244
Telefax: (806) 345-1663
BANK OF NORTH DAKOTA
By: /s/ Lori Gabriel
Name: Lori Gabriel
Title: Loan Officer
Address: 1200 Memorial Hwy
PO Box 5509
Bismarck, ND 58506-5509
Attention: Lori Gabriel
Telephone: 701-328-5670
Telefax: 701-328-5731
FARM CREDIT SERVICES OF MANDAN, ACA, and its wholly owned subsidiaries, Farm
Credit Services of Mandan, PCA and Farm Credit Services of Mandan, FLCA
By: /s/ Rod Bachmeier
Name: Rod Bachmeier
Title: VP-Customer Operations
Address: 1600 Old Red Trail
Mandan, ND 58554
Attention: Aaron Vetter
Telephone: 701-663-6595 Ext 4304
Telefax: 701-667-4504
FARM CREDIT SERVICES OF MANDAN, PCA
Name: Rod Bachmeier
Mandan, ND 58554
Attention: Aaron Vetter
FARM CREDIT SERVICES OF MANDAN, FLCA
Name: Rod Bachmeier
Mandan, ND 58554
Attention: Aaron Vetter
FIRST NATIONAL BANK OF LIBERAL
By: /s/ Tim Sadler, SVP
Name: Tim Sadler
Address: 1700 N Lincoln St.
Liberal, KS 67901
Attention:
Telephone: 620-624-1971
Telefax: 620-624-9639
Exhibit A
LENDERS AND COMMITMENTS
Lender
Revolving Credit Loan Commitments
Initial Declining Revolving Credit Loan Commitments*
Term Loan Commitments
Lenders' Total Commitment
First National Bank of Omaha
$3,822,500.00
$3,189,708.00
$12,198,780.00
$19,210,988.00
Amarillo National Bank
$453,000.00
$452,800.00
$1,811,200.00
$2,717,000.00
Bank of North Dakota
$453,000.00
$909,000.00
$3,638,000.00
$5,000,000.00
Farm Credit Services of Mandan, PCA
$271,500.00
N/A
N/A
$271,500.00
Farm Credit Services of Mandan, FLCA
N/A
$271,500
$1,086,000.00
$1,357,500.00
First National Bank of Liberal
N/A
$176,992.00
$1,266,020.00
$1,443,012.00
Totals:
$5,000,000
$5,000,000
$20,000,000
$30,000,000
The Declining Revolving Credit Commitments will reduce to each Lender's
Percentage of the Maximum Availability on each Reduction Date.
Exhibit B-1
REVOLVING CREDIT NOTE
$________________ ______________, 2012
For value received, the undersigned, RED TRAIL ENERGY, LLC, a North Dakota
limited liability company ("Borrower"), promises to pay to the order of
________________________, a national banking association (the "Lender", which
term shall include any subsequent holder hereof), in lawful money of the United
States of America, at such address as is required by the Agent, the principal
sum of _____________________ and __/100 Dollars ($___________________) or, if
different, the principal amount outstanding under Section 2.01(a)(i) of the
Credit Agreement referred to below.
This Revolving Credit Note (the "Note") is issued pursuant to, and is subject to
the terms and conditions of, the First Amended and Restated Construction Loan
Agreement, dated on or about the date hereof, among the Borrower, the Agent, the
Lender and the other Lenders party thereto (as the same may be amended, renewed,
restated, replaced, consolidated or otherwise modified from time to time (the
"Credit Agreement"). To the extent of any conflict between the terms and
conditions of this Note and the terms and conditions of the Credit Agreement,
the terms and conditions of the Credit Agreement shall prevail and govern.
Capitalized terms used but not defined in this Note have the meanings given to
Interest shall accrue on the outstanding principal balance of this Note as
provided in the Credit Agreement. Principal, interest and all other amounts, if
any, payable in respect of this Note shall be payable as provided in the Credit
Agreement.
The termination of the Credit Agreement or the occurrence of an Event of Default
shall entitle the Agent to declare the then outstanding principal balance
hereof, all accrued interest thereon, and all other amounts, if any, payable in
respect of this Note to be, and the same shall thereupon become, immediately due
and payable without notice to or demand on the Borrower, all of which the
Borrower waives.
Time is of the essence with respect to this Note. To the fullest extent
permitted by applicable law, each Borrower, for itself and its successors and
assigns, waives presentment, demand, protest, notice of dishonor, and any and
all other notices, demands and consents in connection with the delivery,
acceptance, performance, default or enforcement of this Note, and consents to
any extensions of time, renewals, releases of any parties to or guarantors of
this Note, waivers and any other modifications that may be granted or consented
to by the Agent from time to time in respect of the time of payment or any other
provision of this Note.
This Note shall be governed by the laws of the State of Nebraska, without regard
to any choice of law rule thereof giving effect to the laws of any other
jurisdiction.
IN WITNESS WHEREOF, the Borrower has executed and delivered this Note as of the
By:
Title:
By:
Title:
By:
Title:
Exhibit B-2
DECLINING REVOLVING CREDIT NOTE
$________________ _____________, 2012
limited liability company ("Borrower") promises to pay to the order of
___________________________ (the "Lender"; which term shall include any
subsequent holder hereof), in lawful money of the United States of America, at
such address as is required by the Agent, the principal sum of _________________
and __/100 Dollars ($________________), or, if different, the principal amount
outstanding under Section 2.01(a)(ii) of the Credit Agreement referred to below.
This Declining Revolving Credit Note (the "Note") is issued pursuant to, and is
subject to the terms and conditions of, the First Amended and Restated
Construction Loan Agreement, dated on or about the date hereof, among the
Borrower, the Agent, the Lender and the other Lenders party thereto (as the same
may be amended, renewed, restated, replaced, consolidated or otherwise modified
from time to time (the "Credit Agreement"). To the extent of any conflict
between the terms and conditions of this Note and the terms and conditions of
the Credit Agreement, the terms and conditions of the Credit Agreement shall
prevail and govern. Capitalized terms used but not defined in this Note have the
meanings given to them in the Credit Agreement.
Agreement, including, but not limited to, payments required on each Reduction
Date to bring the Declining Revolving Credit Loans within the Maximum
Availability on each such Reduction Date.
Borrower waives.
permitted by applicable law, Borrower, for itself and its successors and
jurisdiction.
By:
Title:
By:
Title:
By:
Title:
EXHIBIT B-3
TERM NOTE
$_____________ _____________, 2012
_______________________________ (the "Lender"; which term shall include any
such address as is required by the Agent, the principal sum of _____________ and
outstanding under Section 2.01(a)(iii) of the Credit Agreement referred to
below.
This Term Note (the "Note") is issued pursuant to, and is subject to the terms
and conditions of, the First Amended and Restated Construction Loan Agreement,
dated on or about the date hereof, among the Borrower, the Agent, Lender and the
other Lenders party thereto (as the same may be amended, renewed, restated,
replaced, consolidated or otherwise modified from time to time (the "Credit
Agreement"). To the extent of any conflict between the terms and conditions of
this Note and the terms and conditions of the Credit Agreement, the terms and
conditions of the Credit Agreement shall prevail and govern. Capitalized terms
used but not defined in this Note have the meanings given to them in the Credit
Agreement.
Agreement.
Borrower waives.
permitted by applicable law, the Borrower, for itself and its successors and
jurisdiction.
By:
Title:
By:
Title:
By:
Title:
Exhibit C
Permitted Liens
Original Filing Number
Location of Filing
Secured Party
Debtor
Collateral
10/1/622432
Caterpillar Financial Services Corporation
One Caterpillar 930H wheel loader, Serial Number DHC02037
Exhibit D
COMPLIANCE CERTIFICATE
This Compliance Certificate, dated as of ______________ (the “Certificate”), is
delivered pursuant to Section 4.11(f) of the First Amended and Restated
Construction Loan Agreement, dated as of _______________, 2012 (the “Credit
Agreement”), among Red Trail Energy, LLC (the "Borrower") and First National
Bank of Omaha ("Agent") as Agent and a Lender and the Lenders party thereto, as
the same may be amended from time to time. Capitalized terms used but not
defined in this Certificate have the meanings given to them in the Credit
Agreement.
The undersigned certifies as follows:
1. The undersigned is the President, controller or treasurer of the Borrower
and is authorized to execute and deliver this certificate on its behalf.
2. Attached are the financial statements of the Borrower as of and for the
period and for the fiscal year-to-date ended on __________________ (the "Current
Financials").
3. The Current Financials have been prepared in accordance with GAAP and
otherwise in accordance with the terms of the Credit Agreement.
4. Events of Default (check one):
___ The undersigned does not have knowledge of the occurrence of a Default or
Event of Default under the Credit Agreement.
___ The undersigned has knowledge of the occurrence of a Default or Event of
Default under the Credit Agreement and attached hereto is a statement of the
facts with respect thereto.
5. Financial Covenants:
(a)
Pursuant to Section 4.07 of the Credit Agreement, as of __________, the
Borrower's Working Capital was $____________, which [satisfies] [does not
satisfy] the requirement in such Section that, beginning on ____________, 20__,
and at all times thereafter, the Borrower maintains an excess of current assets
over current liabilities (plus the Maximum Availability at such time) of not
less than $5,000,000.00.
(c)
Pursuant to Section 4.09 of the Credit Agreement, for the fiscal year-to-date
period ending _________, the Borrower has made capital expenditures in an
aggregate amount of $________, which [satisfies] [does not satisfy] the
requirement in such Section that the Borrower not make any expenditures for
fixed or capital assets if, after giving effect thereto, the aggregate of all
such expenditures by the Borrower exceeds $4,100,00.00 for the Borrower's 2012
fiscal year and$1,000,000.00 during each fiscal year thereafter.
(d)
Pursuant to Section 4.08 of the Credit Agreement as of the fiscal quarter ending
___________, the Fixed Charge Coverage Ratio, for the four fiscal quarters then
ended, was ___ to 1, which [satisfies] [does not satisfy] the requirement in
such Section that such ratio not exceed 1.15 to 1.
(e)
Pursuant to Section 4.12 of the Credit Agreement the Borrower is restricted from
incurring any Debt other than the Permitted Debt. Subsection (e) of the
definition of Permitted Debt permits Debt for
Borrowed Money in an aggregate principal amount outstanding not to exceed
$100,000. The Borrower has Debt for Borrowed Money under Subsection (e) of the
definition of Permitted Debt outstanding in the sum of $____________ which is
[in compliance with] [is not in compliance with] such Subsection as of the
fiscal quarter ending ___________.
(f)
Pursuant to Section 4.13 of the Credit Agreement the Borrower is restricted from
redeeming or purchasing outstanding membership interests in Borrower in an
aggregate amount exceeding $100,000 in any fiscal year. Borrower has made
purchases/redemptions of membership interest in an aggregate amount of
$________, which [satisfies] [does not satisfy] the requirement in such Section
that the Borrower not make any such purchases/redemptions if, after giving
effect thereto, the aggregate of all such purchases or redemptions by the
Borrower exceeds $100,000.00 for the Borrower's fiscal year.
6. Attached hereto are all relevant facts in reasonable detail to evidence,
and the computations of the financial covenants referred to above. These
computations were made in accordance with GAAP applied on a basis consistent
with the accounting principles reflected in the annual financial statements
delivered to the Agent dated as of ______________.
7. This Certificate may be conclusively relied upon by Agent and the Lenders.
This Certificate may be validly executed and delivered by fax or other
electronic means, and by use of multiple counterpart signature pages.
[signature page(s) to follow]
IN WITNESS WHEREOF, the undersigned has executed and delivered this Certificate
By:
Title:
By:
Title:
By:
Title:
Exhibit E
BORROWING BASE CERTIFICATE
(for the period ending _______)
This Borrowing Base Certificate (the “Certificate”) is delivered pursuant to
Section 4.11(c) of the First Amended and Restated Construction Loan Agreement,
dated as of ______________, 2012 (the “Credit Agreement”), among Red Trail
Energy, LLC (the "Borrower") and First National Bank of Omaha ("Agent") as Agent
and a Lender and the Lenders party thereto, as the same may be amended from time
to time. Capitalized terms used but not defined in this Certificate have the
The undersigned certifies that he or she is the President, treasurer, corporate
controller or other officer of the Borrower and, as such, is authorized to
execute and deliver this Certificate on behalf of the Borrower, and that the
Borrowing Base for the Borrower, at the end of the period indicated above, is
$________________, and that the such Borrowing Base was determined as set forth
in the spreadsheet attached hereto as Exhibit A to this Certificate.
This Certificate is delivered to and may be conclusively relied upon by the
Agent and Lenders.
IN WITNESS WHEREOF, the undersigned has executed this certificate on behalf of
the Borrower on ________________, 20___.
By:__________________________________________
Name:
Title:
By:__________________________________________
Name:
Title:
By:__________________________________________
Name:
Title:
Schedule 3.01(f)
(Litigation)
None
Schedule 3.01(p)
(Solvency Certificate)
CERTIFICATE REGARDING SOLVENCY
The undersigned, as a duly authorized officer of Red Trail Energy, LLC
(“Company”) familiar with the financial condition, business and affairs of
Company hereby gives this certificate on behalf of the Company in his/her
capacity as such officer, to induce Lenders to consummate certain financial
accommodations with Company pursuant to the terms of the First Amended and
Restated Construction Loan Agreement, dated as of the date hereof, among
Company, the Agent and Lenders (the “Loan Agreement”). Capitalized terms used
herein and not otherwise defined herein shall have the meanings ascribed to such
terms in the Loan Agreement.
Company hereby certifies that:
1. The undersigned is the _________________ of Company and is authorized and
empowered to issue this certificate for and on behalf of Company;
2. He is familiar with the business and financial affairs of Company,
including, without limiting the generality of the foregoing, the transactions
contemplated by the Loan Agreement and the other Loan Documents and all of the
matters hereinafter described.
3. He has reviewed the reports and financial statements of Company delivered
to the Agent (collectively, the “Financial Reports”); and he is familiar with
the process through which such financial reports and statements were generated.
4. The Financial Reports accurately present the financial condition, results
of operations, and changes in cash flows of Company for the periods covered
thereby, based on the assumptions set forth therein, which assumptions are
reasonable based on historical experience and presently known facts. The
practices followed in preparing the Financial Reports do not materially differ
from practices followed by Company in the preparation of Financial Reports
previously submitted to the Agent.
5. No material adverse change has occurred in Company's financial condition,
operations or prospects since the date of such Financial Reports.
6. On and as of the date hereof, both before and after giving effect to the
consummation of the transactions contemplated by the Loan Agreement and the
other Loan Documents, Company (i) is and will be Solvent (as defined below);
(ii) is and will continue to be able to pay its debts as they mature; and (iii)
has and will continue to have capital sufficient (and will not be left with
unreasonably small capital) to conduct its business and all businesses in which
it is engaged. “Solvent” means that (x) Company will have assets with a present
fair saleable value greater than the amount of its total liabilities (including
contingent liabilities); (y) the sum of Company's assets at book value exceeds
the sum of its debts; and (z) on Company's balance sheet, the sum of its assets
exceeds the sum of its liabilities. In making this statement the undersigned has
considered the current and anticipated future capital requirements of Company
for the current and currently anticipated future conduct of the business of
Company, based upon presently known facts.
7. The transactions contemplated by the Loan Agreement and the other Loan
Documents are not being entered into with an intent on the part of Company to
hinder, delay or defraud its present or future creditors. In making this
statement the undersigned has considered the current and anticipated future
capital requirements of Company for the current and currently anticipated future
conduct of the business of Company, based upon presently known facts.
8. The Loan Agreement and the other Loan Documents are being entered into by
Company in good faith, and the obligations incurred thereunder and the security
interests granted thereunder were incurred and granted in exchange for fair
equivalent value.
9. Company does not intend to incur, nor does it believe it will incur, debts
beyond its ability to pay as such debts mature.
10. All trade and other accounts payable of Company are being paid in
accordance with their terms, and the consummation of the transactions
contemplated under the Loan Agreement and other Loan Documents to occur on the
Closing Date will not impair the ability of Company to pay its trade and other
accounts payable in accordance with their terms.
11. Company does not contemplate filing a petition in bankruptcy or for
reorganization under the federal Bankruptcy Code, nor does the undersigned have
any knowledge of any threatened bankruptcy or insolvency proceedings against
Company.
12. The undersigned hereby acknowledges that the Agent and Lenders have
relied upon the statements contained herein, and consents to such reliance.
IN WITNESS WHEREOF, the undersigned has executed this certificate in his
aforesaid capacity this ___ day of _______________, 2012.
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
Schedule 3.01(q)
(Affiliates)
None
Schedule 3.01(t)
(Permits)
1. Permit to Construct air permit issued by the North Dakota Department of
Health, Environment Health Section, Division of Air Quality, Title V Permit
Number _______________
2. National Pollution Discharge Elimination System ("NPDES"), including (i) a
NPDES Storm Water Association with Industrial Activity, General Permit No. 1 and
(ii) NPDES Discharge of Process, Non-Contact Water, Permit No. ____________
3. Alcohol, Tobacco and Firearms Bureau Permit
4. Risk Management Plan, EPA Facility ID: ________________, last submission
__________, 20__
5. Spill Prevention, Control and Countermeasure Plan, ________, 20___
6. Industrial Stormwater Coverage Issued by North Dakota Department of
Health, Environmental Health Section, Division of Water Quality (Permit No:
ND-___________________
7. Aboveground Storage Tank Permits, issued by North Dakota State Fire
Marshal
8. Stormwater Pollution Prevention Plan for Construction Activities and
Stormwater Pollution Plan for Industrial Activities, Retained on site
Schedule 3.01(u)
(Assignments and Consents of Material Contracts)
1. Assignment of ethanol marketing agreement with RPMG, Inc. dated August 18,
2005 and consent thereto.
2. Assignment of coal supply agreement with Westmoreland Coal Sales Company
dated April 18, 2007 and consent thereto.
3. Assignment of water agreement with Southwest Water Authority dated April
3, 2006 and consent thereto.
4. Assignment of natural gas agreement with Montana Dakota Utilities Co.
dated June 7, 2006 and consent thereto.
5. Assignment DDGS marketing agreement with CHS Inc. dated January 1, 2006
and consent thereto.
6. Assignment of electric services agreement with West Plains Electric
Cooperative dated August 18, 2005 and consent thereto.
7. Assignment of Rents dated December 16, 2005 executed and delivered by
Borrower to First National and recorded December 19, 2005 as Document No.
3040798 with the Stark County, North Dakota Recorder.
Schedule 3.01(u)(i)
(Management Contracts)
None
Schedule 3.01(u)(ii)
(Supply Contracts)
Coal Sales Order dated December 16, 2011 between Borrower and Westmoreland Coal
Sales Company as sales agent for Absaloka Coal LLC on behalf of Western Energy
Company
Schedule 3.01(u)(iii)
(Sales and Marketing Contracts)
Ethanol Fuel Marketing Agreement dated June 25, 2010 between Borrower and RPMG,
Inc.
Distiller's Grain Marketing Agreement dated March 10, 2008 between Borrower and
CHS Inc.
[Crude Corn Oil Purchase Agreement dated March 6, 2012 between Borrower and
RPMG, Inc.]
Schedule 3.01(u)(iv)
(Transportation Contracts)
None
Schedule 3.01(u)(v)
(Utility Contracts)
Company
Water agreement with Southwest Water Authority
Natural gas agreement with Montana-Dakota Utilities Co.
Electric service agreement with West Plains Electric Cooperative
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EX-16(13)(d)(ii) EXHIBIT A TO THE EXPENSE LIMITATION AGREEMENT BETWEEN NATIONWIDE MUTUAL FUNDS AND NATIONWIDE FUND ADVISORS Effective May 1, 2007; Amended , 2013*† Name of Fund/ClassExpense Limitation for Fund/Class Nationwide Money Market Fund Prime0.59% Service‡0.59% Institutional0.59% Nationwide Short Duration Bond Fund Class A0.55% Class C0.55% Service Class 0.55% Institutional Class0.55% Nationwide Enhanced Income Fund Class A0.45% Class R20.45% Institutional Class0.45% Institutional Service Class0.45% Nationwide U.S. Small Cap Value Fund Class A1.09% Class C1.09% Institutional Class1.09% Institutional Service Class1.09% Nationwide International Value Fund Class A1.00% Class C1.00% Institutional Class1.00% Institutional Service Class 1.00% Each of the Asset Allocation Funds (Nationwide Investor Destinations Aggressive Fund, Nationwide Investor Destinations Moderately Aggressive Fund, Nationwide Investor Destinations Moderate Fund, Nationwide Investor Destinations Moderately Conservative Fund, Nationwide Investor Destinations Conservative Fund) Class A0.25% Class B 0.25% Class C 0.25% Class R2 0.25% Service Class 0.25% Institutional Class Shares0.25% Nationwide S&P 500 Index Fund Class A0.21% Class B0.21% Class C0.21% Class R20.21% Service Class0.21% Institutional Service Class0.21% Institutional Class0.21% Nationwide Small Cap Index Fund Class A0.28% Class B0.28% Class C0.28% Class R20.28% Institutional Class0.28% Nationwide Mid Cap Market Index Fund Class A0.30% Class B0.30% Class C0.30% Class R20.30% Institutional Class0.30% Nationwide International Index Fund Class A0.34% Class B0.34% Class C0.34% Class R20.34% Institutional Class0.34% Nationwide Bond Index Fund Class A0.29% Class B 0.29% Class C 0.29% Class R2 0.29% Institutional Class 0.29% Nationwide Bond Fund Class A0.55% Class B 0.55% Class C 0.55% Class R2 0.55% Institutional Class 0.55% Institutional Service Class 0.55% Nationwide Growth Fund Class A0.65% Class B 0.65% Class C 0.65% Class R2 0.65% Institutional Service Class 0.65% Institutional Class 0.65% Nationwide Alternatives Allocation Fund Class A0.40% Class C 0.40% Institutional Service Class 0.40% Institutional Class 0.40% Nationwide Small Company Growth Fund Class A0.94% Institutional Service Class0.94% Nationwide Inflation-Protected Securities Fund†† Class A 0.30% Institutional Class 0.30% Nationwide Global Equity Fund†† Class A0.95% Class C 0.95% Institutional Service Class 0.95% Institutional Class 0.95% Nationwide High Yield Bond Fund†† Class A0.75% Class C 0.75% Institutional Service Class 0.75% Institutional Class 0.75% Nationwide Core Plus Bond Fund††† Class A0.70% Institutional Service Class0.70% Institutional Class 0.70% * As approved at the September 6, 2012 Board meeting. † Effective through February 28, 2013. †† Effective through February 28, 2014. ††† Effective through February 28, 2015. ‡ With respect to the Service Class of the Nationwide Money Market Fund, effective until at least February 28, 2013, the Fund Operating Expenses shall be limited to 0.75% and shall include the Rule 12b-1 fees and fees paid pursuant to an Administrative Services Plan. IN WITNESS WHEREOF, the parties have caused this Amended Exhibit A to be signed by their respective officers thereunto duly authorized and their respective corporate seals to be hereunto affixed, as of the day and year first above written. NATIONWIDE MUTUAL FUNDS By: Name:Michael S. Spangler Title:President NATIONWIDE FUND ADVISORS By: Name:Michael S. Spangler Title:President
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported): May 22, 2012 MetaStat, Inc. (Exact name of registrant as specified in its charter) Nevada (State or other jurisdiction of incorporation) 000-52735 20-8753132 (Commission File Number) (IRS Employer Identification No.) 4 Autumnwood Court, The Woodlands, Texas 77380 (Address of principal executive offices and zip code) (281) 363-0003 (Registrant's telephone number including area code) (Registrant's former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of registrant under any of the following provisions: []Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) []Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b)) []Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) []Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 5.02 Departure Of Directors Or Certain Officers; Election Of Directors; Appointment Of Certain Officers; Compensatory Arrangements of Certain Officers On May 22, 2012, the board of directors of MetaStat, Inc. (the “Company”) authorized an amendment to the Company’s 2012 Amended and Restated Omnibus Securities and Incentive Plan (the “Plan”) to increase the number of authorized and unissued shares of common stock reserved for issuance thereunder to 3,316,789.A copy of the Plan, as amended, is attached as Exhibit No. 10.1 to this Current Report on Form 8-K. Item 9.01 Financial Statement and Exhibits. (d) Exhibits. Exhibit No. Description 2012 Amended and Restated Omnibus Securities and Incentive Plan SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
METASTAT, INC. By: /s/ Warren C. Lau Name Warren C. Lau Title: Chief Executive Officer Dated: May 22, 2012
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Title: Coffee shop told me they'll be seeing me in court for using their WiFi
Question:I stop by a local coffee shop on my way home from work maybe two or three times a month. They have WiFi with a sign on the front door that says "WiFi For Customers Only."
This specific time, I walk in, sit down and am doing some report writing on my laptop. All previous times, I've purchased food or coffee.
A woman, who I assumed to be the manager or owner, says she knows my name (no clue how) and that I'm breaking the law trespassing by using their WiFi without being a customer. She called me by my first name and told me she'd be seeing me in court and that I "be ready to spend money regardless" and told me to leave.
I left. I immediately contacted an attorney who is contracted with my employer but they said they only get involved for on-the-clock incidents. What should I do?
Answer #1: You should accept that this is going nowhere and take your business elsewhere from now on. Alternately, contact the regional manager/corporate and tell them this presumed manager made you feel unwelcome. But that's up to you and quite probably won't net you more than a free coffee, if anything. Answer #2: Is your laptop named "Nouguy's PC"?
You aren't trespassing until they ask you to leave. Really though, buy a bagel when you use their wifi, it's only fair. Answer #3: If you are served with a lawsuit, respond to the lawsuit.Answer #4: Odds are they won't see you in court. It's not worth their time to pursue something this trivial. If they do go to small claims court just show up and explain what happened to the judge and you'll probably win. In the meantime you should try to find out who owns the restaurant. If it's not the person who told you to leave, then I'm sure they'd love to hear about this aggressive manager driving away customers.Answer #5: This won’t go to court but even if it did, can they prove beyond reasonable doubt you were stealing their WiFi?
You could convincingly argue you sat down, started work and had every intention of purchasing a coffee in a couple of minutes time.
What losses can she demonstrate from you using her WiFi?
She sounds like a fruitcake.Answer #6: Agreed with the other responses. Stop going there, they aren't going to sue you (if you ever are sued get an attorney and respond accordingly).
Perhaps maybe leave a Yelp review? Be 100% truthful in the post. You may be surprised how quickly someone contacts you to say "it was all a misunderstanding, we're sorry".Answer #7: I'm guessing this wasn't a Starbucks. |
AGREEMENT
AGREEMENT, dated February 1, 2008, among Clark-GLAC Investment, LLC, a Delaware
limited liability company, or its assigns (the “Purchaser”), the persons listed
on Schedule A hereto (each an “Insider” and collectively the “Insiders”) and
Global Logistics Acquisition Corporation, a Delaware corporation (the
RECITALS:
A. The Company will hold a special meeting of its stockholders to consider and
act upon, among other things, a proposal to adopt and approve the Stock Purchase
Agreement (“Acquisition Agreement”) dated May 18, 2007, as amended, among the
Company, The Clark Group, Inc. (“Clark”) and the stockholders of Clark,
providing for the sale by the stockholders of Clark of all of the outstanding
capital stock of Clark to the Company (the “Acquisition Proposal”). The
Purchaser is an affiliate of certain stockholders of Clark.
B. The Insiders and the Company have advised the stockholders of Clark that
certain persons who hold approximately 2,380,000 shares of the Company’s common
stock sold in the Company’s initial public offering (“Public Shares”) have
indicated their intention to vote against the Acquisition Proposal and convert
their Public Shares into a pro rata portion of the trust fund established for
the benefit of holders of Public Shares in connection with the initial public
offering (the “Converting Stockholders”).
C. In order to increase the likelihood of the approval of the Acquisition
Proposal, the Purchaser has agreed to purchase the Public Shares and to vote
such Public Shares in favor of the Acquisition Proposal at the special meeting,
all upon the terms and conditions set forth herein.
D. GLAC and its Chairman and President have advised the stockholders of Clark of
their belief that upon the acquisition of the Public Shares by the Purchaser and
the vote of such shares in favor of the Acquisition Proposal (i) a majority of
the Public Shares are expected to be voted in favor of the Acquisition Proposal,
and (ii) the 20% threshold of Public Shares whose holders must exercise their
conversion rights in order to defeat the Acquisition Proposal and cause the
liquidation of GLAC should not be reached.
IT IS AGREED:
1. Purchase of Shares. The Purchaser agrees to use commercially reasonable
efforts to purchase 2,380,000 shares of common stock, par value $0.0001, of the
Company from the Converting Stockholders prior to the special meeting at prices
reasonably acceptable to the Purchaser. Such purchases shall be effected in open
market transactions through a registered stock broker (or in non-market
transactions). Notwithstanding anything to the contrary herein, no such
purchases shall be made at any time if, at the time of placing an order to
purchase Public Shares, or, if purchases are to be made pursuant to a “10b5-1
Plan,” at the time such plan is instituted with a broker, the Purchaser is in
possession of material information regarding the Company or Clark that has not
been disclosed to the public. As consideration for the Purchaser’s purchase of
the Public Shares, the Company shall grant Purchaser demand and piggy-back
registration rights with respect to such shares, with such registration rights
being exercisable by Purchaser with respect to one-third (1/3) of the shares
beginning six months following
closing of the transactions contemplated by the Acquisition Agreement and with
respect to the remaining two-thirds (2/3) of the shares beginning one (1) year
following closing of the transactions contemplated by the Acquisition Agreement
and, in each case, which are otherwise consistent with the registration rights
provided by the Company with respect to the founders shares as set forth in
Section 3 below.
2. Voting of Shares. The Purchaser agrees to maintain ownership of such shares
until the special meeting and to vote the Public Shares in favor of the
Acquisition Proposal and the other proposals presented to the stockholders of
the Company for consideration at the special meeting. In furtherance of the
provisions of this section 2, the Purchaser shall use reasonable efforts to
obtain a proxy to such effect from the seller of the Public Shares or to cause
such seller to vote the Public Shares in favor of the Acquisition Proposal. At
the time of the special meeting, the Purchaser shall provide confirmation
reasonably satisfactory to the Company that it has purchased up to 2,380,000
Public Shares and has used reasonable efforts to cause such Public Shares to be
voted as provided for in this section 2.
3. Insider Stock Transfers. In consideration of the purchases made by the
Purchaser pursuant to this Agreement, if the Acquisition Proposal is approved
and the transactions contemplated by the Acquisition Agreement are consummated,
the Insiders, in the aggregate, will transfer to the Purchaser, upon the closing
of such transactions, 0.1597 shares of the Company’s common stock for each share
purchased, but not more than 380,000 shares in the aggregate. Of the total
number of shares so transferred by the Insiders, each Insider will transfer the
number of shares listed next to such Insider’s name on Schedule A. Such shares
so transferred shall be unencumbered and freely tradable by the Purchaser except
for restrictions imposed by federal and state securities laws. Each Insider
represents and warrants, with respect to himself only, that he is the beneficial
owner of at least the number of shares listed next to his name on Schedule A and
that he has owned such shares since the time they were placed in escrow pursuant
to Lock-Up Agreements dated February 21, 2006 between each Insider and BB&T
Capital Markets, a Division of Scott & Stringfellow, Inc. The Purchaser
acknowledges that, notwithstanding of the transfer of such shares to the
Purchaser, such shares remain subject to the provisions of such Lock-Up
Agreements. Such shares will be entitled to registration rights pursuant to the
Registration Rights Agreement dated February 21, 2006 (the “Registration Rights
Agreement”) between the Company and the founders. Notwithstanding anything to
the contrary in the Registration Rights Agreement, at any time after six months
after the transfer of the shares transferred to the Purchaser pursuant to this
section 3, the Company will register such shares upon the demand of a
majority-in-interest of the holders of such shares made pursuant to Section 2.1
of the Registration Rights Agreement.
4. Disclosure; Exchange Act Filings. Promptly upon execution of this Agreement,
the Company will issue a press release describing this Agreement and file a
Current Report on Form 8-K under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) reporting such execution. Promptly upon the Purchaser
making a purchase of Public Shares pursuant to this Agreement, the Purchaser
will inform the
2
Company thereof. The Company will thereupon issue a press release describing
such purchase and file a Current Report on Form 8-K with respect thereto at such
time that counsel advises is necessary or appropriate to do so. The Purchaser
will also file any forms or schedules required to be filed by the Purchaser
pursuant to Section 13 or Section 16 of the Exchange Act with respect to or as a
result of such purchase. The parties to this Agreement shall cooperate with one
another to assure that all such forms, schedules and reports and other
disclosures are accurate and consistent.
5. Representation. The Company and Messrs. Martell and Burns each represents and
warrants that all information in the Proxy Statement distributed to the
stockholders of the Company in connection with the special meeting relating to
the Company’s trust account and liabilities of the Company that could affect the
trust account are true and correct as of this date in all material respects.
Attached hereto as Schedule B is a list of amounts owed to vendors and others
who have not waived their rights to collect amounts owed to them from funds in
the trust account.
6. Entire Agreement; Amendment. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and may be amended
or modified only by written instrument signed by all parties. The headings in
this Agreement are for convenience of reference only and shall not alter or
otherwise affect the meaning hereof.
7. Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of New York, including the conflicts of law
provisions and interpretations thereof.
8. Counterparts. This Agreement may be executed in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement. Delivery of an executed signature page by
facsimile or other electronic transmission shall be effective as delivery of a
manually signed counterpart of this Agreement.
3
[Signature Page to Agreement Dated February 1, 2008]
first above written.
PURCHASER:
CLARK-GLAC INVESTMENT, LLC
By:
/s/ J. Maier
Name:
Jay Maier
Title:
VP
INSIDERS:
/s/ James J. Martell
James J. Martell
/s/ Gregory E. Burns
Gregory E. Burns
/s/ Maurice Levy
Maurice Levy
/s/ Mitchel Friedman
Mitchel Friedman
GLOBAL LOGISTICS ACQUISITION CORPORATION
By:
Name:
Gregory E. Burns
Title:
Chief Executive Officer and President
4
SCHEDULE A
James J. Martell
102,000 Shares
Gregory E. Burns
88,000 Shares
Maurice Levy
8,750 Shares
Mitchel Friedman
181,250 Shares
SCHEDULE B
Capital Systems, Inc. (Printer)
$126,646.51
State of Delaware Franchise Taxes
$106,558.89
5
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Exhibit 10.6
SECOND AMENDMENT TO FORBEARANCE AGREEMENT AND FOURTH
This SECOND AMENDMENT TO FORBEARANCE AGREEMENT AND FOURTH AMENDMENT TO AMENDED
AND RESTATED CREDIT AGREEMENT (this “Agreement”) is entered into as of
December 23, 2011, by and among AQUILEX HOLDINGS LLC, a Delaware limited
liability company (the “Borrower”), each other Loan Party listed on the
signature pages hereto, the Lenders listed on the signature pages hereto and
ROYAL BANK OF CANADA, as Administrative Agent and Collateral Agent (in such
capacities, the “Agent”), and as L/C Issuer (in such capacity, the
“L/C Issuer”).
RECITALS
WHEREAS, the Borrower, the other Loan Parties, the Agent, the L/C Issuer and the
Lenders are parties to that certain Amended and Restated Credit Agreement, dated
as of April 1, 2010 (as amended, restated, supplemented or otherwise modified
from time to time prior to the date hereof, the “Credit Agreement”; capitalized
terms used herein and not otherwise defined shall have the meanings ascribed
thereto in the Credit Agreement), pursuant to which, among other things, the
Agent, the L/C Issuer and the Lenders named therein agreed, subject to the terms
and conditions set forth in the Credit Agreement, to make senior secured credit
facilities and certain other financial accommodations available to the Borrower;
WHEREAS, as of October 13, 2011, the Borrower, the other Loan Parties, the
Agent, the L/C Issuer and the Lenders signatory thereto entered into a
Forbearance Agreement and Second Amendment to Amended and Restated Credit
Agreement (as amended from time to time prior to the date hereof, the
“Forbearance Agreement”) pursuant to which (including subsequent amendments),
among other things, the Agent and the Required Lenders, on behalf of all
Lenders, agreed to forbear through February 3, 2012 from exercising remedies
with respect to the Specified Defaults as set forth therein, and the Borrower
and the other Loan Parties agreed to either (a) consummate an out-of-court
restructuring or (b) commence voluntary cases under Chapter 11 of Title 11 of
the United States Code, in each case on or before January 27, 2012;
WHEREAS, the Borrower, the other Loan Parties, the Agent, the holders of at
least two-thirds in amount of the outstanding Loans, the Second Lien Agent, the
holders of at least two-thirds in amount of the Second Lien Term Loans, the
beneficial holders or investment advisors or managers for the account of the
holders of at least two-thirds in principal amount of the Senior Notes, certain
holders of Senior Notes, as equity backstop parties, and the Sponsor are,
concurrently with the effectiveness hereof, entering into a Restructuring
Support Agreement, pursuant to which the debt obligations of the Borrower shall
be restructured through either an out-of-court restructuring or commencement of
pre-packaged bankruptcy cases (the “Restructuring Support Agreement”); and
WHEREAS, the Borrower has requested that the Credit Agreement, the Forbearance
Agreement and the Second Lien Intercreditor Agreement be amended to reflect the
agreements of the parties in the Restructuring Support Agreement;
1
NOW, THEREFORE, in consideration of the foregoing, the terms, covenants and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1 Amendments to Credit Agreement.
(a) Section 2.08(c) of the Credit Agreement is hereby amended to add the
following sentence at the end thereof: “For the avoidance of doubt, if the
Forbearance Period terminates by reason of an out-of-court restructuring, then
the interest accrued or previously capitalized pursuant to the 1.00% increase in
the Applicable Rate effected by the Forbearance Agreement shall be payable in
cash on the effective date of such out-of-court restructuring.”
(b) Section 11.21 of the Credit Agreement is hereby amended (i) to delete
Section 11.21(a) and (ii) to replace the number “$40,000,000” in clause 11.21(b)
thereof with the number “$50,000,000”.
SECTION 2 Additional Amendments and Agreements.
(a) Amendment to Second Lien Intercreditor Agreement. The Administrative Agent
is hereby authorized and directed to execute and deliver an amendment to the
Second Lien Intercreditor Agreement in the form attached hereto as Exhibit A.
(b) Amendment to Bondholder Letter Agreement. The Administrative Agent is hereby
authorized and directed to execute and deliver an amendment to the Bondholder
Letter Agreement in the form attached hereto as Exhibit B.
(c) Amendment to Forbearance Agreement. Section 3(a) of the Forbearance
Agreement is hereby amended to insert the following proviso at the end of clause
(ii) thereof: “provided, that if the deadline for consummating an out-of-court
restructuring or, alternatively, commencing voluntary cases under Chapter 11 of
Title 11 of the United States Code, has been extended pursuant to the terms of
the Restructuring Support Agreement, the Forbearance Period shall end on the
earlier to occur of (i) and Forbearance Default and (ii) such extended date”. In
addition, for the avoidance of doubt, the agreements of the Loan Parties set
forth in Section 4(a)(i) of the Third Amendment are superseded by the provisions
of the Restructuring Support Agreement and if the date for commencing an
out-of-court restructuring or commencing a voluntary case under Chapter 11 of
Title 11 of the United States Code is extended pursuant to the terms of the
Restructuring Support Agreement to a later date, then the date set forth in
Section 4(a)(i) shall be deemed extended to such date.
SECTION 3 Representations, Warranties and Covenants of Borrower and Each Other
Loan Party.
To induce the Agent, the L/C Issuer and the Lenders to execute and deliver this
Agreement, the Borrower and each other Loan Party represents, warrants and
covenants that:
(a) the individual executing this Agreement on behalf of the Borrower and each
other Loan Party is authorized to so act and the execution of this Agreement by
such individual makes the obligations set forth herein legal, valid, binding and
enforceable against the
2
Borrower or such other Loan Party in accordance with their respective terms,
except as the enforcement thereof may be subject to (i) the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors’ rights generally and (ii) general principles of equity
(regardless of whether such enforcement is sought in a proceeding in equity or
at law);
(b) except with respect to the Specified Defaults, each of the representations
and warranties contained in the Credit Agreement and the other Loan Documents
(other than the representations and warranties in Section 5.05(b) and
Section 5.17 of the Credit Agreement), as updated from time to time pursuant to
the Perfection Certificates delivered to the Agent under the Credit Agreement,
is true and correct in all material respects on and as of the date hereof as if
made on the date hereof, except to the extent that such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date, and each of the agreements and covenants in
the Credit Agreement and the other Loan Documents is hereby reaffirmed with the
same force and effect as if each were separately stated herein and made as of
the date hereof;
(c) neither the execution, delivery and performance of this Agreement nor the
consummation of the transactions contemplated hereby does or shall contravene,
result in a breach of, or violate (i) any provision of the Borrower’s or any
other Loan Party’s corporate charter, bylaws, operating agreement, or other
governing documents, (ii) any material Laws or (iii) any indenture, mortgage,
deed of trust, lease, agreement or other instrument to which the Borrower or any
other Loan Party is a party or by which the Borrower or any other Loan Party or
any of their respective property is bound except with respect to this clause
(iii) to the extent such contravention, breach or violation would not reasonably
be expected to have a Material Adverse Effect;
(d) as of the date hereof, except for the Specified Defaults, no Event of
Default has occurred and is continuing under this Agreement, the Credit
Agreement or any other Loan Document; and
(e) the Secured Parties’ security interest in the Collateral continues to be
valid, binding, and enforceable first-priority security interests that secures
the Obligations (subject, with respect to priority only, to Liens permitted by
Section 7.01 of the Credit Agreement).
SECTION 4 Ratification of Liability.
The Borrower and each other Loan Party hereby (a) ratifies and reaffirms all of
its payment and performance obligations and obligations to indemnify, contingent
or otherwise, under this Agreement, the Credit Agreement, the Forbearance
Agreement, the Third Amendment and each other Loan Document to which such Loan
Party is a party, and each such Loan Party hereby ratifies and reaffirms its
grant of Liens on or security interests in its properties pursuant to such Loan
Documents to which it is a party as security for the Obligations under or with
respect to the Credit Agreement, and confirms and agrees that such Liens and
security interests hereafter secure all of the Obligations. The Borrower and
each other Loan Party acknowledges receipt of a copy of this Agreement and all
other agreements or documents executed or delivered in
3
connection herewith, (b) consents to the terms and conditions of same and
(c) agrees and acknowledges that each of the Loan Documents remains in full
force and effect and is hereby ratified and confirmed.
SECTION 5 Reference to and Effect upon the Credit Agreement.
(a) Except as expressly modified hereby, all terms, conditions, covenants,
representations and warranties contained in the Credit Agreement, the
Forbearance Agreement, the Third Amendment and the other Loan Documents, all
rights of the Secured Parties and all of the Obligations shall remain in full
force and effect. Each of the Borrower and each other Loan Party hereby confirms
that no such party has any right of setoff, recoupment or other offset or any
defense, claim or counterclaim with respect to any of the Obligations, the
Credit Agreement, the Forbearance Agreement, the Third Amendment or any other
Loan Document.
(b) Except as expressly set forth herein or in the Forbearance Agreement, the
effectiveness of this Agreement shall not directly or indirectly (i) create any
obligation to make any further Loans, Letters of Credit or financial
accommodations under the Credit Agreement or to continue to defer any
enforcement action after the occurrence of any Default or Event of Default
(including, without limitation, any Forbearance Default), (ii) constitute a
consent or waiver of any past, present or future violations of any provisions of
the Credit Agreement, the Forbearance Agreement, the Third Amendment or any
other Loan Documents, (iii) amend, modify or operate as a waiver of any
provision of the Credit Agreement, the Forbearance Agreement, the Third
Amendment or any other Loan Documents or any right, power or remedy of the
Agent, the L/C Issuer or any Lender, (iv) constitute a consent to any merger or
other transaction or to any sale, restructuring or refinancing transaction or
plan of reorganization, or (v) constitute a course of dealing or other basis for
altering any Obligations or any other contract or instrument. Except as
expressly set forth herein, the Agent, the L/C Issuer and the Lenders reserve
all rights, powers, and remedies under the Credit Agreement, the Forbearance
Agreement, the Third Amendment, the other Loan Documents and applicable law.
(c) From and after the Amendment Effective Date, (i) the term “Agreement” in the
Credit Agreement, and all references to the Credit Agreement in any Loan
Document shall mean the Credit Agreement, as amended hereby, (ii) the term
“Agreement” in the Forbearance Agreement, and all references to the Forbearance
Agreement in any Loan Document shall mean the Forbearance Agreement as amended
hereby and (iii) the term “Loan Documents” in the Credit Agreement and the other
Loan Documents shall include, without limitation, this Agreement and any
agreements, instruments and other documents executed and/or delivered in
connection herewith.
(d) This Agreement shall not be deemed or construed to be a satisfaction,
reinstatement, novation or release of the Credit Agreement or any other Loan
Document.
SECTION 6 Construction.
This Agreement and all other agreements and documents executed or delivered in
connection herewith have been prepared through the joint efforts of all of the
parties hereto. Neither the provisions of this Agreement or any such other
agreements and documents nor any
4
alleged ambiguity therein shall be interpreted or resolved against any party on
the ground that such party or its counsel drafted this Agreement or such other
agreements and documents, or based on any other rule of strict construction.
Each of the parties hereto represents and declares that such party has carefully
read this Agreement and all other agreements and documents executed or delivered
in connection herewith, and that such party knows the contents hereof and signs
the same freely and voluntarily. The parties hereto acknowledge that they have
been represented by legal counsel of their own choosing in negotiations for and
preparation of this Agreement and all other agreements and documents executed or
delivered in connection herewith and that each of them has read the same and had
their contents fully explained by such counsel and is fully aware of their
respective contents and legal effect.
SECTION 7 Counterparts.
so executed shall be deemed an original, but all such counterparts shall
constitute one and the same instrument, and all signatures need not appear on
any one counterpart. Any party hereto may execute and deliver a counterpart of
this Agreement by delivering by facsimile or other electronic transmission
(including .pdf or .tif) a signature page of this Agreement signed by such
party, and any such facsimile or other electronic signature shall be treated in
all respects as having the same effect as an original signature.
SECTION 8 Severability.
The invalidity, illegality, or unenforceability of any provision in or
obligation under this Agreement in any jurisdiction shall not affect or impair
the validity, legality, or enforceability of the remaining provisions or
obligations under this Agreement or of such provision or obligation in any other
jurisdiction.
SECTION 9 Further Assurances.
The Borrower and each other Loan Party agrees to, and to cause any other Loan
Party to, take all further actions and execute all further documents as the
Agent may from time to time reasonably request to carry out the transactions
contemplated by this Agreement and all other agreements executed or delivered in
connection herewith.
SECTION 10 Section Headings.
Section headings in this Agreement are included herein for convenience of
reference only and shall not constitute part of this Agreement for any other
purpose.
SECTION 11 Notices.
All notices, requests, and demands to or upon the respective parties hereto
shall be given in accordance with the Credit Agreement.
5
SECTION 12 Effectiveness.
This Agreement shall become effective at the time (the “Amendment Effective
Date”) that all of the following conditions precedent have been met (or waived)
as determined by the Agent in its sole discretion:
(a) Agreement. The Agent shall have received duly executed signature pages for
this Agreement signed by the Agent, the L/C Issuer, the Required Lenders, the
Borrower and each other Loan Party.
(b) Amendment to Second Lien Intercreditor Agreement. The Agent shall have
received duly executed signature pages for an amendment to the Second Lien
Intercreditor Agreement in the form attached hereto as Exhibit A.
(c) Restructuring Support Agreement. The Restructuring Support Agreement shall
have become effective pursuant to its terms and the Agent shall have received a
fully-executed copy thereof.
(d) Consent of Second Lien Lenders. The requisite Second Lien Lenders shall have
consented to the amendments set forth in Section 1 hereof.
(e) Documentation. The Borrower and the other Loan Parties shall have delivered
to the Agent such additional customary documents and instruments as the Agent
may require, all of the foregoing of which shall be in form and substance
acceptable to the Agent.
(f) Expenses. The Borrower shall have reimbursed all reasonable invoiced fees
and expenses of the Agent’s financial advisor, Zolfo Cooper, LLC, and counsel,
Latham & Watkins LLP (including out-of-pocket expenses).
SECTION 13 Assignments; No Third Party Beneficiaries.
This Agreement shall be binding upon and inure to the benefit of the Borrower,
each other Loan Party, the Agent, the L/C Issuer, the Lenders and their
respective successors and assigns; provided that neither the Borrower nor any
other Loan Party shall be entitled to delegate any of its duties hereunder and
shall not assign any of its rights or remedies set forth in this Agreement
without the prior written consent of the Agent and the Required Lenders in their
respective sole discretion.
SECTION 14 Final Agreement.
This Agreement, the Credit Agreement, the other Loan Documents and the other
written agreements, instruments, and documents entered into in connection
therewith (collectively, the “Borrower/Lender Documents”) set forth in full the
terms of agreement between the parties hereto and thereto and are intended as
the full, complete, and exclusive contracts governing the relationship between
such parties, superseding all other discussions, promises, representations,
warranties, agreements and understandings among the parties with respect
thereto. No term of the Borrower/Lender Documents may be amended, restated,
waived or otherwise modified except in a writing signed by the party against
which enforcement of the modification,
6
amendment, or waiver is sought. Any waiver of any condition in, or breach of,
any of the foregoing in a particular instance shall not operate as a waiver of
other or subsequent conditions or breaches of the same or a different kind. The
exercise or failure to exercise any rights or remedies by the Agent, the
L/C Issuer or any Lender under any of the foregoing in a particular instance
shall not operate as a waiver to exercise the same or different rights and
remedies in any other instances. There are no oral agreements among the parties
hereto.
SECTION 15 Applicable Law.
This Agreement and the rights and obligations of the parties hereunder
(including any claims sounding in contract law or tort law arising out of the
subject matter hereof) shall be governed by, and shall be construed in
accordance with, the laws of the State of New York without regard to conflicts
of law principles that would result in the application of any law other than the
law of the State of New York.
SECTION 16 General Release; Covenant Not to Sue.
(a) In consideration of, among other things, the Agent’s, the L/C Issuer’s and
the Required Lenders’ execution and delivery of this Agreement, the Borrower and
each other Loan Party, on behalf of themselves and their agents,
representatives, officers, directors, advisors, employees, successors and
assigns (collectively, “Releasors”), hereby forever waive, release and
discharge, to the fullest extent permitted by law, each Releasee (as hereinafter
defined) from any and all liens, claims, interests and causes of action of any
kind or nature (collectively, the “Claims”) that such Releasor now has or
hereafter may have against any or all of the Agent, the L/C Issuer and any
Lender in any capacity and their respective affiliates, subsidiaries,
shareholders and “controlling persons” (within the meaning of the federal
securities laws), and their respective successors and assigns and each and all
of the officers, directors, employees, agents, attorneys and other
representatives of each of the foregoing (collectively, the “Releasees”), based
on facts existing on or before the Amendment Effective Date that relate to:
(i) any Loan Document, (ii) any transaction, action or omission contemplated
thereby or (iii) any aspect of the dealings or relationships between or among
any or all of the Borrower and the other Loan Parties, on the one hand, and any
or all of the Agent, the L/C Issuer and the Lenders, on the other hand, relating
to any Loan Document or transaction, action or omission contemplated thereby.
The provisions of this Section 17 shall survive the termination of this
Agreement, the Credit Agreement, the other Loan Documents and payment in full of
the Obligations.
(b) The Borrower and each other Loan Party, on behalf of themselves and their
successors, assigns, and other legal representatives, hereby unconditionally and
irrevocably agree that they will not sue any Releasee on the basis of any Claim
released, remised and discharged by the Borrower or any other Loan Party
pursuant to Section 17 hereof. If the Borrower, any other Loan Party or any of
its successors, assigns or other legal representatives violates the foregoing
covenant, the Borrower and each other Loan Party, each for itself and its
successors, assigns and legal representatives, agrees to pay, in addition to
such other damages as any Releasee may sustain as a result of such violation,
all reasonable attorneys’ fees and costs incurred by any Releasee as a result of
such violation.
(Signature pages to follow)
7
Amendment to Amended and Restated Credit Agreement has been executed by the
parties hereto as of the date first written above.
AQUILEX HOLDINGS LLC, as Borrower By: AQUILEX ACQUISITION SUB III, LLC, its
sole member By: AQUILEX HOLDCO, L.P., its sole member By: AQUILEX
HOLDCO GP LLC, its general partner By: ONTARIO TEACHERS’ PENSION PLAN
BOARD, its sole member By:
/s/ Darren Smart
Name: Darren Smart Title: Portfolio Manager AQUILEX ACQUISITION SUB III,
LLC, as a Loan Party By: AQUILEX HOLDCO, L.P., its sole member By:
AQUILEX HOLDCO GP LLC, its general partner By: ONTARIO TEACHERS’ PENSION
PLAN BOARD, its sole member By:
Name: Darren Smart Title: Portfolio Manager
SIGNATURE PAGE TO SECOND AMENDMENT TO FORBEARANCE AGREEMENT AND FOURTH
AQUILEX CORPORATION, as a Loan Party By:
/s/ Jay W. Ferguson
Name: Jay W. Ferguson Title: CFO and Treasurer AQUILEX HYDROCHEM, INC., as a
Loan Party By:
Name: Jay W. Ferguson Title: CFO and Treasurer AQUILEX HYDROCHEM INDUSTRIAL
CLEANING, INC., as a Loan Party By:
Name: Jay W. Ferguson Title: CFO and Treasurer AQUILEX SMS, INC., as a Loan
Party By:
Name: Jay W. Ferguson Title: CFO and Treasurer AQUILEX WSI, INC., as a Loan
Party By:
Name: Jay W. Ferguson Title: CFO and Treasurer AQUILEX FINANCE CORP., as a
Loan Party By:
Name: Jay W. Ferguson Title: CFO and Treasurer
AQUILEX SPECIALTY REPAIR AND OVERHAUL, INC., as a Loan Party By:
ROYAL BANK OF CANADA, as the Agent By:
/s/ Ann Hurley
Name: Ann Hurley Title: Manager, Agency
ROYAL BANK OF CANADA, as the L/C Issuer By:
/s/ Leslie P. Vowell
Name: Leslie P. Vowell Title: Attorney-in-Fact
[NAME OF LENDER], as Lender By:
Name: Title:
|
Exhibit 10.17
EMPLOYMENT AGREEMENT
This Employment Agreement (“Agreement”) is made by and between Better Biodiesel,
Inc., a corporation duly organized and existing under the laws of the State of
Colorado (the “Company”), and Kenneth R. Bennett (“Executive”).
RECITALS
WHEREAS, the Company desires to hire Executive and Executive desires to become
employed by the Company;
WHEREAS, the Company and Executive have determined that it is in their
respective best interests to enter into this Agreement on the terms and
conditions as set forth herein; and
promises contained herein, and for other good and valuable consideration, the
agree as follows:
1. Nature of Agreement.
This Agreement effects the cancellation of Prior Offers. Any and all prior oral
understandings, offers, open obligations, and/or representations (if any) with
respect to the employment of Executive are deemed to be superseded by this final
written Agreement. This Agreement shall become effective only upon resolution
2. Employment Terms and Duties.
2.1. Term of Employment. The employment of Executive, and the term of this
Agreement (the “Employment Term”), shall be deemed to commenced upon the date
upon which the Board resolves to approve this Agreement, which shall occur
within ten (10) days of the later of (i) the closing of the Company’s
acquisition of GeoAlgae Technology, Inc., or (ii) the mutual execution of this
Agreement (the “Effective Date”) and shall continue for thirty-six (36) months,
subject to automatic renewal for successive twelve (12) month periods and shall
continue until otherwise terminated in accordance with Section 6 or Section 7.
2.2. Location. Executive shall not be required to change his personal
residence, but shall maintain an office at the location of the Company’s
principal executive offices as reasonably necessary to enable him to perform his
duties.
2.3. Position and Primary Responsibility.
2.3.1. It is understood that Executive shall serve as (i) President and Chief
Executive Officer of the Company. Contemporaneously with the execution and
delivery of this Agreement, the Company shall effectuate all such action as
shall be required to procure the appointment of Executive as President and Chief
Executive Officer.
2.3.2. Executive, as Chief Executive Officer, shall have general supervision,
direction and control of the business and affairs of the Company. Accordingly,
all officers of the Company other than the Chief Executive Officer shall perform
their duties under the direction of, and subject to the authority of, the Chief
Executive Officer.
2.3.3. Executive shall have all of the powers and duties of the Chief Executive
Officer as prescribed by the Bylaws of the Company in effect on the date hereof;
and, without limitation, shall have general supervision, direction and control
of the business and affairs of the Company and of each and every subsidiary of
the Company; and shall have discretionary power, subject to Board approval, to
hire officers of the Company and its subsidiaries. The Company agrees that,
during the Employment Term, neither the Articles of Incorporation, nor the
Bylaws, of the Company shall at any time be amended in a manner inconsistent
with the foregoing or the additional provisions of this Agreement without the
written consent of the Executive.
2.4. Exclusivity. Executive agrees to devote the majority of his time,
attention, energies, and to use his “best efforts” in the performance of his
duties under the terms of this Agreement and shall make this his primary
employment and source of income. However, the expenditure of reasonable amounts
of time for educational, charitable, or professional activities shall not be
deemed a breach of this Agreement if those activities do not materially
interfere with the services required under this Agreement, and shall not require
the prior written consent of the Board. This Agreement shall not be interpreted
to prohibit Executive from making passive personal investments or conducting
private business affairs if those activities do not materially interfere with
the services required under this Agreement and do not violate Sections 5, 9
and/or 11 of this Agreement.
3. Compensation.
3.1 Base Salary. In consideration for the services rendered to the
Company hereunder by Executive, the Company shall, during his employment, pay
Executive a salary at the annual rate of One hundred thousand Dollars
($100,000.00) for his first year of employment; One hundred twenty-five thousand
Dollars ($125,000.00) for his second year of employment; and One hundred
seventy-five thousand Dollars ($175,000.00) for his third year of employment
(the “Base Salary”), less statutory deductions and withholdings, payable to
Executive on a semi-monthly basis, which shall accrue upon the Closing of Better
Biodiesel, Inc.’s acquisition of GeoAlgae Technology, Inc., but for which cash
payments shall not exceed 10% of any sums received pursuant to the closing,
subsequent to execution of this Agreement, of a financing (or culmination of
financings)(a “Financing”) and/or revenues generated through operations
(collectively, “Revenues”) of the Company, up the extent of the aforementioned
year one, year two and year three salary limits, unless the Board determines
that funds for cash payments of greater than 10% of Revenues are available. For
purposes of clarity, in no event shall Executive’s Base Salary be decreased
pursuant to the preceding sentences.
3.2. Payment. All compensation payable to Executive hereunder shall
be subject to the Company’s rules and regulations, and shall also be subject to
all applicable State and federal employment law(s); it being understood that
subject to applicable federal and state laws, Executive shall be responsible for
the payment of all taxes resulting from a determination that any portion of the
compensation and/or benefits paid/received hereunder is a taxable event to
Executive; it being further understood that Executive shall hold the Company
harmless from any governmental claim(s) for Executive’s personal tax
liabilities, including interest or penalties, arising from any failure by
Executive to pay his individual taxes when due.
3.3 Reimbursement of Expenses. During the Employment Term, the
Company shall be required to reimburse Executive for all reasonable and
necessary expenses incurred by Executive, including auto allowance, travel
expenses, and other expenses of up to Seven thousand, five hundred dollars
($7,500.00) per month for expenses in connection with Executive’s duties under
this Agreement without the prior majority approval of the Board. These expenses
shall commence accruing to the Company upon the Effective Date; provided,
however, that the payment of which shall be contingent upon the earlier
occurrence of the Company closing a Financing, as defined in Section 3.1.
3.4 Cash Bonuses. Executive shall have a bonus entitlement during
each calendar year (or portion thereof) of the Employment Term of up to one
hundred percent (100%) of his Base Salary (whether paid or accrued) for such
year (or portion thereof), subject to the Board’s performance review of the
Executive and approval of the cash bonus. Within sixty (60) days of the
Effective Date, the Company and Executive shall concur, within their respective
reasonable discretion, on the criteria and procedures applicable to
establishment of Executive’s entitlement to such amount for the then current
calendar year; and, thereafter, within thirty (30) days following the
commencement of each calendar year of the Employment Term, the Company and
Executive shall concur, within their respective reasonable discretion, on the
criteria and procedures applicable to establishment of Executive’s entitlement
to such amount for the ensuing calendar year. Such criteria shall include,
without limitation: (i) specified revenue targets for the Company during the
applicable period; (ii) specified EBITDA targets for the Company during the
applicable period (as defined pursuant to consensus between the Company and
Executive); and (iii) such additional specified targets as the Company and
Executive mutually determine. Any such cash bonuses shall be paid by the Company
no later than March 15 of the taxable year commencing after the year in which
the Executive’s right to such payment becomes vested.
3.5 Compensation Review. It is understood and agreed that Executive’s
performance will be reviewed by the Board at the end of each calendar year
during the Employment Term, and at such other times as the Board may determine
to be appropriate, for the purpose of determining whether or not Executive’s
Base Salary and/or cash bonuses should be increased; it being further understood
that the decision to increase Executive’s compensation shall be at the sole and
exclusive discretion of the Board. If the Executive’s Base Salary is increased,
the new amount shall become the Base Salary for all purposes of this
Agreement. The Executive’s Base Salary shall not be decreased.
4. Benefits.
4.1 No Benefits Other Than Those Set Forth Herein. Executive shall
not be entitled to any benefits other than those set forth in this Section 4;
provided that Executive shall be entitled to participate in any employee benefit
plans or perquisites maintained by the Company on the same basis as other senior
executives. It is understood that, excepting Section 4.3, all benefits provided
in this Section 4 shall immediately terminate in the event of a Voluntary
Termination or a Termination for Cause, as defined in Section 6.2 and Section
6.4, respectively.
4.2 Vacation. Executive shall be entitled to twenty (20) days paid
vacation per annum. Any unused vacation time may be carried forward to the
following year.
4.3 Indemnification. The Company agrees to indemnify Executive to the
fullest extent permitted by law and by the Company’s Bylaws. The Company shall
not amend its Bylaws to reduce the Company’s ability to indemnify Executive
after the Effective Date. The Executive shall be covered by the Company’s
directors and officers liability insurance, policy, employment-related practices
liability insurance policy and fiduciary liability insurance policy during the
Employment Term, which shall remain in place and effective during Executives
Term and cover the Executive for a period of not less than five (5) years
following his termination of employment for any reason. The obligations of this
Section 4.3 shall survive any termination of the Employment Term for any reason.
4.4. Illness or Personal Leave. Executive shall be entitled to four
(4) days per year as sick leave or personal leave with full pay. Sick or
personal leave may not be accumulated from year to year. In addition, the
Company shall pay the cost of an annual physical examination for Executive to
the extent not covered by the Company’s general medical plan.
4.5 Paid Holidays. Executive shall
be entitled to a holiday on the following days, with full pay: New Year’s Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, the Friday after
Thanksgiving Day and Christmas Day.
5. Confidential Information and Records.
5.1 Existing or Potential Conflict of Interest. Executive represents
that his employment with the Company under the terms of this Agreement will not
conflict with any continuing duty(ies) or obligation(s) Executive has with any
other person(s), firm(s) and/or entity(ies). Executive also represents that he
has not brought to the Company (during the period before or after the Effective
Date of this Agreement) any material(s) and/or document(s) of any former
employer(s), or any confidential information or property belonging to other(s).
5.2 Confidential Information. Executive also represents that he will
not disclose to any person(s) or entity/entities (other than to the Board, or to
others as required in the performance of his duties) any confidential or secret
information with respect to the business or affairs of the Company and/or its
product(s).
5.3 Corporate Related Records. All records, files, documents, and the
like, or abstracts, summaries, or copies thereof, relating to the business of
the Company which Executive shall prepare or use or come into contact with shall
remain the sole property of the Company.
6. Termination.
Executive’s employment and this Agreement (except as otherwise provided
hereunder) shall terminate upon the occurrence of any of the following, at the
time set forth therefor (the “Termination Date”):
6.1 Death or Disability. Immediately upon the death of Executive or
six (6) months subsequent to a determination by the Company that Executive has
ceased to be able to perform the essential functions of his duties, with or
without reasonable accommodation, due to a mental or physical illness or
incapacity (“Disability”) (termination pursuant to this Section 6.1 being
referred to herein as termination for “Death or Disability”);
6.2 Voluntary Termination. Thirty (30) days following Executive’s
written notice to the Company of voluntary termination of employment; provided,
however, that the Company may waive all or a portion of the thirty (30) days’
notice and accelerate the effective date of such termination (and the
Termination Date) (termination pursuant to this Section 6.2 being referred to
herein as “Voluntary Termination”).
6.3 Resignation for Good Reason. The date specified in a written
notice given by the Executive to the Company that he is resigning for Good
Reason, as hereinafter defined. For purposes of this Agreement, “Good Reason”
shall mean (i) the Company’s material breach of this Agreement not cured within
thirty (30) days after written notice to the Company, or (ii) any of the
following without the prior written consent of the Executive: the Company’s
adverse change in Executive’s title from Chief Executive Officer or its
equivalent; the Company’s material and adverse diminution in the Executive’s
duties or authority; the Company’s assignment of duties materially inconsistent
with the Executive’s executive duties; the Company’s material and adverse change
in Executive’s direct reporting structure to the Board; or the Company’s failure
to elect or re-elect Executive to, or the Company’s removal of Executive from,
the Board. Termination pursuant to this Section 6.3 being referred to herein as
“resignation for Good Reason.” Resignation for Good Reason pursuant to this
Section 6.3 shall be in addition to and without prejudice to any other right or
remedy to which the Executive may be entitled at law, in equity, or under this
Agreement.
6.4 Termination For Cause. The Company may terminate the Executive
effective immediately following notice of Termination For Cause (as defined
below), which notice shall specify such Cause (termination pursuant to this
Section 6.4 being referred to herein as “Termination For Cause”). As used
herein, Termination For Cause shall mean any of the following acts by the
Executive or occurrences, and no others: (i) acts or omissions constituting
willful misconduct on the part of the Executive with respect to Executive’s
obligations or otherwise relating to the business of the Company;
(ii) Executive’s breach of this Agreement that Executive has not cured within
thirty (30) days after the Board has provided Executive written notice of such
material breach; (iii) Executive’s conviction or entry of a plea of nolo
contendere for fraud, misappropriation or embezzlement, or any felony or crime
of moral turpitude; and (iv) Executive’s breach of fiduciary duty to the
Company. For purposes of clause (i) of the definition, acts or omissions of
Executive shall not be considered “willful” unless done or omitted by Executive
(a) intentionally or not in good faith and (b) without reasonable belief that
Executive’s action or omission was in the best interests of the Company, and
shall not include failure to act by reason of total or partial incapacity due to
a physical or mental condition. Termination pursuant to this Section 6.4 shall
be in addition to and without prejudice to any other right or remedy to which
the Company may be entitled at law, in equity, or under this Agreement.
6.5 Termination Without Cause. Thirty (30) days following the
Company’s written notice, at any time for any reason or no reason, to the
Executive of termination of the Executive’s employment without Cause; provided,
however, that the Executive may waive all or a portion of the thirty (30) days’
Termination Date) (termination pursuant to this Section 6.5 being referred to
herein as “Termination Without Cause”).
7. Severance and Termination.
7.1 Voluntary Termination or Termination for Cause. In the case of a
termination of Executive by Voluntary Termination of employment hereunder, in
accordance with Section 6.2 above, or a termination of Executive’s employment
hereunder through Termination For Cause in accordance with Section 6.4 above,
Executive shall not be entitled to receive payment of, and the Company shall
have no obligation to pay, any severance or similar compensation attributable to
such termination, other than Base Salary earned but unpaid (including any amount
that has been accrued pending the completion of financings pursuant to Section
3.1), accrued but unused vacation to the extent required by the Company’s
policies, any non-reimbursed expenses incurred by Executive as of the
Termination Date that were not approved by the Board, or any amounts payable
upon termination of employment under any employee benefit plan of the
Company. Any expenses that are approved by the Board or are incurred in
accordance with Section 3.3 shall be paid in cash in a lump sum not later than
thirty (30) days after the Termination Date, except as otherwise provided in any
employee benefit plan.
7.2 Termination for Death or Disability. In the case of a termination
of employment for Death or Disability in accordance with Section 6.1 above, the
Executive (or a representative of his estate), shall receive (i) accrued but
unused vacation to the extent required by the Company’s policies, (ii) any
non-reimbursed expenses incurred by Executive as of the Termination Date that
were approved by the Board, (iii) any amounts payable upon termination of
employment under any employee benefit plan of the Company (the “Accrued
Obligations”). Accrued Obligations shall be payable in cash in a lump sum not
later than thirty (30) days after the Termination Date, except as otherwise
provided in any employee benefit plan. In addition, Executive shall receive an
amount equal to Executive’s target annual bonus for the year in which the
Termination Date occurs prorated on a daily basis to the Termination Date, which
shall be paid in cash within thirty (30) days of the Termination Date and all
shares of Incentive Stock not yet vested shall vest in full on the Termination
Date.
7.3 Termination Without Cause or Resignation for Good Reason. In the
case of a termination of Executive’s employment hereunder without Cause pursuant
to Section 6.5, or resignation for Good Reason pursuant to Section 6.3,
Executive shall receive (i) the Accrued Obligations, (ii) an amount equal to the
sum of six months Base Salary as in effect on the Termination Date (iii) plus
the target bonus prorated to the Termination Date for the year in which the
Termination Date occurs, which shall be paid in cash within thirty (30) days of
the Termination Date, and (iv) executive level career transition assistance
services by an outplacement firm designated by the Executive up to a maximum of
twelve (12) months, but in no event to exceed a total of Ten thousand Dollars
($10,000.00).
7.4 Compliance with Code Section 409A. To the extent required by
Section 409A of the Internal Revenue Code, any amount that would otherwise be
payable within six months following Executive’s termination of employment shall
be paid instead on the date that is six months following his termination of
employment, with interest from the date on which such amount would otherwise
have been paid at the prime rate of interest published in the Wall Street
Journal from time to time.
8. Release of Claims
Upon a termination of employment, other than a Termination For Cause, the
Company and the Executive shall execute mutual releases of all claims against
each other, except for claims for any violation of law, in a form reasonably
satisfactory to both parties.
9. Non-competition, Non-solicitation.
9.1 Non-Competition. As a stipulated condition of employment,
Executive agrees that he shall not, during the Employment Term and for twelve
(12) months subsequent thereto, without both the disclosure to and the written
approval of the Board of the Company, directly or indirectly, engage or be
interested in (whether as a principal, lender, employee, officer, director,
partner, venturer, consultant or otherwise) any business(es) that is competitive
with the business of the Company or any company affiliated with the
Company. This section 9.1 shall not apply in the event of Executive’s
Resignation for Good Reason or Termination Without Cause.
9.2 Direct Interests. Executive also represents that during the term
of this Agreement, he will promptly disclose to the Board of the Company,
complete information concerning any direct or indirect interest that he holds,
if any, in any business which provides service(s) and/or product(s) to the
Company (whether as a principal, stockholder, lender, employee, Director,
Officer, partner, venturer, consultant or otherwise).
9.3 Non-Solicitation. Executive agrees that he will not, for a period
of twelve (12) months following the Termination Date, contact or solicit orders,
sales or business from any customer of the Company.
10. Inventions, Discoveries and Improvements.
Any and all invention(s), discovery(ies) and improvement(s), whether protectible
or unprotectible by Patent, trademark, copyright or trade secret, made, devised,
or discovered by Executive, whether by Executive alone or jointly with others,
Termination Date of this Agreement or the actual date of termination of
employment, relating or pertaining in any way to Executive’s employment with the
Company, shall be promptly disclosed in writing to the Board of the Company, and
become and remain the sole and exclusive property of the Company. Executive
agrees to execute any assignments to the Company, or its nominee, of the
Executive’s entire right, title, and interest in and to any such inventions,
discoveries and improvements and to execute any other instruments and documents
requisite or desirable in applying for and obtaining Patents, trademarks or
copyrights at the cost of the Company, with respect thereto in the United States
and in all foreign countries, that may be requested by the Company. Executive
further agrees, whether or not then in the employment of the Company, to
cooperate to the fullest extent and in the manner that may be reasonably
requested by the Company in the prosecution and/or defense of any suit(s)
involving claim(s) of infringement and/or misappropriation of proprietary rights
relevant to Patent(s), trademark(s), copyright(s), trade secret(s), processes,
and/or discoveries involving the Company’s product(s); it being understood that
all reasonable costs and expenses thereof shall be paid by the Company. The
Company shall have the sole right to determine the treatment of disclosures
received from Executive, including the right to keep the same as a trade secret,
to use and disclose the same without a prior Patent Application, to file and
prosecute United States and foreign Patent Application(s) thereon, or to follow
any other procedure which the Company may deem appropriate. In accordance with
this provision, Executive understands and is hereby further notified that this
Agreement does not apply to an invention which the employee developed entirely
on his own time without using the Company’s equipment, supplies, facilities, or
trade secret information.
11. Proprietary Information and Trade Secrets.
11.1 Confidential Company Property. Executive hereby acknowledges that
all trade, engineering, production, and technical data, information or
“know-how” including, but not limited to, customer lists, sales and marketing
techniques, vendor names, purchasing information, processes, methods,
investigations, ideas, equipment, tools, programs, costs, product profitability,
plans, specifications, Patent Application(s), drawings, blueprints, sketches,
layouts, formulas, inventions, processes and data, whether or not reduced to
writing, used in the development and manufacture of the Company’s products
and/or the performance of services, or in research or development, are the
exclusive secret and confidential property of the Company, and shall be at all
times, whether after the Effective Date or after the Termination Date, be kept
strictly confidential and secret by Executive.
11.2 Return of Property. Executive agrees not to remove from the
Company’s office or copy any of the Company’s confidential information, trade
secrets, books, records, documents or customer or supplier lists, or any copies
of such documents, without the express written permission of the Board of the
Company. Executive agrees, at the Termination Date, to return any property
belonging to the Company, including, but not limited to, any and all records,
notes, drawings, specifications, programs, data and other materials (or copies
thereof) pertaining to the Company’s businesses or its product(s) and
service(s), generated or received by Executive during the course of his
11.3 Non-Disclosure. Executive represents and agrees that during the
term of this Agreement, and after the Termination Date, he will not report,
publish, disclose, use, or transfer to any person(s) or entity(ies) any property
or information belonging to the Company without first having obtained the prior
express written consent of the Company to do so; it being understood, however,
that information which was publicly known, or which is in the public domain, or
which is generally known, shall not be subject to this restriction.
12. Information of Others.
Executive agrees that the Company does not desire to acquire from Executive any
secret or confidential information or “know-how” of others. Executive,
therefore, specifically represents to the Company that he will not bring to the
Company any materials, documents, or writings containing any such
information. Executive represents and warrants that from the Effective Date of
this Agreement he is free to divulge to the Company, without any obligation to,
or violation of, the rights of others, information, practices and/or techniques
which Executive will describe, demonstrate or divulge or in any other manner
make known to the Company during Executive’s performance of services. Executive
also agrees to indemnify and hold the Company harmless from and against any and
all liabilities, losses, costs, expenses, damages, claims or demands for any
violation of the rights of others as it relates to Executive’s misappropriation
of secrets, confidential information, or “know-how” of others.
13. Notice.
All notices and other communications under this Agreement shall be in writing
and shall be delivered personally or mailed by registered or certified mail,
return receipt requested, and shall be deemed given when so delivered or mailed,
to a party at his or its address as follows (or at such other address as a party
may designate by notice given hereunder):
If to Executive: Kenneth R.
Bennett
2150 Ewin Dr.
Prescott, AZ 86305
If to the
Company: Better
Biodiesel, Inc.
601 Union Street, Suite 4500,
Seattle, WA 98101
With a copy to: David M.
Otto
The Otto Law Group, PLLC
601 Union Street, Suite 4500
Seattle, WA 98101
14. Resolution of Disputes.
Any controversy between the Company and Executive arising out of or relating to
any of the terms, provisions or conditions of this Agreement shall first be
attempted to be resolved informally between the parties. In the even the parties
are not able to resolve the controversy informally within 10 days; the matter
shall be mediated, with each party appointing a mediator for said purpose. If,
within 20 days of the appointment of mediators the parties continue to be unable
resolve their controversy, the matter shall be submitted to arbitration in
accordance with the American Arbitration Association’s National Arbitration
Rules for the Resolution of Employment Disputes. Only a person who is a
practicing lawyer admitted to a state bar may serve as the arbitrator. On the
written request of either party for arbitration of such a claim pursuant to this
paragraph, the Company and Executive shall both be deemed to have waived the
right to litigate the claim in any federal or state court. The expenses of
arbitration and reimbursement of a prevailing party’s reasonable legal fees and
expenses shall be as determined by the arbitrator in the arbitrator’s sole
discretion. Any result reached by the arbitrator shall be binding on all
parties to the arbitration, and no appeal may be taken. It is agreed that any
party to any award rendered in such arbitration proceeding may seek a judgment
upon the award and that judgment may be entered thereon by any court having
jurisdiction. The arbitration shall be conducted at either the Executive’s
principal place of residence or the Company’s principal place of business, or at
such other location as the parties may mutually agree. The parties agree that
the required attempts at informal resolution and mediation shall constitute
mandatory conditions precedent to application of the arbitration provisions set
forth herein.
15. Miscellaneous.
15.1. Post Termination Obligations. Notwithstanding the termination of
Executive’s employment hereunder, the provision(s) of Section(s) 4.3, 5, 9, 10,
11, and 14 shall survive the Termination Date.
15.2. No Assignment. This Agreement shall not be assignable. Further,
Executive understands and agrees that this Agreement is exclusive and personal
to him only, and, as such, he will neither assign nor subcontract all or part of
his undertaking(s) or obligation(s) under the terms of this Agreement.
15.3. Entire Agreement. Each party acknowledges that this Agreement constitutes
the entire understanding between them, and that there are no other written or
verbal agreement(s) or understanding(s) between them other than those set forth
herein; it being understood that no amendment(s) to this Agreement shall be
effective unless reduced to writing and signed by each party hereto.
15.4. Severability. In the event that any provision of this Agreement shall be
determined to be unenforceable or otherwise invalid, the balance of the
provision(s) shall be deemed to be enforceable and valid; it being understood
that all provision(s) of this Agreement are deemed to be severable, so that
unenforceability or invalidity of any single provision will not affect the
remaining provision(s).
15.5. Headings. The Section(s) and paragraph heading(s) in this Agreement are
deemed to be for convenience only, and shall not be deemed to alter or affect
any provision herein.
15.6. Interpretation of Agreement. This Agreement shall be interpreted in
accordance plain meaning of its terms and under the laws of the State of
Washington.
15.7. Variation. Any changes in the Sections relating to salary, bonus, or
other material condition(s) after the Effective Date of this Agreement shall not
be deemed to constitute a new Agreement. All unchanged terms are to remain in
force and effect.
15.8. Unenforceability. The unenforceability or invalidity of any provision(s)
of this Agreement shall not affect the enforceability and/or the validity of the
15.9. Collateral Documents. Each party hereto shall make, execute and deliver
such other instrument(s) or document(s) as may be reasonably required in order
to effectuate the purposes of this Agreement.
15.10. Non-Impairment. This Agreement may not be amended or supplemented at any
time unless reduced to a writing executed by each party hereto. No amendment,
supplement or termination of this Agreement shall affect or impair any of the
rights or obligations which may have matured thereunder.
15.11. Execution. This Agreement may be executed in one or more counterpart(s),
and each executed counterpart(s) shall be considered by the parties as an
original. This Agreement may be executed via facsimile.
15.12. Legal Counsel. Executive represents to the Company that he has retained
legal counsel of his own choosing, or was given sufficient opportunity to obtain
legal counsel prior to executing this Agreement. Executive also represents that
he has read each provision of this Agreement and understands its meaning.
15.13. Transition. In the event that Executive’s employment with the Company
terminates, Executive shall, through the last day of employment, and at the
Company’s request, use Executive’s reasonable best efforts (at the Company’s
expense) to assist the Company in transitioning Executive’s duties and
responsibility responsibilities to Executive’s successor and maintaining the
Company’s professional relationship with all customers, suppliers, etc. Without
limiting the generality of the foregoing, Executive shall cooperate and assist
the Company, at the Company’s direction and instruction, during the transition
period between any receipt of or giving of notice of the termination of
employment and the final day of employment.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals this
__________ day of January 2008.
BETTER BIODIESEL, INC.
By: David M. Otto
Its: Director
EXECUTIVE
_____________________________________
By: Kenneth R. Bennett, Individually
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Pending Legal Proceedings The Russell Strategic Bond Fund is one of several defendants in a bankruptcy adversary avoidance claim [in a Consolidated Multidistrict Action styled In Re: Motors Liquidation Company, et al., Debtors, Motors Liquidation Company Avoidance Action Trust, etc., v. JPMorgan Chase Bank, et al., United States District Bankruptcy Court for the Southern District of New York. The claim relates to alleged improper payments to the Fund as a participating lender in a term loan provided to General Motors Company due to the Funds security interests not being properly perfected. The Fund has filed answers denying liability and a crossclaim against the administrative agent for the term loan lenders seeking damages arising from the agents failure to properly perfect the security interests of the lenders.
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AAM/Bahl & Gaynor Income Growth Fund AAM/Cutwater Select Income Fund (each a “Fund”) A series of Investment Managers Series Trust Supplement dated October 7, 2014 to the Prospectus dated November 1, 2013 The following information supplements and, to the extent inconsistent, supersedes any inconsistent information contained in the “Purchase of Shares - Class A Shares Purchase Programs” section of the Prospectus: Net Asset Value Purchases. You may be able to buy Class A shares of a Fund without a sales charge if you are: · reinvesting dividends or distributions; · participating in a fee-based program (such as a wrap account) under which you pay advisory fees to a broker-dealer or other financial institution; · a broker-dealer or other financial institution that has entered into an agreement with the Fund’s distributor to offer Fund shares in self-directed investment brokerage accounts; · a financial intermediary that: (i) is compensated by clients on a fee-only basis, including but not limited to investment advisors and financial planners, and (ii) has entered into an agreement with the Fund to offer Class A shares through a no-load network or platform; · a trust company or bank trust department exercising discretionary investment authority with respect to amounts to be invested in the Fund; · a current Trustee of the Trust; or · an employee (including the employee's spouse, domestic partner, children, grandchildren, parents, grandparents, siblings and any dependent of the employee, as defined in Section 152 of the Internal Revenue Code) of the Advisor, the Sub-advisor and their affiliates or of a broker-dealer authorized to sell shares of the Fund. Your financial advisor or the Fund's transfer agent (the "Transfer Agent") can answer your questions and help you determine if you are eligible. The following information supplements and, to the extent inconsistent, supersedes, any inconsistent information in the “Purchase of Shares - Class C Shares Purchase Programs” section of the Prospectus: In addition, in certain cases a CDSC may not apply or may be reduced. These include: · distributions from an account of a redemption resulting from the death or disability (as defined in Section 72(t)(2)(A) of the Internal Revenue Code) of a registered owner or a registered joint owner occurring after the purchase of the shares being redeemed. In the case of accounts established under the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act or trust accounts, the waiver applies upon the death of all beneficial owners; · returns of excess contributions; or · the following types of transactions, provided such withdrawals do not exceed 12% of the of the account annually: - redemptions due to receiving required minimum distributions upon reaching age 70 ½ (required minimum distributions that continue to be taken by the beneficiary(ies) after the account owner is deceased also qualify for the waiver); and - if you have an automatic withdrawal plan, redemptions through such a plan (including any dividends and/or capital gain distributions taken in cash). The following information supplements and, to the extent inconsistent, supersedes, any inconsistent information contained in the “Purchase of Shares - Exchange Privilege” section of the Prospectus: Exchange Privilege Shareholders may exchange shares of a Fund for shares of the other Fund. The amount of the exchange must be equal to or greater than the required minimum initial investment (see “Minimum Investment” table above). For U.S. federal income tax purposes, any such exchange will be treated as a taxable disposition of the exchanged shares. Please consult with your tax advisor for information about certain exchanges which may be non-taxable. You may realize either a gain or loss on those shares and will be responsible for paying the appropriate taxes. If you exchange shares through a broker, the broker may charge you a transaction fee. You may exchange shares by sending a written request to the Fund or by telephone. Be sure that your written request includes the dollar amount or number of shares to be exchanged, the name(s) on the account, the account number(s), and signed by all shareholders on the account. In order to limit expenses, the Fund reserves the right to limit the total number of exchanges you can make in any year. At the authorized dealers request,in a fee based environment Class A shareholders who are eligible to invest in Class I shares and who are no longer subject to a CDSC, are eligible to exchange their Class A shares for Class I shares of the same fund, if offered in their state. No sales charges or other charges will apply to any such exchange. The following information supplements and/or amends any inconsistent information contained in the “Your Account with the Funds” section of the Prospectus: Conversion of Shares A share conversion is a transaction in which shares of one class of a Fund are exchanged for shares of another class of the Fund. Share conversions can occur between each share class of a Fund. Generally, share conversions occur when a shareholder becomes eligible for another share class of a Fund or no longer meets the eligibility criteria of the share class owned by the shareholder (and another class exists for which the shareholder would be eligible). Please note that a share conversion is generally a non-taxable event, but you should consult with your personal tax advisor on your particular circumstances. Please note, all share conversion requests must be approved by the Fund. A request for a share conversion will not be processed until it is received in “good order” (as defined above) by the relevant Fund or your financial intermediary. To receive the NAV of the new class calculated that day, conversion requests must be received in good order by the Fund or your financial intermediary before 4:00 p.m., Eastern Time or the financial intermediary’s earlier applicable deadline. Please note that, because the NAV of each class of a Fund will generally vary from the NAVs of the other classes due to differences in expenses, you will receive a number of shares of the new class that is different from the number of shares that you held of the old class, but the total value of your holdings will remain the same. A Fund’s frequent trading policies will not be applicable to share conversions. If you hold your shares through a financial intermediary, please contact the financial intermediary for more information on share conversions. Please note that certain financial intermediaries may not permit all types of share conversions. Each Fund reserves the right to terminate, suspend or modify the share conversion privilege for any shareholder or group of shareholders. Each Fund reserves the right to automatically convert shareholders from one class to another if they either no longer qualify as eligible for their existing class or if they become eligible for another class. Such mandatory conversions may be as a result of a change in value of an account due to market movements, exchanges or redemptions. A Fund will notify affected shareholders in writing prior to any mandatory conversion. Please file this Supplement with your records.
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Exhibit 10.6
REGISTRATION RIGHTS AGREEMENT
as of October [___], 2014 by and among CDx, Inc., a Delaware corporation (the
“Company”), and the parties listed on Schedule I hereto (collectively, the
“Investors”). Capitalized terms used but not otherwise defined herein shall have
the respective meanings ascribed to such terms in the Purchase Agreement (as
defined below).
WHEREAS, the Investors are purchasing securities in the Company and have
requested registration rights for such securities as a condition to purchasing
such securities;
WHEREAS, the Company has agreed to provide the registration and other rights set
forth in this Agreement for the benefit of the Investors to facilitate their
investment in the Company; and
NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged by each party hereto, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions.
The terms set forth below are used herein as so defined:
“Business Day” means a day other than a Saturday, Sunday or other day on which
banks located in New York, New York are authorized or required by law to close.
“Change of Control” shall mean either (i) the acquisition of the Company by
another person or entity by means of any transaction or series of related
transactions to which the Company is a party (including, without limitation, any
stock acquisition, reorganization, merger or consolidation, but excluding any
such transaction if the primary purpose of such transaction is to change the
Company’s domicile, and excluding any equity financing the primary purpose of
which is to raise operating capital for the Company) that results in a transfer
of at least fifty percent (50%) of the total voting power represented by the
Company’s voting securities before such acquisition; or (ii) a sale, lease, or
other conveyance of all or substantially all of the Company’s assets.
“Commission” shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
“Common Stock” means the Common Stock of the Company, par value $0.005 per share
or, if a Merger has occurred, any securities issued upon the exchange thereof in
connection with such Merger.
“Financing” means the private placement of Series B Preferred Stock and Warrants
sold to investors pursuant to the Purchase Agreement.
“Holder” means the record holder of any Registrable Securities.
“Included Registrable Securities” has the meaning specified therefore in Section
2.02(a) of this Agreement.
“Losses” has the meaning specified therefore in Section 2.06(a) of this
Agreement.
“Majority-in-Interest” means Investors holding a majority of the Registrable
Securities.
“Managing Underwriter” means, with respect to any Underwritten Offering, the
book-running lead manager of such Underwritten Offering.
“Merger” means a merger of the Company, either into a public company or a
wholly-owned subsidiary of a public company, wherein the Company survives as a
public company or as a wholly-owned subsidiary thereof, and the Company’s
existing security holders, including purchasers of securities pursuant to the
Purchase Agreement, become security holders of the public company.
“Piggyback Registration” means a registration involving the sale of Common Stock
by the Company as described further in Section 2.02(a) of this Agreement.
“Placement Agent” means Paulson Investment Company, LLC.
“Placement Agent Warrants” mean the warrants issuable to the Placement Agent
and/or its assigns in connection with the purchase of the securities sold
pursuant to the Purchase Agreement or, if a Merger has occurred, any securities
issued upon the exchange thereof in connection with such Merger.
“Purchase Agreement” means the Series B Preferred Stock and Warrant Purchase
Agreement dated as of October [___], 2014 between the Company and the investors
named therein.
“Registrable Securities” means, with respect to any Holder (i) any and all
shares of Series B Preferred Stock which are purchased under the Purchase
Agreement, (ii) any shares of Company Common Stock issuable upon conversion of
the Series B Preferred Stock purchased under the Purchase Agreement and those
shares of Series B Preferred Stock issuable upon exercise of the Warrants, (iii)
any shares of Company Common Stock issuable to the Placement Agent or its
assigns upon exercise, conversion or exchange of warrants issued to the
Placement Agent in connection with the issuance of the Series B Preferred Stock
and Warrants; and (iv) any securities of the Company issued in respect of the
shares of Series B Preferred Stock, Common Stock issued upon conversion of the
Series B Preferred Stock or Common Stock issued upon exercise of the Warrants by
way of stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise, each of which Registrable Securities described under (i) through (iv)
above are subject to the rights provided herein until such rights terminate
pursuant to the provisions hereof.
“Registration Expenses” has the meaning specified therefore in Section 2.05(a)
of this Agreement.
“Registration Statement” means a registration statement under the Securities Act
to permit the resale of the Registrable Securities.
Securities Act, as may be amended from time to time.
“Rule 145” means Rule 145 promulgated by the Commission pursuant to the
2
“Selling Expenses” has the meaning specified therefore in Section 2.05(a) of
this Agreement.
“Selling Holder” means a Holder who is selling Registrable Securities pursuant
to a registration statement.
“Series B Preferred Stock” means the Series B Preferred Stock of the Company,
par value $0.001 per share sold pursuant to the Purchase Agreement or, if a
Merger has occurred, any securities issued upon the exchange thereof in
“Underwritten Offering” means an offering (including an offering pursuant to a
Registration Statement) in which Common Stock is sold to an underwriter on a
firm commitment basis for reoffering to the public or an offering that is a
“bought deal” with one or more investment banks.
“Warrant” means a warrant to purchase Series B Preferred Stock issued in
connection with the sale of the Series B Preferred Stock pursuant to the
Purchase Agreement or, if a Merger has occurred, any securities issued upon the
exchange thereof in connection with such Merger.
Section 1.02 Registrable Securities. Any Registrable Security will cease to
be a Registrable Security (a) when a Registration Statement covering such
Registrable Security has been declared effective by the Commission and such
Registrable Security has been sold or disposed of pursuant to such effective
Registration Statement, (b) when such Registrable Security is held by the
Company or one of its subsidiaries, (c) when such Registrable Security has been
sold in a private transaction in which the transferor’s rights under this
Agreement are not assigned to the transferee of such securities.
ARTICLE II
REGISTRATION RIGHTS
Section 2.01 (a) Timing of Registration. As soon as practicable
following the Merger, but in any event within sixty (60) days thereof, the
Company shall use its commercially reasonable efforts to cause a Registration
Statement under the Securities Act to be prepared and filed by the post-Merger
public company with respect to all of the Registrable Securities. The Company
shall use its commercially reasonable efforts to cause such Registration
Statement to become effective no later than sixty (60) days after the date of
the initial filing of the Registration Statement. If a prospectus supplement
will be used in connection with the marketing of an Underwritten Offering from
the Registration Statement and the Managing Underwriter at any time shall notify
the Company in writing that, in the sole judgment of such Managing Underwriter,
inclusion of detailed information to be used in such prospectus supplement is of
material importance to the success of the Underwritten Offering of such
Registrable Securities, the Company shall use its commercially reasonable
efforts to include such information in the prospectus. The Company will cause
the Registration Statement filed pursuant to this Section 2.01 to be
continuously effective under the Securities Act, until there are no longer any
Registrable Securities outstanding, but in any event no longer than thirty-six
(36) months after effectiveness thereof or such shorter period as is agreed to
by a Majority-in-Interest of the Holders; provided, however, that if the
provisions of Rule 144(i)(1) apply to the Company, the requirement to maintain
an effective Registration Statement shall be extended to sixty (60) months after
effectiveness. The Registration Statement when declared effective (including the
documents incorporated therein by reference) will comply as to form with all
applicable requirements of the Securities Act and the Securities Exchange Act,
and will not contain an untrue statement of a material fact or omit to state a
therein not misleading.
3
(b) Delay Rights. Notwithstanding anything to the contrary contained
herein, the Company may, upon written notice to any Selling Holder whose
Registrable Securities are included in the Registration Statement, suspend such
Selling Holder’s use of any prospectus which is a part of the Registration
Statement (in which event the Selling Holder shall discontinue sales of the
Registrable Securities pursuant to the Registration Statement) if (i) the
Company is pursuing an acquisition, merger, reorganization, disposition or other
similar transaction and the Company’s independent directors determine in good
faith that the Company’s ability to pursue or consummate such a transaction
would be materially and adversely affected by any required disclosure of such
transaction in the Registration Statement or (ii) the Company has experienced
some other material non-public event the disclosure of which at such time, in
the good faith judgment of the Company’s independent directors, would materially
adversely affect the Company; provided, however, in no event shall the
Registration Statement be suspended for a period exceeding an aggregate of
ninety (90) days in any three hundred sixty five (365)-day period. Upon
disclosure of such information or the termination of the condition described
above, the Company shall provide prompt notice to the Selling Holders whose
Registrable Securities are included in the Registration Statement, and shall
promptly terminate any suspension of sales it has put into effect and shall take
such other actions to permit registered sales of Registrable Securities as
contemplated in this Agreement.
Section 2.02 Piggyback Rights.
(a) Participation. If at any time after the final closing date of the
Merger, the Company proposes to file a registration statement for the sale of
Common Stock in an Underwritten Offering for its own account and/or another
Person, then as soon as practicable but not less than ten Business Days prior to
the filing of such registration statement, the Company shall give notice of such
proposed Underwritten Offering to the Holders and such notice shall offer the
Holders the opportunity to include in such Underwritten Offering such number of
Registrable Securities (the “Included Registrable Securities”) as each such
Holder may request in writing (but only to the extent that such Registrable
Securities are not then subject to lock-up provisions under any lock-up or
similar agreement); provided, however, that if the Company has been advised by
the Managing Underwriter that the inclusion of Registrable Securities for sale
for the benefit of the Holders will have an adverse effect on the price, timing
or distribution of the Common Stock offered by the Company under such
registration statement, then the amount of Registrable Securities to be offered
for the accounts of Holders shall be determined based on the provisions of
Section 2.02(b). The notice required to be provided in this Section 2.02(a) to
Holders shall be provided on a Business Day pursuant to Section 3.02 hereof and
receipt of such notice shall be deemed to be received by Holders on the next
Business Day. Holder shall then have three (3) Business Days after such deemed
receipt of the notice to request inclusion of Registrable Securities in the
Underwritten Offering. If no request for inclusion from a Holder is received
within the specified time, then such Holder shall have no further right to
participate in such Underwritten Offering. If a Holder decides not include some
or all of its Registrable Securities in any registration statement filed by the
Company as described in this Section 2.02(a), such Holder shall nevertheless
continue to have the right to include any Registrable Securities in any
subsequent registration statement or registration statements as may be filed by
the Company with respect to the offering by the Company of its securities, all
upon the terms and conditions set forth herein. If, at any time after giving
written notice of its intention to undertake an Underwritten Offering and prior
to the closing of such Underwritten Offering, the Company shall determine for
any reason not to undertake or to delay such Underwritten Offering, the Company
may, at its election, give written notice of such determination to the Selling
Holders and, (x) in the case of a determination not to undertake such
Underwritten Offering, shall be relieved of its obligation to sell any Included
Registrable Securities in connection with such terminated Underwritten Offering,
and (y) in the case of a determination to delay such Underwritten Offering,
shall be permitted to delay offering any Included Registrable Securities for the
same period as the delay in the Underwritten Offering. Any Selling Holder shall
have the right to withdraw such Selling Holder’s request for inclusion of such
Selling Holder’s Registrable Securities in such offering by giving written
notice to the Company of such withdrawal up to and including the date
immediately preceding the date on which the underwriters price such offering.
4
(b) Priority of Piggyback Rights. If the Managing Underwriter or
Underwriters of any proposed Underwritten Offering of Company Common Stock
included in an Underwritten Offering involving Included Registrable Securities
advises the Company that the total amount of Company Common Stock that the
Selling Holders and any other Persons intend to include in such offering exceeds
the number that can be sold in such offering without being likely to have an
adverse effect on the price, timing or distribution of the Company Common Stock
offered or the market for the Company Common Stock, then the Company Common
Stock to be included in such Underwritten Offering shall include the number of
Registrable Securities that such Managing Underwriter or Underwriters advises
the Company can be sold without having such adverse effect, with such number to
be allocated (i) first, to the Company and (ii) second, pro rata among the
Selling Holders who have requested participation in such Underwritten Offering
and any other Person holding Company securities who may also be including any
such securities for sale in such Underwritten Offering based, for each Selling
Holder or other Person, on the fraction derived by dividing (x) the number of
shares of Company Common Stock proposed to be sold by such Selling Holder or
other Person in such Underwritten Offering by (y) the aggregate number of shares
of Company Common Stock proposed to be sold by all Selling Holders and other
Persons in such Underwritten Offering. For clarity, the Managing Underwriter or
Underwriters shall have the ability to fully cut back any Registrable Securities
in connection with the Underwritten Offering. If any Selling Holder or other
Person does not agree to the terms of any such underwriting, such Selling Holder
or other Person, as the case may be, may be excluded from the Underwritten
Offering by written notice from the Company or the Managing Underwriter. Any
Registrable Securities or other Company securities excluded or withdrawn from
such underwriting shall be withdrawn from such registration. To facilitate the
allocation of shares in accordance with the above provisions, the Company or the
Managing Underwriter or Underwriters may round the number of shares allocated to
any Holder to the nearest one hundred (100) shares. If shares are so withdrawn
from the registration and if the number of shares of Registrable Securities to
be included in such registration was previously reduced as a result of marketing
factors, the Company shall then offer to all persons who have retained the right
to include securities in the registration the right to include additional
securities in the registration in an aggregate amount equal to the number of
shares so withdrawn, with such shares to be allocated among the Selling Holders
or other Person or Persons requesting additional inclusion in accordance with
the formula contained in this Section 2.02(b). The Company shall have the right
to terminate or withdraw any registration initiated by it under this Section
2.02 at any time whether or not any Holder has elected to include securities in
such registration.
Section 2.03 Underwritten Offering.
(a) S-1 Registration. If a Selling Holder elects to dispose of
Registrable Securities under the Registration Statement pursuant to an
Underwritten Offering and the Company’s board of directors determines in good
faith that such Underwritten Offering will result in gross proceeds of greater
than five million dollars ($5,000,000), the Company shall, at the request of
such Selling Holder, enter into an underwriting agreement in customary form with
the Managing Underwriter or Underwriters, which shall include, among other
provisions, indemnities to the effect and to the extent provided in Section
2.06, and shall take all such other reasonable actions as are requested by the
Managing Underwriter to expedite or facilitate the disposition of the
Registrable Securities.
5
(b) General Procedures. In connection with any Underwritten Offering
pursuant to this Agreement, the Company shall, at its sole discretion, be
entitled to select the Managing Underwriter or Underwriters. In connection with
an Underwritten Offering under Section 2.01 or Section 2.03 hereof, each Selling
Holder and the Company shall be obligated to enter into an underwriting
agreement that contains such representations, covenants, indemnities and other
rights and obligations as are customary in underwriting agreements for firm
commitment offerings of securities. No Selling Holder may participate in such
Underwritten Offering unless such Selling Holder agrees to sell its Registrable
Securities on the basis provided in such underwriting agreement and completes
and executes all questionnaires, powers of attorney, indemnities and other
documents required under the terms of such underwriting agreement. No Selling
Holder shall be required to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such Selling Holder and its ownership of the
securities being registered on its behalf and its intended method of
distribution and any other representation required by law. If any Selling Holder
disapproves of the terms of an underwriting, such Selling Holder may elect to
withdraw therefrom by notice to the Company and the Managing Underwriter;
provided, that such withdrawal must be made prior to the time in the last
sentence of Section 2.02(a) hereof to be effective.
Section 2.04 Sale Procedures. In connection with its obligations
contained in Section 2.01 and Section 2.03, the Company will:
(a) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in connection
therewith as may be necessary to keep the Registration Statement effective and
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the Registration
Statement;
(b) furnish to each Selling Holder (i) as far in advance as reasonably
practicable before filing the Registration Statement or any other registration
statement contemplated by this Agreement or any supplement or amendment thereto,
upon request, copies of reasonably complete drafts of all such documents
proposed to be filed, and provide each such Selling Holder five (5) Business
Days to object in writing to any information pertaining to such Selling Holder
and its plan of distribution that is contained therein and make the corrections
reasonably requested by such Selling Holder with respect to such information
prior to filing the Registration Statement or such other registration statement
or supplement or amendment thereto, and (ii) such number of copies of the
Registration Statement or such other registration statement and the prospectus
included therein and any supplements and amendments thereto as such Persons may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Securities covered by such Registration Statement or other
registration statement;
(c) if applicable, use its commercially reasonable efforts to register
or qualify the Registrable Securities covered by the Registration Statement or
any other registration statement contemplated by this Agreement under the
securities or blue sky laws of such jurisdictions as the Selling Holders or, in
the case of an Underwritten Offering, the Managing Underwriter, shall reasonably
request, provided, however, that the Company will not be required to qualify
generally to transact business in any jurisdiction where it is not then required
to so qualify or to take any action which would subject it to general service of
process in any such jurisdiction where it is not then so subject;
(d) promptly notify each Selling Holder, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of (i)
the filing of the Registration Statement or any other registration statement
contemplated by this Agreement or any prospectus or prospectus supplement to be
used in connection therewith, or any amendment or supplement thereto, and, with
respect to such Registration Statement or any other registration statement or
any post-effective amendment thereto, when the same has become effective, and
(ii) any written comments from the Commission with respect to any filing
referred to in clause (i) and any written request by the Commission for
amendments or supplements to the Registration Statement or any other
registration statement or any prospectus or prospectus supplement thereto;
6
(e) immediately notify each Selling Holder, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of (i) the happening of any event as a result of which the prospectus or
prospectus supplement contained in the Registration Statement or any other
registration statement contemplated by this Agreement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
not misleading in the light of the circumstances then existing, (ii) the
issuance or threat of issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or any other registration
statement contemplated by this Agreement, or the initiation of any proceedings
for that purpose, or (iii) the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable Securities for
sale under the applicable securities or blue sky laws of any jurisdiction.
Following the provision of such notice, the Company agrees to as promptly as
practicable amend or supplement the prospectus or prospectus supplement or take
other appropriate action so that the prospectus or prospectus supplement does
not misleading in the light of the circumstances then existing and to take such
other action as is necessary to remove a stop order, suspension, threat thereof
or proceedings related thereto;
(f) otherwise use its commercially reasonable efforts to comply with
all applicable rules and regulations of the Commission;
(g) make available to the appropriate representatives of the Managing
Underwriter and Selling Holders access to such information and the Company
personnel as is reasonable and customary to enable such parties to establish a
due diligence defense under the Securities Act; provided, however, that the
Company need not disclose any information to any such representative unless and
until such representative has entered into a confidentiality agreement with the
Company;
(h) cause all such Registrable Securities registered pursuant to this
Agreement to be listed on each securities exchange or nationally recognized
quotation system on which similar securities issued by the Company are then
listed;
(i) use its commercially reasonable efforts to cause the Registrable
Securities to be registered with or approved by such other governmental agencies
or authorities as may be necessary by virtue of the business and operations of
the Company to enable the Selling Holders to consummate the disposition of such
Registrable Securities;
(j) provide a transfer agent and registrar for all Registrable
Securities covered by such registration statement not later than the effective
date of such registration statement; and
(k) enter into customary agreements and take such other actions as are
reasonably requested by the Selling Holders or the underwriters, if any, in
order to expedite or facilitate the disposition of such Registrable Securities.
Each Selling Holder, upon receipt of notice from the Company of the happening of
any event of the kind described in subsection (e) of this Section 2.04, shall
forthwith discontinue disposition of the Registrable Securities until such
Selling Holder’s receipt of the copies of the supplemented or amended prospectus
contemplated by subsection (e) of this Section 2.04 or until it is advised in
writing by the Company that the use of the prospectus may be resumed, and has
received copies of any additional or supplemental filings incorporated by
reference in the prospectus, and, if so directed by the Company, such Selling
Holder will, or will request the managing underwriter or underwriters, if any,
to deliver to the Company (at the Company’s expense) all copies in their
possession or control, other than permanent file copies then in such Selling
Holder’s possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice.
7
Section 2.05 Expenses.
(a) Certain Definitions. “Registration Expenses” means all expenses
incident to the Company’s performance under or compliance with this Agreement to
effect the registration of Registrable Securities under the Registration
Statement pursuant to Section 2.01, an Underwritten Offering pursuant to Section
2.02 or Section 2.03, and the disposition of such securities, including, without
limitation, all registration, filing, securities exchange listing and annual
maintenance fees, all registration, filing, qualification and other fees and
expenses of complying with securities or blue sky laws, fees of the Financial
Industry Regulatory Authority, transfer taxes and fees of transfer agents and
registrars, all word processing, duplicating and printing expenses, the fees and
disbursements of counsel and independent public accountants for the Company,
including the expenses of any special audits or “cold comfort” letters required
by or incident to such performance and compliance. Except as otherwise provided
in Section 2.05 hereof, the Company shall not be responsible for legal fees
incurred by Holders in connection with the exercise of such Holders’ rights
hereunder; provided, however that the Company shall pay the legal fees of one
counsel to the Investors in an amount not to exceed ten thousand dollars
($10,000). In addition, the Company shall not be responsible for any “Selling
Expenses,” which means all underwriting fees, discounts and selling commissions
allocable to the sale of the Registrable Securities under the Registration
Statement.
(b) Expenses. The Company will pay all reasonable Registration Expenses
as determined in good faith, including, in the case of an Underwritten Offering,
whether or not any sale is made pursuant to such Underwritten Offering. Each
Selling Holder shall pay all Selling Expenses in connection with any sale of its
Registrable Securities hereunder.
Section 2.06 Indemnification.
Securities under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless each Selling Holder thereunder, its directors and
officers, and each underwriter, pursuant to the applicable underwriting
agreement with such underwriter, of Registrable Securities thereunder and each
Person, if any, who controls such Selling Holder or underwriter within the
meaning of the Securities Act and the Exchange Act, against any losses, claims,
damages, expenses or liabilities (including reasonable attorneys’ fees and
Holder or underwriter or controlling Person may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such Losses (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement or any other
registration statement contemplated by this Agreement, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to
the statements therein (in the case of a prospectus, in light of the
circumstances under which they were made) not misleading, and will reimburse
each such Selling Holder, its directors and officers, each such underwriter and
each such controlling Person for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such Loss or actions
or proceedings; provided, however, that the Company will not be liable in any
such case if and to the extent that any such Loss arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
so made in conformity with information furnished by such Selling Holder, such
underwriter or such controlling Person in writing specifically for use in the
Registration Statement or such other registration statement, or prospectus
supplement, as applicable. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Selling Holder or
any such director, officer or controlling Person, and shall survive the transfer
of such securities by such Selling Holder.
8
(b) By Each Selling Holder. Each Selling Holder agrees severally and
not jointly to indemnify and hold harmless the Company, its directors and
officers, and each Person, if any, who controls the Company within the meaning
of the Securities Act or of the Exchange Act to the same extent as the foregoing
indemnity from the Company to the Selling Holders, but only with respect to
information regarding such Selling Holder furnished in writing by or on behalf
of such Selling Holder expressly for inclusion in the Registration Statement or
prospectus supplement relating to the Registrable Securities, or any amendment
or supplement thereto; provided, however, that the liability of each Selling
Holder shall not be greater in amount than the dollar amount of the proceeds
(net of any Selling Expenses) received by such Selling Holder from the sale of
the Registrable Securities giving rise to such indemnification.
(c) Notice. Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to any indemnified party other than under this Section 2.06. In any action
brought against any indemnified party, it shall notify the indemnifying party of
the commencement thereof. The indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake the
defense thereof with counsel reasonably satisfactory to such indemnified party
and, after notice from the indemnifying party to such indemnified party of its
election so to assume and undertake the defense thereof, the indemnifying party
shall not be liable to such indemnified party under this Section 2.06 for any
legal expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation and of
liaison with counsel so selected; provided, however, that, (i) if the
indemnifying party has failed to assume the defense and employ counsel or (ii)
indemnifying party and counsel to the indemnified party shall have concluded
that there may be reasonable defenses available to the indemnified party that
or if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, then the indemnified
party shall have the right to select a separate counsel and to assume such legal
defense and otherwise to participate in the defense of such action, with the
reasonable expenses and fees of such separate counsel and other reasonable
expenses related to such participation to be reimbursed by the indemnifying
party as incurred. Notwithstanding any other provision of this Agreement, no
indemnified party shall settle any action brought against it with respect to
which it is entitled to indemnification hereunder without the consent of the
indemnifying party, unless the settlement thereof imposes no liability or
obligation on, and includes a complete and unconditional release from all
liability of, the indemnifying party.
(d) Contribution. If the indemnification provided for in this
Section 2.06 is held by a court or government agency of competent jurisdiction
to be unavailable to any indemnified patty or is insufficient to hold them
harmless in respect of any Losses, then each such indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such Loss in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of such indemnified party on the other in connection with the
statements or omissions which resulted in such Losses, as well as any other
relevant equitable considerations; provided, however, that in no event shall
such Selling Holder be required to contribute an aggregate amount in excess of
the dollar amount of proceeds (net of Selling Expenses) received by such Selling
Holder from the sale of Registrable Securities giving rise to such
indemnification. The relative fault of the indemnifying party on the one hand
and the indemnified party on the other shall be determined by reference to,
fact or the omission or alleged omission to state a material fact has been made
by, or relates to, information supplied by such party, and the parties’ relative
and equitable if contributions pursuant to this paragraph were to be determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to herein. The amount paid by
an indemnified party as a result of the Losses referred to in the first sentence
of this paragraph shall be deemed to include any legal and other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any Loss which is the subject of this paragraph. No person guilty
Securities Act) shall be entitled to contribution from any Person who is not
guilty of such fraudulent misrepresentation.
9
(e) Other Indemnification. The provisions of this Section 2.06 shall be
in addition to any other rights to indemnification or contribution which an
Section 2.07 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission that may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its commercially reasonable efforts to:
(a) Make and keep public information regarding the Company available,
as those terms are understood and defined in Rule 144 of the Securities Act, at
all times from and after the date hereof;
(b) File with the Commission in a timely manner all reports and other
at all times from and after the date hereof, and
(c) So long as a Holder owns any Registrable Securities, furnish to
such Holder forthwith upon request a copy of the most recent annual or quarterly
the Commission allowing such Holder to sell any such securities without
registration; provided that the Company’s obligations pursuant to this Section
2.07(c) shall be deemed satisfied with respect to any document that is publicly
available, free of charge, on the Commission’s EDGAR website.
Section 2.08 Transfer or Assignment of Registration Rights. The rights
to cause the Company to register Registrable Securities granted to the Investors
by the Company under this Article II may be transferred or assigned by any
Investor to one or more transferee(s) or assignee(s) of at least one thousand
(1,000) shares of Registrable Securities or to an Affiliate of such Investor.
The Company shall be given written notice prior to any said transfer or
assignment, stating the name and address of each such transferee and identifying
the securities with respect to which such registration rights are being
transferred or assigned. Each such transferee shall assume in writing
responsibility for its portion of the obligations of such Investor under this
Agreement be executing a counterpart signature page hereto pursuant to which
such transferee agrees to be bound by all terms and conditions contained in this
Agreement.
Section 2.09 Limitation on Subsequent Registration Rights. From and
after the date hereof, the Company shall not (except in connection with the
issuance of securities as consideration to the sellers of any Company or
business acquired by the Company), without the prior written consent of the a
Majority-in-Interest of the Investors, enter into any agreement with any current
or future holder of any securities of the Company that alters, restricts, or
otherwise limits the registration rights granted hereunder or that would allow
such current or future holder to require the Company to include securities in
any registration statement filed by the Company on a basis that is superior (as
opposed to pari passu) in any way to the registration rights granted to the
Investors hereunder.
10
ARTICLE III
MISCELLANEOUS
Section 3.01 Termination. This Agreement shall terminate upon the
earlier of: (a) with respect to a particular Holder, when all Registrable
Securities held by such Holder may be sold under Rule 144, (b) a Change of
Control, but only as long as all Registrable Securities (or any securities for
which such Registrable Securities are exchanged in such transaction) may be sold
by the Holder or Holders thereof without restriction pursuant to Rule 144 or
Rule 145 immediately following the closing of such Change of Control, or (c)
five (5) years following the date first set forth above.
Section 3.02 Communications. All notices and other communications
provided for or permitted hereunder shall be made in writing by facsimile,
courier service or personal delivery:
(a) if to an Investors, to the address set forth under such Investor’s
signature block in accordance with the provisions of this Section 3.02,
(b) if to a transferee of the Investor, to such transferee at the
address provided pursuant to Section 2.08 above, and
(c) if to the Company, to the address set forth under the Company’s
signature block in accordance with the provisions of this Section 3.02.
All such notices and communications shall be deemed to have been received at the
time delivered by hand, if personally delivered; when receipt acknowledged, if
sent via facsimile or sent via Internet electronic mail; and when actually
received, if sent by any other means.
Section 3.03 Effectiveness. This Agreement shall be effective
automatically and without further action on the part of any party hereto on the
final closing date of the Financing.
Section 3.04 Amendments and Waivers. This Agreement may be amended, and
any provision of it may be waived, only by a written agreement executed by the
Company and a Majority-in-Interest of the Investors; provided, however, that no
such consent shall be required to amend this Agreement to add as parties
Investors purchasing Company securities in the Financing.
Section 3.05 Successor and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties, including subsequent Holders of Registrable Securities to the
extent permitted herein.
Section 3.06 Assignment of Rights. All or any portion of the rights and
obligations of the Investors under this Agreement may be transferred or assigned
by the Investors in accordance with Section 2.08 hereof.
11
Section 3.07 Independent Nature of Investors’ Obligations and Rights.
The obligations of each Investor under this Agreement are several and not joint
with the obligations of any other Investor, and no Investor shall be responsible
in any way for the performance of the obligations of any other Investor under
this Agreement or the Securities Purchase Agreement. Nothing contained herein,
and no action taken by any Investor pursuant hereto shall be deemed to
constitute the Investors as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Investors are in any
way acting in concert or a group with respect to such obligations or the
transactions contemplated by this Agreement or the Securities Purchase
Agreement. Each Investor acknowledges that no other Investor has acted as agent
for such Investor in connection with enforcing its rights and obligations under
this Agreement. Each Investor will be entitled to independently protect an
enforce its rights, including without limitation the rights arising out of this
Agreement and it shall not be necessary for any other Investor to be joined as
an additional party in any proceeding for such purpose. The Company acknowledges
that each of the Investors has been provided with the same Agreement for the
purpose of closing a transaction with multiple Investors and not because it was
required or requested to do so by any Investor.
Section 3.08 Aggregation of Purchased Common Stock. All Company Common
Stock held or acquired by Persons who are Affiliates of one another shall be
aggregated together for the purpose of determining the availability of any
rights under this Agreement.
Section 3.09 Recapitalization, Exchanges, etc. Affecting the Common
Stock. The provisions of this Agreement shall apply to the full extent set forth
herein with respect to any and all securities of the Company or any successor,
assign or acquirer of the Company (whether by merger, consolidation, sale of
assets or otherwise) which may be issued in respect of, in exchange for or in
substitution of, the Registrable Securities, and shall be appropriately adjusted
for combinations, recapitalizations and the like occurring after the date of
this Agreement.
Section 3.10 Specific Performance. Damages in the event of breach of
this Agreement by a party hereto may be difficult, if not impossible, to
ascertain, and it is therefore agreed that each such Person, in addition to and
without limiting any other remedy or right it may have, will have the right to
an injunction or other equitable relief in any court of competent jurisdiction,
enjoining any such breach, and enforcing specifically the terms and provisions
hereof, and each of the parties hereto hereby waives any and all defenses it may
have on the ground of lack of jurisdiction or competence of the court to grant
such an injunction or other equitable relief. The existence of this right will
not preclude any such Person from pursuing any other rights and remedies at law
or in equity which such Person may have.
Section 3.11 Counterparts; Facsimile Signatures. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement. Facsimile or
other electronically transmitted signatures, including by email attachment,
shall be deemed originals for all purposes of this Agreement.
Section 3.12 Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
Section 3.13 Governing Law. The laws of the State of California shall
govern this Agreement without regard to principles of conflict of laws.
Section 3.14 Severability of Provisions. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting or impairing the validity or enforceability of such provision in any
other jurisdiction.
12
Section 3.15 Entire Agreement. This Agreement is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the rights granted by the Company set forth herein. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
Section 3.16 No Presumption. If any claim is made by a party relating to
any conflict, omission, or ambiguity in this Agreement, no presumption or burden
of proof or persuasion shall be implied by virtue of the fact that this
Agreement was prepared by or at the request of a particular party or its
counsel.
(SIGNATURE PAGES FOLLOW)
13
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be
executed, this Registration Rights Agreement on the date first written above.
CDX, INC. By: Name: Title:
with a copy to: Wilson Sonsini Goodrich & Rosati, P.C. 650 Page Mill
Road Palo Alto, CA 94304 Facsimile: (650) 493-6811 Attention: Philip H.
Oettinger INVESTOR By: Name: Title:
14
Schedule I
Schedule of Investors
CDx Investor Name, Address
and Fax Number
15
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Amended and Restated Appendix A to INVESTMENT ADVISORY AGREEMENT BETWEEN INVESTMENT MANAGERS SERIES TRUST AND 361 CAPITAL, LLC Fund Advisor Fee Effective Date 361 Absolute Alpha Fund 1.25% 10/1/12 361 Long/Short Equity Fund 1.25% 12/19/11 361 Managed Futures Strategy Fund 1.50% 12/19/11 Agreed and accepted this day of , 2012 THE TRUST: INVESTMENT MANAGERS SERIES TRUST on behalf of the 361 Funds By: Name: Title: THE ADVISOR: 361 Capital, LLC By: Name: Title: 1
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EXHIBIT 10.1
UNITED DOMINION REALTY TRUST, INC.
NOTICE OF PERFORMANCE CONTINGENT RESTRICTED STOCK AWARD
Grantee’s Name and Address
Mark M. Culwell, Jr.
7317 Alto Caro Drive
Dallas, TX 75248
Depending upon the performance of United Dominion Realty Trust, Inc., a Maryland
corporation (the “Company”) during the Performance Period, you (the “Grantee”)
have been granted the right (the “Award”) to receive and retain 0% to 116% of
the target number of shares indicated below (the “Target Number of Shares”) of
the Company’s $0.01 par value common stock (“Common Stock”), subject to the
restrictions and the other terms and conditions set forth in this Notice of
Performance Contingent Restricted Stock Award (the “Notice”), and the Restricted
Stock Award Agreement (the “Agreement”) attached hereto, as follows.
Target Number of Shares:
2,350
Grant Date:
June 23, 2006
Aggregate Value of Target Number Of
Shares as of Grant Date
$56,250
Performance Period:
One-year period beginning on January 1, 2006
and ending on December 31, 2006
1. Consideration.
The Award has been issued to the Grantee in consideration for continued
employment with the Company or a Parent or Subsidiary of the Company (a Parent
or Subsidiary hereinafter referred to as a “Related Entity”).
2. Grants of Common Stock.
2.1 Grant of Initial Shares. On the Grant Date, the Company shall issue to
the Grantee the Target Number of Shares of Common Stock (the “Initial Shares”).
2.2 Adjusted Number of Shares. As soon as practicable following the end of
the Performance Period (the “Determination Date”), the Committee shall certify
in writing the Company’s funds from operations (“FFO”) on a fully diluted,
per-share basis, and the Incremental Growth in FFO (as defined below).
1
On December 31, 2006, the actual number of shares earned will be determined
based on the Company’s FFO and Incremental Growth in FFO compared to the Peer
Group for calendar year 2006 as summarized in the following matrix:
Earned Award as a percent of target
1.73 56 % 60 % 66 % 72 % 80 % 89 %
96 % 102 % 109 % 116 %
1.72 55 % 59 % 64 % 70 % 78 % 86 %
93 % 99 % 106 % 113 %
1.71 54 % 58 % 63 % 69 % 76 % 84 %
90 % 96 % 103 % 109 %
1.70 53 % 57 % 62 % 67 % 74 % 82 %
88 % 94 % 100 % 106 %
1.69 53 % 56 % 60 % 66 % 72 % 80 %
85 % 91 % 96 % 102 %
1.68 52 % 55 % 59 % 64 % 70 % 77 %
83 % 88 % 93 % 99 %
1.67 52 % 54 % 58 % 63 % 68 % 75 %
80 % 85 % 90 % 95 %
1.66 51 % 53 % 57 % 61 % 67 % 73 %
78 % 83 % 87 % 92 %
1.65 51 % 53 % 56 % 60 % 65 % 71 %
76 % 80 % 85 % 89 %
1.64 51 % 52 % 55 % 59 % 64 % 69 %
74 % 78 % 82 % 86 %
UDR FFO
1.63 50 % 52 % 54 % 58 % 62 % 68 %
71 % 75 % 79 % 83 %
Per Share
1.62 50 % 51 % 53 % 56 % 60 % 66 %
69 % 73 % 76 % 80 %
1.61 0 % 51 % 53 % 55 % 59 % 64 %
67 % 70 % 74 % 77 %
1.59 0 % 50 % 51 % 53 % 57 % 61 %
64 % 66 % 69 % 71 %
1.58 0 % 0 % 51 % 53 % 55 % 59 %
62 % 64 % 66 % 68 %
1.57 0 % 0 % 50 % 52 % 54 % 58 %
60 % 62 % 64 % 65 % %
1.56 0 % 0 % 0 % 51 % 53 % 56 % 58
% 59 % 61 % 63 %
1.55 0 % 0 % 0 % 50 % 52 % 55 % 56
% 58 % 59 % 60 %
1.54 0 % 0 % 0 % 0 % 51 % 54 % 55
% 56 % 57 % 58 %
1.53 0 % 0 % 0 % 0 % 50 % 53 % 53
% 54 % 54 % 55 %
1.52 0 % 0 % 0 % 0 % 0 % 51 % 52 %
52 % 52 % 53 %
1.51 0 % 0 % 0 % 0 % 0 % 50 % 50 %
50 % 50 % 50 %
0th 15th 25th 35th 45th 55th 65th 75th
85th 100th
UDR’s FFO Growth ranked against its peers (expressed in percentiles)
Does not meet expectations
Meets expectations
Exceeds expectations
Significantly exceeds expectations
The actual number of shares earned, expressed as a percentage of the Target
Number of Shares, is based on the combined impact of FFO and the Company’s
Incremental Growth in FFO ranked against the Peer Group.
No shares will be earned for performance results below the designated thresholds
(i.e., if the Company’s FFO does not exceed $1.51 and Incremental Growth in FFO
ranked in the zero percentile among the Peer Group).
(a) “Incremental Growth in FFO” shall mean a number stated as a
percentage equal to the product of (i) 100, multiplied by (ii) the quotient of
(A) the excess amount, if any, of the Company’s funds from operations during the
Performance Period, on a fully-diluted, per-
2
share basis (determined by treating the aggregate number of Initial Shares of
all Grantees that were issued during the Performance Period as having vested),
over the Company’s funds from operations during the calendar year immediately
prior to the Performance Period, on a fully-diluted, per-share basis (determined
by treating the aggregate number of Initial Shares and Additional Shares, if
any, of all Grantees that were issued during or with respect to the calendar
year immediately prior to the Performance Period as having vested), divided by
(B) the Company’s funds from operations during the calendar year immediately
year immediately prior to the Performance Period as having vested). The
Committee, in its sole discretion, shall determine whether any significant
item(s) shall be included or excluded from the calculation of Incremental Growth
in FFO for the Performance Period and calculate Incremental Growth in FFO for
the Performance Period accordingly.
(b) “Peer Group” shall mean: Apartment Investment & Management Co.;
Archstone-Smith Trust; AvalonBay Communities, Inc.; BRE Properties, Inc.; Camden
Property Trust; Equity Residential Properties Trust; Essex Property Trust, Inc.;
Home Properties, Inc.; Mid-America Apartment Communities, Inc.; Post Properties,
Inc.; and Town and Country Trust.
2.3 Grant of Additional Shares. If the Adjusted Number of Shares is greater
than the Target Number of Shares, then, on the Determination Date, the Company
shall issue to the Grantee additional shares of Common Stock (the “Additional
Shares”) equal to the excess of the Adjusted Number of Shares over the Target
Number of Shares as promptly as practical after filing any registration
statement, such as a Form S-8, to register such Additional Shares as the
Committee in its discretion deems advisable. Notwithstanding any contrary
provision of this Notice and the Agreement, if the Grantee’s employment with the
Company or a Related Entity is terminated on or prior to 5:00 p.m. Eastern Time
on the last day of the Performance Period for any reason, including death,
Disability or Retirement, he or she shall not be entitled to receive any
Additional Shares for the Performance Period (unless the Committee, in its sole
discretion, determines that the Grantee is remaining in the service of the
Company or a Related Entity in any capacity of employee, director or
consultant).
2.4 Forfeiture of Initial Shares.
(a) If the Adjusted Number of Shares is less than the Target Number of
Shares, then, on the Determination Date, the number of Initial Shares equal to
the excess of the Target Number of Shares over the Adjusted Number of Shares
shall automatically be forfeited and deemed re-conveyed to the Company, and the
Company shall thereafter be the legal and beneficial owner of such Initial
Shares and shall have all rights and interest in or related thereto without
further action by the Grantee. After the Determination Date, all references to
“Initial Shares” in this Notice and the Agreement shall be deemed to refer to
the remaining number of shares, if any, held in escrow for the Grantee after
taking into account the forfeiture of shares as set forth in this
Section 2.4(a).
(b) Notwithstanding any contrary provision of this Notice or the
Agreement, if the Grantee’s employment with the Company or a Related Entity is
terminated on or prior to 5:00 p.m. Eastern Time on the last day of the
Performance Period for any reason, other than death, Disability or Retirement,
all of the Initial Shares shall automatically be forfeited and deemed re-
3
conveyed to the Company on the Grantee’s date of termination, and the Company
shall thereafter be the legal and beneficial owner of the Initial Shares and
shall have all rights and interest in or related thereto without further action
by the Grantee (unless the Committee, in its sole discretion, determines that
the Grantee is remaining in the service of the Company or a Related Entity in
any capacity of employee, director or consultant).
(c) The foregoing forfeiture provisions set forth in this Section 2.4
as to Initial Shares shall apply to the new capital stock or other property
(including cash paid other than as a regular cash dividend) received in exchange
for Initial Shares in consummation of any transaction described in Section 5 of
the Agreement.
2.5 Grants of Initial Shares and Additional Shares. The Initial Shares and
Additional Shares, if any, shall be granted as shares of Common Stock that are
subject to the restrictions and the other terms and conditions set forth in this
Notice and the Agreement.
2.6 Tax Withholding. The Grantee (or his or her beneficiary, as applicable)
shall make appropriate arrangements with the Company or Related Entity to
satisfy any federal, state, local, or non-U.S. income tax withholding
requirements and Social Security or other employment tax withholding
requirements applicable to grants of the Initial Shares and Additional Shares,
if any. If no arrangements are made, the Company or Related Entity may provide,
at its discretion and without the consent of the Grantee or his or her
beneficiary, for such withholding and tax payments as may be required,
including, without limitation, by reducing the number of Initial Shares and
Additional Shares, if any, by an amount equal to quotient of such tax divided by
the Fair Market Value of a share of Common Stock on the dates of grant of such
Initial Shares and Additional Shares, if any, respectively. The Grantee
understands and agrees that the Company or a Related Entity shall treat grants
of the Initial Shares and Additional Shares, if any, as compensation for
services for tax purposes. The Grantee agrees to refrain from filing an election
with the U.S. Internal Revenue Service under Section 83(b) of the Code to
include in gross income the amount of any compensation taxable in connection
with the receipt of the Initial Shares and Additional Shares, if any, and
acknowledges that such agreement is a condition to the grant by the Company of
the Award, the Initial Shares and Additional Shares, if any.
3. Vesting and Forfeiture of Common Stock.
3.1 Vesting Schedule. Subject to the Grantee’s continued employment with
the Company or a Related Entity and other limitations set forth in this Notice
and the Agreement, the Initial Shares and Additional Shares, if any, held by or
in escrow for the Grantee will vest on the earliest to occur of the following
(the “Vesting Schedule”):
(a) As to the following percentage of the Initial Shares and
Additional Shares, if any,
(i) 1/4 of the Initial Shares and Additional Shares, if any,
held by or in escrow for the Grantee shall vest on the day immediately following
the last day of the Performance Period,
4
(ii) 1/4 of the Initial Shares and Additional Shares, if any,
held by or in escrow for the Grantee shall vest on the first anniversary of the
last day of the Performance Period,
(iii) 1/4 of the Initial Shares and Additional Shares, if any,
held by or in escrow for the Grantee shall vest on the second anniversary of the
last day of the Performance Period; and
(iv) 1/4 of the Initial Shares and Additional Shares, if any,
held by or in escrow for the Grantee shall vest on the third anniversary of the
last day of the Performance Period.
(b) On the date of termination of the Grantee’s employment with the
Company or a Related Entity because of his or her death, Disability, or
Retirement, 100% of the Initial Shares and Additional Shares, if any, held by or
in escrow for the Grantee shall vest;
(c) On the date of a Change of Control that causes acceleration of
vesting of Awards under Section 5 of the Agreement, 100% of the Initial Shares
and Additional Shares, if any, held by or in escrow for the Grantee shall vest;
or
(d) On any date specified by the Committee, the percentage(s) of the
Initial Shares and Additional Shares, if any, held by or in escrow for the
Grantee specified by the Committee shall vest.
For purposes of this Notice and the Agreement, the term “vest” shall
mean, with respect to Initial Shares and Additional Shares, if any, held by or
in escrow for the Grantee that such Initial Shares and Additional Shares are no
longer subject to forfeiture to the Company. Initial Shares and Additional
Shares, if any, held by or in escrow for the Grantee that have not vested are
deemed “Restricted Shares.” If the Grantee would become vested in a fraction of
a Restricted Share, such Restricted Share shall not vest until the Grantee
becomes vested in the entire share.
3.2 Forfeiture of Restricted Shares. Vesting shall cease upon the date of
termination of the Grantee’s continued employment with the Company or a Related
Entity for any reason, other than death, Disability or Retirement (unless the
Committee, in its sole discretion, determines that the Grantee is remaining in
the service of the Company or a Related Entity in any capacity of employee,
director or consultant). In the event the Grantee’s continued employment with
the Company or a Related Entity is terminated for any reason, other than death,
Disability or Retirement, any Restricted Shares held by or in escrow for the
Grantee immediately following such termination of employment shall be deemed
re-conveyed to the Company and the Company shall thereafter be the legal and
beneficial owner of the Restricted Shares and shall have all rights and interest
in or related thereto without further action by the Grantee (unless the
director or consultant). The foregoing forfeiture provisions set forth in this
Section 3.2 as to Restricted Shares shall apply to the new capital stock or
other property (including cash paid other than as a regular cash dividend)
received in exchange for Restricted Shares in consummation of any transaction
described in Section 9 of the Agreement.
5
IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and
agree that the Award is to be governed by the terms and conditions of this
By: /s/ Thomas W. Toomey
Name: Thomas W. Toomey
Title: Chief Executive Officer & President
THE GRANTEE ACKNOWLEDGES AND AGREES THAT VESTING OF THE INITIAL SHARES AND
ADDITIONAL SHARES, IF ANY, SHALL OCCUR, IF AT ALL, ONLY DURING THE PERIOD OF THE
GRANTEE’S CONTINUOUS EMPLOYMENT WITH THE COMPANY OR A RELATED ENTITY (NOT
THROUGH THE ACT OF BEING HIRED OR BEING GRANTED THIS AWARD, THE INITIAL SHARES
AND ADDITIONAL SHARES, IF ANY, HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND
AGREES THAT NOTHING IN THIS NOTICE NOR THE AGREEMENT SHALL CONFER UPON THE
GRANTEE ANY RIGHT WITH RESPECT TO CONTINUATION OF THE GRANTEE’S EMPLOYMENT WITH
THE COMPANY OR A RELATED ENTITY, NOR SHALL IT INTERFERE IN ANY WAY WITH THE
GRANTEE’S RIGHT OR THE COMPANY’S OR A RELATED ENTITY’S RIGHT TO TERMINATE THE
GRANTEE’S EMPLOYMENT WITH THE COMPANY OR RELATED ENTITY AT ANY TIME, WITH OR
WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS
THE GRANTEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY OR A RELATED
ENTITY TO THE CONTRARY, THE GRANTEE’S STATUS IS AT WILL. THE GRANTEE AGREES TO
REFRAIN FROM FILING AN ELECTION WITH THE U.S. INTERNAL REVENUE SERVICE UNDER
SECTION 83(B) OF THE CODE TO INCLUDE IN GROSS INCOME THE AMOUNT OF ANY
COMPENSATION TAXABLE IN CONNECTION WITH THE RECEIPT OF THE INITIAL SHARES AND
ADDITIONAL SHARES, IF ANY, AND ACKNOWLEDGES THAT SUCH AGREEMENT IS A CONDITION
TO THE GRANT BY THE COMPANY OF THIS AWARD, THE INITIAL SHARES AND ADDITIONAL
SHARES, IF ANY.
The Grantee acknowledges receipt of a copy of the Agreement and represents that
he or she is familiar with the terms and provisions thereof, and hereby accepts
the Award subject to all of the terms and provisions hereof and thereof. The
Grantee has reviewed this Notice and the Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Notice and
fully understands all provisions of this Notice and the Agreement. The Grantee
hereby agrees that all disputes arising out of or relating to this Notice and
the Agreement shall be resolved in accordance with Section 19 of the Agreement.
The Grantee further agrees to notify the Company upon any change in the
residence address indicated in this Notice.
Dated:
June 23, 2006 Signed: /s/ Mark M. Culwell, Jr.
6
RESTRICTED STOCK AWARD AGREEMENT
Grantee:
Number of Shares:
2,350
Date of Grant:
June 23, 2006
Value as of Grant Date:
$56,250
1. Grant of Shares. United Dominion Realty Trust, Inc. (the “Company”) hereby
grants to the Grantee named above (the “Grantee”), as additional compensation
for services to be rendered, and subject to the restrictions and the other terms
and conditions set forth in this Restricted Stock Award Agreement (this
“Agreement”), the number of shares indicated above of the Company’s $0.01 par
value common stock (the “Shares”).
2. Vesting of Restricted Stock. Unless the exercisability of this Agreement is
accelerated in accordance with Section 5 of this Agreement, 100% of the Shares
subject to this Agreement shall vest (become exercisable) on the Determination
Date as set forth in the Notice of Performance Contingent Restricted Stock
Award.
3. Restrictions.
(a) The Shares are subject to each of the following restrictions.
“Restricted Shares” means those Shares that are subject to the restrictions
imposed hereunder which restrictions have not then expired or terminated.
Restricted Shares may not be sold, transferred, exchanged, assigned, pledged,
hypothecated or otherwise encumbered. If the Grantee’s employment with the
Company or any Parent or Subsidiary terminates for any reason other than as set
forth in paragraph (a) or (b) of Section 4 hereof, then the Grantee shall
forfeit all of the Grantee’s right, title and interest in and to the Restricted
Shares as of the date of employment termination and such Restricted Shares shall
be re-conveyed to the Company without further consideration or any act or action
by the Grantee. Whether military, government or other service or other leave of
absence shall constitute a termination of employment shall be determined in each
case by the Committee at its discretion, and any determination by the Committee
shall be final and conclusive. A termination of employment shall not occur
(i) in a circumstance in which a Grantee transfers from the Company to one of
its Parents or Subsidiaries, transfers from a Parent or Subsidiary to the
Company, or transfers from one Parent or Subsidiary to another Parent or
Subsidiary, or (ii) in the discretion of the Committee as specified at or prior
to such occurrence, in the case of a spin-off, sale or disposition of the
Grantee’s employer from the Company or any Parent or Subsidiary.
1
(b) The restrictions imposed under this Section 3 shall apply to all shares
of the Company’s stock or other securities issued with respect to Restricted
Shares hereunder in connection with any merger, reorganization, consolidation,
re-capitalization, stock dividend or other change in corporate structure
affecting the common stock of the Company.
4. Expiration and Termination of Restrictions. The restrictions imposed under
Section 3 will expire on the earliest to occur of the following:
(a) On the date of termination of the Grantee’s employment with the Company
or any Parent or Subsidiary because of his or her death or Disability; or
(b) On the date specified by the Committee in the event of an acceleration
of vesting under Section 5 of this Agreement (including, without limitation,
upon the occurrence of a Change in Control).
5. Acceleration Provisions.
(a) Upon the Grantee’s death or Disability during his employment or service
as a director or consultant, all restrictions on the Award shall lapse.
(b) Upon the Grantee’s Retirement, all restrictions on the Award shall
lapse.
(c) Upon the occurrence of a Change of Control, all restrictions on the
Award shall lapse.
(d) In the event of the occurrence of any circumstance, transaction or
event not constituting a Change of Control but which the Board deems to be, or
to be reasonably likely to lead to, an effective change in control of the
Company of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of the 1934 Act, the Committee may in its sole discretion
declare all restrictions on the Award to have lapsed as of such date as the
Committee may, in its sole discretion, declare, which may be on or before the
consummation of such transaction or event.
(e) Regardless of whether an event has occurred as described in clauses
(c) and (d) above, the Committee may in its sole discretion at any time
determine that all or part of the restrictions on all or a portion of the Award
shall lapse as of such date as the Committee may, in its sole discretion,
declare.
(f) If an Award is accelerated under clause (c) or (d) above, the Committee
may, in its sole discretion, provide (i) that the Award will be settled in cash
rather than Stock, (ii) that the Award will be assumed by another party to the
transaction giving rise to the acceleration or otherwise be equitably converted
in connection with such transaction, or (iii) any combination of the foregoing.
6. Delivery of Shares. The Shares will be registered in the name of the Grantee
as Restricted Stock and may be held by the Company prior to the lapse of the
restrictions
2
thereon as provided in Section 4 hereof (the “Restricted Period”). Any
certificate for Shares issued during the Restricted Period shall be registered
in the name of the Grantee and shall bear a legend in substantially the
following form:
THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE
TERMS AND CONDITIONS (INCLUDING FORFEITURE AND RESTRICTIONS AGAINST TRANSFER)
CONTAINED IN A RESTRICTED STOCK AWARD AGREEMENT DATED JUNE 23, 2006 BETWEEN THE
REGISTERED OWNER OF THE SHARES REPRESENTED HEREBY AND UNITED DOMINION REALTY
TRUST, INC. RELEASE FROM SUCH TERMS AND CONDITIONS SHALL BE MADE ONLY IN
ACCORDANCE WITH THE PROVISIONS OF SUCH AGREEMENT, COPIES OF WHICH ARE ON FILE IN
THE OFFICE OF UNITED DOMINION REALTY TRUST, INC.
If requested, the Grantee shall deposit with the Company, a stock power, or
powers, executed in blank and sufficient to re-convey the Restricted Shares to
the Company upon termination of the Grantee’s employment during the Restricted
Period, in accordance with the provisions of this Agreement. Stock certificates
shall be delivered to the Grantee as soon as practicable after the lapse of the
restrictions on the Shares, but delivery may be postponed for such period as may
be required for the Company with reasonable diligence to comply if deemed
advisable by the Company, with registration requirements under the 1933 Act,
listing requirements under the rules of any stock exchange, and requirements
under any other law or regulation applicable to the issuance or transfer of the
Shares.
7. Voting and Dividend Rights. The Grantee, as beneficial owner of the Shares,
shall have full voting rights with respect to the Shares and shall receive
dividends on the Shares during the Restricted Period. Dividends on the Shares
are not eligible for participation in the Company’s Dividend Reinvestment Plan
8. Restrictions on Transfer and Pledge. The Restricted Shares may not be
pledged, encumbered, or hypothecated to or in favor of any party other than the
Company or a Parent or Subsidiary, or be subject to any lien, obligation, or
liability of the Grantee to any other party other than the Company or a Parent
or Subsidiary. The Restricted Shares are not assignable or transferable by the
Grantee other than by will or the laws of descent and distribution.
9. Changes in Capital Structure. In the event a stock dividend is declared upon
the Stock, the shares of Stock then subject to this Agreement shall be increased
proportionately. In the event the Stock shall be changed into or exchanged for a
different number or class of shares of stock or securities of the Company or of
another corporation, whether through reorganization, re-capitalization,
reclassification, share exchange, stock split-up, combination of shares, merger
or consolidation, there shall be substituted for each such share of Stock then
subject to this Agreement the number and class of shares into which each
outstanding share of Stock shall be so exchanged, or there shall be made such
other equitable adjustment as the Committee shall approve.
3
10. Stop Transfer Notices. In order to ensure compliance with the restrictions
on transfer set forth in this Agreement, the Company may issue appropriate “stop
transfer” instructions to its transfer agent, if any, and, if the Company
transfers its own securities, it may make appropriate notations to the same
effect in its own records.
11. Refusal to Transfer. The Company shall not be required (a) to transfer on
its books any Restricted Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (b) to treat as owner of
such Restricted Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Restricted Shares shall have been so
transferred.
12. No Right of Continued Employment. Nothing in this Agreement shall interfere
with or limit in any way the right of the Company or any Parent or Subsidiary to
terminate the Grantee’s employment at any time, nor confer upon the Grantee any
right to continue in the employ of the Company or any Parent or Subsidiary.
13. Payment of Taxes. The Grantee will, no later than the date as of which any
amount related to the Shares first becomes includable in the Grantee’s gross
income for federal income tax purposes, pay to the Company, or make other
arrangements satisfactory to the Committee regarding payment of, any federal,
state and local taxes of any kind required by law to be withheld with respect to
such amount. In satisfaction of such tax obligation, the Grantee authorizes the
Company, upon the exercise of the Company’s sole discretion, to withhold from
those Shares issuable to the Grantee the whole number of Shares sufficient to
satisfy the Grantee’s minimum tax withholding obligation. The obligations of the
Company under this Agreement will be conditional on such payment or
arrangements, and the Company, and, where applicable, its Subsidiaries will, to
payment of any kind otherwise due to the Grantee.
14. Grantee’s Covenant. The Grantee hereby agrees to use his best efforts to
provide services to the Company in a workmanlike manner and to promote the
Company’s interests.
15. Amendment. The Committee may amend, modify or terminate this Agreement
without approval of the Grantee; provided, however, that such amendment,
modification or termination shall not, without the Grantee’s consent, reduce or
diminish the value of this award determined as if it had been fully vested on
the date of such amendment or termination.
16. Successors. This Agreement shall be binding upon any successor of the
Company, in accordance with the terms of this Agreement.
17. Severability. If anyone or more of the provisions contained in this
Agreement is invalid, illegal or unenforceable, the other provisions of this
Agreement will be construed and enforced as if the invalid, illegal or
unenforceable provision had never been included.
4
18. Notice. Notices and communications under this Agreement must be in writing
and either personally delivered or sent by registered or certified United States
mail, return receipt requested, postage prepaid. Notices to the Company must be
addressed to:
United Dominion Realty Trust, Inc.
1745 Shea Center Dr., Suite 200
Highlands Ranch, Colorado 80129
Attn: Corporate Secretary
or any other address designated by the Company in a written notice to the
Grantee. Notices to the Grantee will be directed to the address of the Grantee
then currently on file with the Company, or at any other address given by the
Grantee in a written notice to the Company.
19. Dispute Resolution. The provisions of this Section 19 shall be the exclusive
means of resolving disputes arising out of or relating to this Agreement. The
Company, the Grantee, and the Grantee’s assignees (the “parties”) shall attempt
in good faith to resolve any disputes arising out of or relating to this
Agreement by negotiation between individuals who have authority to settle the
controversy. Negotiations shall be commenced by either party by notice of a
written statement of the party’s position and the name and title of the
individual who will represent the party. Within thirty (30) days of the written
notification, the parties shall meet at a mutually acceptable time and place,
and thereafter as often as they reasonably deem necessary, to resolve the
dispute. If the dispute has not been resolved by negotiation, the parties agree
that any suit, action, or proceeding arising out of or relating to this
Agreement shall be brought in the United States District Court for the District
of Colorado (or should such court lack jurisdiction to hear such action, suit or
proceeding, in a state court in Colorado) and that the parties shall submit to
the jurisdiction of such court. The parties irrevocably waive, to the fullest
extent permitted by law, any objection the party may have to the laying of venue
for any such suit, action or proceeding brought in such court. THE PARTIES ALSO
EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH
SUIT, ACTION OR PROCEEDING. If any one or more provisions of this Section 19
shall for any reason be held invalid or unenforceable, it is the specific intent
of the parties that such provisions shall be modified to the minimum extent
necessary to make it or its application valid and enforceable.
20. Administration. This Agreement shall be administered by the Compensation
Committee of the Board or, at the discretion of the Board from time to time, by
the Board. During any time that the Board is acting as administrator of this
Agreement, it shall have all the powers of the Committee hereunder, and any
reference herein to the Committee shall include the Board. The Committee’s
interpretation of this Agreement and all decisions and determinations by the
Committee with respect to this Agreement are final, binding, and conclusive on
all parties.
5
21. Definitions.
(a) “Award” means any Restricted Stock Award, Performance Unit Award, or
Other Stock-Based Award, or any other right or interest relating to Stock or
cash, granted to a Grantee under the Agreement.
(c) “Change of Control” means and includes each of the following:
(i) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated;
(ii) the transfer or sale of all or substantially all of the assets of
the Company other than to an affiliate or Subsidiary of the Company;
(iii) the liquidation of the Company; or
(iv) the acquisition by any person, or by a group of persons acting in
concert, of more than fifty percent (50%) of the outstanding voting securities
of the Company, which results in the resignation or addition of fifty percent
(50%) or more independent members of the Board.
time.
(e) “Committee” means the Compensation Committee of the Board.
(f) “Disability” shall mean any illness or other physical or mental
condition of a Grantee that renders the Grantee incapable of performing his
customary and usual duties for the Company, or any medically determinable
illness or other physical or mental condition resulting from a bodily injury,
disease or mental disorder which, in the judgment of the Committee, is permanent
and continuous in nature. The Committee may require such medical or other
evidence as it deems necessary to judge the nature and permanency of the
Grantee’s condition.
(g) “Fair Market Value”, on any date, means the closing sales price on the
New York Stock Exchange on such date or, in the absence of reported sales on
such date, the closing sales price on the immediately preceding date on which
sales were reported.
(h) “Parent” means a corporation that owns or beneficially owns a majority
of the outstanding voting stock or voting power of the Company.
(i) “Retirement” means a Grantee’s termination of employment with the
Company, Parent or Subsidiary after attaining any normal or early retirement age
specified in any pension, profit sharing or other retirement program sponsored
by such
6
company, or, in the event of the inapplicability thereof with respect to the
person in question, as determined by the Committee in its reasonable judgment.
(j) “Stock” means the $0.01 par value common stock of the Company, and such
other securities of the Company as may be substituted for Stock pursuant to
Section 9 of the Agreement.
(k) “Subsidiary” means any corporation, limited liability company,
partnership or other entity that is directly, or indirectly through one or more
intermediaries, controlled by or under common control with the Company.
(l) “1933 Act” means the Securities Act of 1933, as amended from time to
time.
(m) “1934 Act” means the Securities Exchange Act of 1934, as amended from
time to time.
IN WITNESS WHEREOF, the Company and the Grantee have executed this
Agreement and agree that the Shares are to be governed by the terms and
The Grantee acknowledges receipt of a copy of this Agreement and represents
that he or she is familiar with the terms and provisions thereof, and hereby
accepts the Shares subject to all of the terms and provisions hereof. The
Grantee has reviewed this Agreement in its entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Agreement and fully
understands all provisions of this Agreement. The Grantee hereby agrees that all
disputes arising out of or relating to this Agreement shall be resolved in
accordance with Section 19 of this Agreement. The Grantee further agrees to
notify the Company upon any change in the residence address indicated in this
Agreement.
GRANTEE:
/s/ Mark M. Culwell, Jr.
7 |
Exhibit 10.1
Execution Version
EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”) is entered into as of July 29, 2020
(the “Effective Date”), by and between MGM Resorts International (“Employer”),
and William Hornbuckle (“Employee”).
1.
Employment. Employer hereby employs Employee, and Employee hereby accepts
employment by Employer as Chief Executive Officer and President to perform such
executive, managerial or administrative duties as Employer may specify from time
to time during the Specified Term (as defined in Section 2). If during the
the “Company” (defined below in Section 22) Employee’s employment with the
Employer shall terminate as of the date Employee commences such other
employment, and pursuant to Section 19 Employee’s new Company-affiliated
employer shall assume all rights and obligations of Employer under this
Agreement.
2.
Term. The term of Employee’s employment under this Agreement commences on
July 29, 2020 and it terminates on March 31, 2024 (the “Specified Term”), unless
a new written employment agreement is executed by the parties. If Employee
remains employed after the expiration of the Specified Term, and the parties do
not execute a new employment agreement, then Employee shall be employed at-will
and none of the provisions of the Agreement shall apply to Employee’s continued
employment at-will, except Sections 8, 10.5, 11 and 12, and Employer shall have
the right to terminate Employee’s employment with or without cause or notice,
for any reason or no reason, and (unless otherwise provided herein) without any
payment of severance or compensation.
3.
Compensation. During the 2020 fiscal year, Employer shall pay Employee a minimum
annual salary of $1,100,000 payable in arrears at such frequencies and times as
Employer pays its other employees. Effective January 1, 2021, Employer shall pay
Employee a minimum annual salary of $1,500,000 payable in arrears at such
frequencies and times as Employer pays its other employees. Employer will also
reimburse Employee for all reasonable business and travel expenses Employee
incurs in performing Employee’s duties under this Agreement, payable in
accordance with Employer’s customary practices and policies, as Employer may
modify and amend them from time to time. Employee’s performance may be reviewed
periodically. Employee is eligible for consideration for a discretionary raise,
bonuses (whether in cash or equity or equity-based awards), promotion, and/or
participation in discretionary benefit plans; provided, however, whether and to
what extent Employee will be granted any of the above will be determined by the
Compensation Committee in its sole and absolute discretion.
3.1
In addition, Employee is eligible for consideration for a discretionary annual
bonus (the “Bonus”). With respect to the 2020 fiscal year, Employee will be
eligible for a Bonus pursuant to the terms of the Bonus Letter, dated as of
June 25, 2020, by and between Employee and Employer. Effective January 1, 2021
(i.e., starting with the Bonus for the 2021 fiscal year), Employee will be
eligible for a Bonus pursuant to the terms of this Agreement, with a target
bonus amount equal to 175% of Employee’s base salary (the “Target Bonus”), and
with a maximum amount equal
to 175% of the Target Bonus. The terms and conditions of the Bonus may be
changed from time to time. Except as otherwise provided in Sections 10.2, 10.3
or 10.6, any Bonus under this Section 3.1 shall be paid at such time as the
Company pays bonuses to the Company’s other senior executives with respect to
each fiscal year, but not earlier than January 1 or later than March 15 of the
year immediately following the end of each fiscal year; provided that beginning
with any such Bonus payable in respect of services performed for fiscal year
2021 or thereafter, to the extent any such Bonus is in excess of the Target
Bonus (such excess portion, the “Incremental Bonus Amount”), the Incremental
Bonus Amount shall be payable 100% in the form of fully vested restricted stock
units (the “Deferred RSUs”). The Deferred RSUs will be granted as of the Bonus
Determination Date pursuant to the terms of the Company’s Amended and Restated
2005 Omnibus Incentive Plan and the Company’s Form of Deferred Restricted Stock
Unit Agreement for Bonus Payouts (the “Award Agreement”). The Deferred RSUs
shall be payable annually in four equal installments over the four-year period
following the grant date, subject to acceleration in the event of the Employee’s
termination of employment, in accordance with the specific terms set forth in
the Award Agreement. Any such Bonus shall be subject to the Policy on Recovery
of Incentive Compensation in Event of Financial Restatement, as may be amended
by the Company from time to time in its discretion, and any other clawback
policies as may be adopted from time to time, including but not limited to for
the purpose of complying with the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 and regulations thereunder promulgated by the Securities
Exchange Commission (the “SEC”).
3.2
During the Specified Term, it is anticipated that Employee will be required to
travel extensively on behalf of Employer. Such travel, if by air, may be on
aircraft provided by Employer, or if commercial airlines are used, on a
first-class basis (or best available basis, if first class is not available).
3.2.1
To the extent Employee wishes to use aircraft operated by the Company for
non-business travel, the Company will, upon Employee’s request and subject to
availability (provided that such use does not unreasonably interfere with
bona-fide business of the Company), make such aircraft available to Employee for
such use. Employee shall be responsible and shall reimburse the Company as set
forth below for costs associated with any such non-business use to the extent
the value of any such non-business use exceeds $250,000 in the aggregate for any
calendar year as determined under the SEC proxy reporting rules for personal
aircraft usage, as such rules may be amended from time to time (the “SEC
Rules”). The Compensation Committee reserves the right to review and modify this
limit from time to time as it deems reasonably appropriate. The determination of
whether all or any portion of Employee’s use of aircraft operated by the Company
constitutes non-business use, as well as the reimbursement amount, if any, shall
be reasonably determined by the Company in consultation with its outside
securities law counsel.
2
Non-business use above the $250,000 limit described above must be reimbursed in
an amount equal to the amount that would otherwise be required to be reported in
the Summary Compensation Table in the Company’s annual meeting proxy statement
in accordance with SEC rules, provided that the reimbursement Employee shall be
required to pay to the Company shall not exceed the maximum permissible amount
under FAA rules that apply to time-sharing agreements. Employee shall enter into
a time-sharing agreement with the Company to provide for reimbursement as
described herein and the list of allowable expenses in Section 3(b) of that
agreement shall be modified, to the extent necessary, to include all the items
authorized by FAR Part 91.501(d), as may be amended from time to time. Employee
acknowledges that Employee will be responsible for any income tax owed by
Employee attributable to the fringe benefit value of non-business use of
aircraft.
3.3
Employee shall be eligible for annual equity awards in 2020, 2021, 2022 and 2023
in forms and amounts determined by the Compensation Committee in its discretion.
It is the Compensation Committee’s present expectation that such annual awards
will have an aggregate grant-date Accounting Value targeted at $8,000,000 and
that such annual awards will be provided (i) 60% in the form of restricted stock
units of the Company (“RSUs”) that are subject to performance-based and
service-based vesting conditions and (ii) 40% in the form of RSUs that are
subject solely to service-based vesting conditions. These annual awards and any
other equity awards granted on or after the Effective Date shall be subject to
such terms as the Compensation Committee may determine in its discretion.
3.4
Notwithstanding anything herein to the contrary, with respect to any regular
annual incentive awards granted to Employee during the Specified Term under the
Omnibus Plan or any successor thereto (but excluding any one-time or special
retention awards, as determined by the Compensation Committee), the applicable
award agreements for such awards shall include provisions with respect to (i)
“Retirement,” (ii) death or Disability, (iii) termination by Employer other than
by reason of “Employer’s Good Cause” and (iv) termination by Employee by reason
of “Participant’s Good Cause” that shall be no less favorable to Employee than
as set forth in the respective (as to type of award) forms of equity award
agreement granted to Employee in October 2019; provided that with respect to the
definition of “Normal Retirement” or “Retirement” applicable to all of
Employee’s outstanding equity awards, clause (iii) of the definition of
Retirement shall be replaced in its entirety with: “(iii) Participant has given
the Employer at least ninety (90) days’ notice of termination; provided that,
with respect to a termination of employment occurring prior to March 31, 2024,
to the extent reasonably requested by the Board of Directors of the Company,
Employee will give Employer at least one hundred and eighty (180) days’ notice
of termination.”
4.
Extent of Services. Employee agrees that Employee’s employment by Employer is
full time and exclusive. Employee further agrees to perform Employee’s duties in
a competent,
3
trustworthy and businesslike manner. Employee agrees that during the Specified
Term, Employee will not render any services of any kind (whether or not for
compensation) for any person or entity other than Employer, and that Employee
will not engage in any other business activity (whether or not for compensation)
that is similar to or conflicts with Employee’s duties under this Agreement,
without the approval of the Board of Directors of MGM Resorts International or
the person or persons designated by the Board of Directors to determine such
matters.
5.
Policies and Procedures. Employee agrees and acknowledges that Employee is bound
by Employer’s policies and procedures as they may be modified, amended or
adopted by Employer from time to time, including, but not limited to, the
Company’s Code of Conduct and Conflict of Interest policies. In the event the
terms in this Agreement conflict with Employer’s policies and procedures, the
terms of this Agreement shall take precedence. As Employee is aware, problem
gaming and underage gambling can have adverse effects on individuals and the
gaming industry as a whole. Employee acknowledges that Employee has read and is
familiar with Employer’s policies, procedures and manuals and agrees to abide by
them. Because these matters are of such importance to Employer, Employee
specifically confirms that Employee is familiar with and will comply with
Employer’s policies of prohibiting underage gaming, supporting programs to treat
compulsive gambling, and promoting diversity in all aspects of Employer’s
business.
6.
Licensing Requirements. Employee acknowledges that Employer is engaged in a
business that is or may be subject to and exists because of privileged licenses
issued by governmental authorities in Nevada, Michigan, Mississippi, Ohio,
Illinois, Maryland, Massachusetts, New Jersey, New York, Macau S.A.R., and other
jurisdictions in which Employer is engaged in a gaming business or where
Employer has applied to (or during the Specified Term may apply to) engage in a
gaming business. Employee shall apply for and obtain any license, qualification,
clearance or other similar approval which Employer or any regulatory authority
which has jurisdiction over Employer requests or requires that Employee obtain.
7.
Failure to Satisfy Licensing Requirement. Employer has the right to terminate
Employee’s employment under Section 10.1 of this Agreement if: (i) Employee
fails to satisfy any licensing requirement referred to in Section 6 above;
(ii) Employer is directed to cease business with Employee by any governmental
authority referred to in Section 6 above; (iii) Employer determines, in its sole
and exclusive judgment, that Employee was, is or might be involved in, or are
about to be involved in, any activity, relationship(s) or circumstance which
could or does jeopardize Employer’s business, reputation or such licenses; or
(iv) any of Employer’s licenses is threatened to be, or is, denied, curtailed,
suspended or revoked as a result of Employee’s employment by Employer or as a
result of Employee’s actions.
8.
Restrictive Covenants. Employee acknowledges that, in the course of performing
Employee’s responsibilities under this Agreement, Employee will form
relationships and become acquainted with “Confidential Information” (defined
below in Section 22). Employee further acknowledges that such relationships and
the Confidential Information are valuable to Employer and the Company, and the
restrictions on Employee’s future
4
employment contained in this Agreement, if any, are reasonably necessary in
order for Employer to remain competitive in Employer’s various businesses and to
prevent Employee from engaging in unfair competition against Employer after
termination of Employee’s employment with Employer for any reason.
In consideration of this Agreement and the compensation payable to Employee
under this Agreement, and in recognition of Employer’s heightened need for
protection from abuse of relationships formed or disclosure and misuse of
Confidential Information garnered before and during the Specified Term of this
Agreement, Employee covenants and agree as follows:
8.1
Competition. Except as otherwise explicitly provided in Paragraph 10 of this
Agreement, during the entire Specified Term and thereafter for the “Restrictive
Period” (defined below in Section 22) Employee shall not directly or indirectly
be employed by, provide consultation or other services to, engage in,
participate in or otherwise be connected in any way with any “Competitor”
(defined below in Section 22) in any capacity that is the same, substantially
the same or similar to the position or capacity (irrespective of title or
department) as that held at any time during Employee’s employment with Employer;
provided, however, that if Employee remains employed at-will by Employer after
expiration of the Specified Term and is thereafter separated by Employer during
the Restrictive Period for any reason other than “Employer’s Good Cause”
(defined below in Section 22), Employee shall not be subject to this
Section 8.1.
8.2
Non-Solicitation. At all times during Employee’s employment with the Company and
at all times thereafter, Employee shall not use, access, disclose, make known
to, or otherwise disseminate for personal gain or for the benefit of a third
party (or induce, encourage or assist others in doing any of the foregoing acts)
any Company “Trade Secrets” (as defined in Section 22) for any purpose
whatsoever. Further, at all times during Employee’s employment with the Company,
and for 12 months thereafter, Employee will not, without the prior written
consent of Company:
(a)
make known to any Competitor and/or any member, manager, officer, director,
employee or agent of a Competitor, the “Business Contacts” (defined in
Section 22) of the Company;
(b)
call on, solicit, induce to leave and/or take away, or attempt to call on,
solicit, induce to leave and/or take away, any Business Contacts of the Company;
and/or
(c)
approach, solicit, contract with or hire any current Business Contacts of the
Company or entice any Business Contact to cease his/her/its relationship with
the Company or end his/her employment with the Company, without the prior
written consent of Company, in each and every instance, such consent to be
within Company’s sole and absolute discretion.
5
8.3
Confidentiality. At all times during Employee’s employment with the Company, and
at all times thereafter, Employee shall not, without the prior written consent
of the Company’s General Counsel in each and every instance—such consent to be
within the Company’s sole and absolute discretion—use, disclose or make known to
any person, entity or other third party outside of the Company any Confidential
Information belonging to the Company or its individual members.
Notwithstanding the foregoing, the provisions of Section 8.3 shall not apply to
Confidential Information: (i) that is required to be disclosed by law or by any
court, arbitrator, mediator or administrative or legislative body (including any
committee thereof) in any litigation, arbitration, mediation or legislative
hearing, with jurisdiction to order Employee to disclose or make accessible any
information, provided, however, that Employee provides Company with ten
(10) days’ advance written notice of such disclosure to enable Company to seek a
protective order or other relief to protect the confidentiality of such
Confidential Information; (ii) that becomes generally known to the public or
within the relevant trade or industry other than due to Employee’s or any third
party’s violation of this Agreement or other obligation of confidentiality; or
(iii) that becomes available to Employee on a non-confidential basis from a
source that is legally entitled to disclose it to Employee.
8.4
Third Party Information. Employee understands and acknowledges that the Company
has received, and in the future will receive, from third parties, their
confidential or proprietary information subject to a duty to maintain the
confidentiality of such information and to use it only for certain limited
purposes. At all times during Employee’s employment with the Company, whether
pursuant to this Agreement or at-will, and at all times thereafter, Employee
shall hold any and all such third party confidential or proprietary information
of third parties in the strictest confidence and will not intentionally or
negligently disclose it to any person or entity or to use it except as necessary
in carrying out Employee’s duties and obligations hereunder consistent with the
Company’s agreement with such third party. Employee shall not be in violation of
Employee’s obligations hereunder if such third party confidential or proprietary
information is already generally known to the public through no wrongful act of
Employee or any other party.
8.5
Acknowledgement of Ownership of Confidential Information Property Acquired or
Developed During Employment; Non-Transfer. Employee understands, agrees, and
hereby confirms that Employee’s duties and responsibilities include acquiring
Confidential Information and developing Relationships for the benefit of Company
and, as applicable, the Company. Employee acknowledges that Confidential
Information acquired, obtained, learned, or developed during Employee’s
employment with Company, including but not limited to, Business Contacts
developed during Employee’s employment, constitutes the sole and exclusive
property of Company, regardless of whether the information qualifies for
protection as a Trade Secret.
Employee further understands, agrees, and hereby confirms that during Employee’s
employment, Employee shall not, at any time or for any reason whatsoever, except
6
upon the express written authorization of the Company, store, transfer,
maintain, copy, duplicate or otherwise possess Confidential Information on any
device or in any form or format except on devices and in such formats as
expressly approved and issued by the Company to Employee. By way of example, and
without limitation, Employee shall not text, copy, or otherwise transfer in any
form or format Confidential Information to any document, paper, computer,
tablet, Blackberry, cellular phone, personal mobile device, iPhone, iPad, thumb
drive, smart phone memory, zip drive or disk, flash drive, external drive or any
other similar device used for storing or recording data of any kind (the
“Devices”) unless such Device is issued by the Company to Employee, or unless
such text, copy or transfer is expressly approved in writing by the Company
before Employee’s use of such Device.
8.6
Return of Confidential Information. Upon termination of Employee’s employment
for any reason at any time, Employee shall immediately return to the Company,
and retain no copies of, any all Confidential Information in Employee’s
possession or control. If any Confidential Information is recorded or saved in
any format or on any Devices, Employee shall delete the Confidential Information
and, upon Company’s request, allow Company to inspect such Devices to confirm
the deletion. Upon Company’s request, Employee shall allow Company reasonable
access to Employee’s personal computers, email accounts, and Devices to confirm
that Employee does not possess any Confidential Information of Company in
contravention of this Agreement.
8.7
Acknowledgement of Copyrights in and to Compilations of Confidential
Information. Employee acknowledges that Company owns copyrights in any and all
compilations of Confidential Information in any tangible or electronic form
(including, but not limited to, printed lists, handwritten lists, spreadsheets,
and databases) in any storage media, including, but not limited to, Devices,
(collectively, “Copyrighted Works”). Employee further acknowledges that
unauthorized copying, distributing, or creating derivative works, or inducing or
contributing to such conduct by others, based on such Copyrighted Works
constitutes infringement of Company’s copyrights in and to the Copyrighted
Works. Employee acknowledges that only the General Counsel of the Company is
authorized to grant authorization to Employee to copy, distribute or create
derivative works based on the Copyrighted Works. Employee shall obtain any such
authorization from Company in writing, in advance of any copying, distribution
or creation of derivative works by Employee. Employee acknowledges that federal
law provides for civil liability and criminal penalties for copyright
infringement. Employee agrees not to challenge, contest or dispute Company’s
right, title and interest in the Copyrighted Works and waives any legal or
equitable defense to infringement of such Copyrighted Works.
9.
Representations and Warranties. Employee hereby represents and warrants to
Company, and hereby agrees with Company, as follows:
7
9.1
A portion of Employee’s compensation and consideration under this Agreement is
(i) Company’s agreement to employ Employee; (ii) Employee’s agreement that the
covenants contained in Sections 4 and 8 hereof are reasonable, appropriate and
suitable in their geographic scope, duration and content; (iii) Employee’s
agreement that Employee shall not, directly or indirectly, raise any issue of
the reasonableness, appropriateness and suitability of the geographic scope,
duration or content of such covenants and agreements in any proceeding to
enforce such covenants and agreements; (iv) Employee’s agreement that such
covenants and agreements shall survive the termination of this Agreement, in
accordance with their terms; and (v) the free and full assignability by Company
of such covenants and agreements upon a sale, reorganization or other
transaction of any kind relating to the ownership and/or control of the Company
or its members or assigns.
9.2
The enforcement of any remedy under this Agreement will not prevent Employee
from earning a livelihood, because Employee’s past work history and abilities
are such that Employee can reasonably expect to find work irrespective of the
covenants and agreements contained in Section 8 hereof.
9.3
The covenants and agreements stated in Sections 4, 6, 7, and 8 hereof are
essential for the Company’s reasonable protection of its Trade Secrets, Business
Contacts, and Confidential Information.
9.4
The Company has reasonably relied on Employee’s covenants, representations and
9.5
Employee has the full right, power and authority to enter into this Agreement
and perform Employee’s duties and obligations hereunder, and the entering into
and performance of this Agreement by Employee will not violate or conflict with
any arrangements or other agreements Employee may have or agreed to have with
any other person or entity.
9.6
Employee acknowledges that the Company has and will continue to invest
substantial time and expense in developing and protecting Confidential
Information, all of which Employee expressly understands and agrees belongs
solely and exclusively to Company. Employee further acknowledges and agrees that
because the Company has and will continue to invest substantial time and expense
in developing and protecting Confidential Information, that any loss of or
damage to the Company as a result of a breach or threatened breach of any of the
covenants or agreements set forth in Sections 4 and 8 hereof, the Company will
suffer irreparable harm. Consequently, Employee covenants and agrees that any
violation by Employee of Sections 4 or 8 of this Agreement shall entitle the
Company to immediate injunctive relief in a court of competent jurisdiction
without the necessity of posting any bond or waiving any claim for damages.
Employee further covenants and agrees that Employee will not contest the
enforceability of such an injunction in any state or country in which such an
injunction is not, itself, a violation of law.
8
10.
Termination.
10.1
Employer’s Good Cause Termination. Employer has the right to terminate this
Agreement at any time during the Specified Term hereof for “Employer’s Good
Cause” (defined below in Section 22). Upon any such termination, Employer shall
have no further liability or obligations whatsoever to Employee under this
Agreement except as provided under Sections 10.1.1 and 10.1.2 below.
10.1.1
In the event Employer’s Good Cause termination is the result of Employee’s death
during the Specified Term, Employee’s beneficiary (as designated by Employee on
Employer’s benefit records) shall be entitled to receive Employee’s salary for a
twelve (12) month period following Employee’s death, such amount to be paid at
regular payroll intervals.
10.1.2
In the event Employer’s Good Cause termination is the result of Employee’s
“Disability” (defined below in Section 22), Employer shall pay Employee (or
Employee’s beneficiary in the event of Employee’s death during the period in
which payments are being made) an amount equal to Employee’s salary for twelve
(12) months following Employee’s termination, such amount to be paid at regular
payroll intervals, net of payments received by Employee from any short term
disability policy which is either self-insured by Employer or the premiums of
which were paid by Employer (and not charged as compensation to Employee).
10.2
Employer’s No Cause Termination. Employer has the right to terminate this
Agreement on written notice to Employee in its sole discretion for any cause
Employer deems sufficient or for no cause, at any time during the Specified
Term, including on the last day of the Specified Term. Subject to the conditions
set forth below, Employer’s sole liability to Employee upon such termination
shall be as follows:
10.2.1
Employee shall receive an amount (the “Severance Payment”) equal to the lesser
of: (A) two (2) times (i) Employee’s annual base salary as in effect on
January 1, 2021 (regardless of when such termination occurs) and (ii) Target
Bonus pursuant to Section 3.1; and (B) the number that results from dividing the
number of days remaining during the Specified Term (following the date of
termination) by 365, times (i) Employee’s annual base salary as in effect on
Bonus pursuant to Section 3.1; in each case of (A) and (B), less all applicable
taxes, payable in twelve (12) monthly installments commencing upon the date that
is thirty (30) days after the date of separation, and plus any earned but unpaid
discretionary bonus due to Employee, payable in accordance with Section 3.1. In
addition, Employee shall receive a lump sum payment (the “COBRA Payment”) equal
to the lesser of (x) 2 times the cost of COBRA coverage for a period of
twenty-four (24) months immediately following separation and (y) 2 times the
cost of COBRA coverage until the last day of the Specified Term, payable in
twelve (12) monthly installments commencing upon separation.
9
10.2.2
Employee’s eligibility for the Severance Payment and COBRA Payment shall be
expressly subject to, conditioned upon, and in consideration of Employee’s
execution, within twenty-one (21) days following the date of Employee’s
termination of employment (or such shorter time period as may be required by the
Company consistent with applicable law) and non-revocation of a release prepared
by Employer and waiving and releasing Employer and the Company, their parents,
subsidiaries and affiliates, and their officers, directors, agents, benefit plan
trustees and employees, from any and all claims whether known or unknown, and
regardless of type, cause or nature, including but not limited to claims arising
under any and all express or implied employment agreements, any and all
statutory and common law tort claims, any and all salary, bonus, stock, vacation
(PTO), insurance and other benefit plans, and all state and federal laws,
ordinances and statutes applicable to Employee’s employment or the cessation of
that employment that may be released by private agreement (including but not
limited to Title VII of the Civil Rights Act of 1964, as amended; the Age
Discrimination in Employment Act as amended by the Older Workers Benefit
Protection Act of 1990; the Americans with Disabilities Act, as amended; the
Equal Pay Act; the Lily Ledbetter Fair Pay Act; the Family and Medical Leave
Act; the Employee Retirement Income Security Act; the Genetic Information
Nondiscrimination Act; Chapter 608, Compensation, Wages and Hours, of the Nevada
Revised Statutes; Chapter 613, Employment Practices, of the Nevada Revised
Statutes; the Worker Adjustment Retraining Notification Act (“WARN”); Post-Civil
War Reconstruction Act, as Amended (42 U.S.C. §1981-1988); the National Labor
Relations Act; the Labor Management Relations Act; any other federal, state or
local law prohibiting employment discrimination or otherwise regulating
employment; which release becomes irrevocable in accordance with its terms
(which, for the avoidance of doubt, will occur within thirty (30) days or fewer
following the date of Employee’s termination of employment).
10.2.3
As a further condition to Employer’s obligations under Section 10.2.1 above,
Employee agrees to cooperate with Employer regarding matters on which Employee
has worked, on a reasonable basis and at times mutually convenient to both
parties. Employee further agrees to fully cooperate with the Company in any
ongoing or future legal matters about which Employee has knowledge or
information, or that concern Employee’s former position with the Company.
10.2.4
Upon any such termination, Employee shall continue to be bound by the
restrictions in Section 8 above; provided, however, that if the reason for the
termination is the elimination of Employee’s position, Employee shall not
10
be bound by Section 8.1 but will continue to be bound by all other
restrictions in Section 8 above. Notwithstanding anything to the contrary
herein, Employer’s conditional obligation under Section 10.2.1 to pay Employee’s
salary shall cease if Employee breaches in any material respect any of the
covenants set forth in Section 8 above; additionally, and without waiving any
rights to other damages resulting from said breach, Employer shall be entitled
to recover any and all amounts already paid to Employee under Section 10.2.1.
10.3
Employee’s Good Cause Termination. Employee may terminate this Agreement for
“Employee’s Good Cause” (defined below in Section 22). Prior to any termination
under this Section 10.3 being effective, Employee agrees to give Employer thirty
(30) days’ advance written notice, within thirty (30) days of the initial event
comprising Employee’s Good Cause, specifying the facts and circumstances that
comprise Employee’s Good Cause. During such thirty (30) day period, Employer may
either cure the breach (in which case Employee’s notice will be considered
withdrawn and this Agreement will continue in full force and effect) or declare
that Employer disputes that Employee’s Good Cause exists, in which case this
Agreement will continue in full force until the dispute is resolved in
accordance with Section 12. In the event this Agreement is terminated under this
Section 10.3, subject to the conditions set forth below, Employer’s sole
liability to Employee upon such termination shall be as follows:
10.3.1
Employee shall receive the Severance Payment and the COBRA Payment.
10.3.2
Employee’s eligibility for the Severance Payment and the COBRA Payment shall be
Company consistent with applicable law), and non-revocation of a release
prepared by Employer and waiving and releasing Employer and the Company, their
parents, subsidiaries and affiliates, and their officers, directors, agents,
benefit plan trustees and employees, from any and all claims whether known or
unknown, and regardless of type, cause or nature, including but not limited to
claims arising under any and all express or implied employment agreements, any
and all statutory and common law tort claims, any and all salary, bonus, stock,
vacation (PTO), insurance and other benefit plans, and all state and federal
laws, ordinances and statutes applicable to Employee’s employment or the
cessation of that employment that may be released by private agreement
(including but not limited to Title VII of the Civil Rights Act of 1964, as
amended; the Age Discrimination in Employment Act as amended by the Older
Workers Benefit Protection Act of 1990; the Americans with Disabilities Act, as
amended; the Equal Pay Act; the Lily Ledbetter Fair Pay Act; the Family and
Medical Leave Act; the Employee Retirement Income Security Act; the Genetic
Information Nondiscrimination Act; Chapter 608, Compensation,
11
Wages and Hours, of the Nevada Revised Statutes; Chapter 613, Employment
Practices, of the Nevada Revised Statutes; WARN; Post-Civil War Reconstruction
Act, as Amended (42 U.S.C. §1981-1988); the National Labor Relations Act; the
Labor Management Relations Act; any other federal, state or local law
prohibiting employment discrimination or otherwise regulating employment; which
release becomes irrevocable in accordance with its terms (which, for the
avoidance of doubt, will occur within thirty (30) days or fewer following the
date of Employee’s termination of employment).
10.3.3
As a further condition to Employer’s obligations under Section 10.3.1 above,
10.3.4
In the event of termination of this Agreement under this Section 10.3, the
restrictions of Section 8.1 shall no longer apply.
10.4
Employee’s No Cause Termination. In the event Employee terminates Employee’s
employment under this Agreement without cause, Employer will have no further
liability or obligations whatsoever to Employee hereunder. Employer will be
entitled to all of Employer’s rights and remedies by reason of such termination,
including without limitation, the right to enforce the covenants and agreements
contained in Section 8 and Employer’s right to recover damages.
10.5
Survival of Covenants. Notwithstanding anything contained in this Agreement to
the contrary, except as specifically provided in Sections 10.2.4, 10.3.4 and
10.6 with respect to the undertaking contained in Section 8.1, the covenants and
agreements contained in Section 8 shall survive a termination of this Agreement
or the cessation of Employee’s employment to the extent and for the period
provided for in Section 8, regardless of the reason for such termination.
10.6
Change of Control. As of the Effective Date, Employee shall continue to be
designated as a participant in the Company’s Change of Control Policy for
Executive Officers (the “COC Policy”) as such policy may be amended by the
Company from time to time. In the event Employee becomes entitled to “Separation
Benefits” pursuant to Section 3.2 of the COC Policy, Employee’s benefits under
Section 3.3 of the COC Policy shall replace and be in lieu of any benefits under
Sections 10.2 or 10.3 of this Agreement; provided, that, notwithstanding
anything to the contrary in this Agreement or the COC Policy, in the event the
aggregate cash benefits payable to Employee pursuant to Sections 3.3(b) and
(c) of the COC Policy are less than the aggregate cash benefits otherwise
payable to Employee pursuant to Sections 10.2 or 10.3 hereof absent a Change of
Control (as defined in the COC Policy), Employee shall be entitled to the amount
of aggregate cash
12
benefits payable under Sections 10.2 or 10.3 hereof, payable in the form and
at the time set forth in Section 3.2 of the COC Policy, in lieu of any cash
benefits under Section 3.3 of the COC Policy. If the COC Policy has been
terminated, references to the COC Policy shall mean the COC Policy as in effect
immediately prior its termination.
In the event Employee (i) becomes entitled to “Separation Benefits” pursuant to
Section 3.2 of the COC Policy or (ii) terminates employment for any reason
during the one-year period following a Change of Control, Employee shall be
released from Employee’s obligations pursuant to Section 8.1 upon Employee’s
termination of employment (or upon the Change of Control if such termination
occurs during the specified period prior to the Change of Control in accordance
with the COC Policy).
10.7
Excise Tax Limitation.
10.7.1
Notwithstanding anything contained in this Agreement to the contrary, (i) in the
event that any Payments (as defined below) in connection with, or arising out
of, Employee’s employment with the Company in the event of a 280G Change in
Control (as defined below) would be subject to the excise tax imposed by
Section 4999 of the Code (“Excise Tax”), and (ii) (A) the net amount of the
Payments that Employee would retain after payment of the Excise Tax and federal,
state and local income taxes, any employment, social security or Medicare taxes
or any other taxes with respect to the Payments would be less than (B) the net
amount of the Payments Employee would retain, after payment of federal, state
and local income taxes, any employment, social security or Medicare taxes or any
other taxes with respect to the Payments, if the Payments were reduced to the
maximum amount Employee could retain such that no portion of the Payments would
be subject to the Excise Tax (“Section 4999 Limit”), then the Payments shall be
reduced (but not below zero) to the Section 4999 Limit. The Company shall reduce
or eliminate the Payments such that the reduction or elimination of compensation
to be provided to Employee as a result of this Section 10.7.1 is minimized. In
applying this principle, the reduction or elimination shall be made in a manner
consistent with the requirements of Section 409A and where two economically
equivalent amounts are subject to reduction or elimination but payable at
different times, such amounts shall be reduced or eliminated on a pro rata basis
but not below zero. The amount of such taxes shall be computed at the rates in
effect under the applicable tax laws in the year in which the 280G Change in
Control occurs, or if then ascertainable, the rates in effect in any later year
in which any Payment is expected to be paid following the 280G Change in
Control, and in the case of any income taxes, by using the maximum combined
federal, state and (if applicable) local income tax rates then in effect under
such laws.
10.7.2
If the Company or Employee believe in good faith that any of the Payments may be
subject to the Excise Tax, the determination of whether and to what
13
extent the Payments are subject to the Excise Tax and the amount of the
Section 4999 Limit (“Determination”) shall be made, at the Company’s expense, by
the accounting firm which is the Company’s accounting firm prior to the 280G
Change in Control or, if requested by Employee, another nationally recognized
accounting firm designated by the Board (or a committee thereof) and subject to
Employee’s reasonable approval, prior to the 280G Change in Control (“Accounting
Firm”). The Accounting Firm shall provide its calculations, together with
detailed supporting documentation, both to the Company and to Employee, before
payment of the Payments (if requested at that time by the Company or Employee)
or at such other time as requested by the Company or Employee (in either case
provided that the Company or Employee believe in good faith that any of the
Payments may be subject to the Excise Tax). Within ten (10) calendar days of the
delivery of the Determination to Employee, Employee shall have the right to
dispute the Determination. The existence of any such dispute shall not in any
way affect Employee’s right to receive the Payments in accordance with the
Determination. If there is no such dispute, the Determination by the Accounting
Firm shall be final, binding and conclusive upon the Company and Employee,
subject to the application of Section 10.7.3. For purposes of this Section 10.7,
(x) a “280G Change in Control” shall mean a change in ownership or effective
control of the Company or in the ownership of a substantial portion of the
assets of the Company, as determined in accordance with section 280G(b)(2) of
the Code and the regulations issued thereunder and (y) “Payments” shall mean any
payments or benefits in the nature of compensation that are to be paid or
provided to Employee or for Employee’s benefit in connection with a 280G Change
in Control (whether under this Agreement or otherwise, including by any entity,
or by any affiliate of the entity, whose acquisition of the stock of the Company
or its assets constitutes the 280G Change in Control) if Employee is a
“disqualified individual” (as defined in section 280G(c) of the Code) at the
time of the 280G Change in Control, to the extent that such payments or benefits
are “contingent” on the 280G Change in Control within the meaning of section
280G(b)(2)(A)(i) of the Code and the regulations issued thereunder.
10.7.3
As a result of the uncertainty in the application of Sections 280G and 4999 of
the Code, it is possible that a Payment or portion thereof either will have been
made or will not have been made by the Company, in either case in a manner
inconsistent with the limitations provided in Section 10.7.1 (an “Excess
Payment” or “Underpayment”, respectively). If it is established pursuant to
(i) a final determination of a court for which all appeals have been taken and
finally resolved or the time for all appeals has expired, or (ii) an Internal
Revenue Service (“IRS”) proceeding which has been finally and conclusively
resolved, that an Excess Payment has been made, Employee shall repay the Excess
Payment to the Company on demand, together with interest on the Excess Payment
at one hundred twenty percent
14
(120%) of the applicable federal rate (as defined in Section 1274(d) of the
Code) compounded semi-annually from the date of Employee’s receipt of such
Excess Payment until the date of repayment. If it is determined (i) by the
Accounting Firm, the Company (including any position taken by the Company,
together with its consolidated group, on its federal income tax return), or the
IRS, (ii) pursuant to a determination by a court, or (iii) upon the resolution
to Employee’s satisfaction of any dispute in accordance with Section 10.7.2,
that an Underpayment has occurred, the Company shall pay an amount equal to the
Underpayment to Employee within ten (10) calendar days of such determination or
resolution, together with interest on such amount at one hundred twenty percent
(120%) of the applicable federal rate compounded semi-annually from the date
such amount should have been paid to Employee until the date of payment. In the
event that the Payments have been reduced pursuant to Section 10.7.1, the
Company will bear all fees and expenses of any audit, suit or proceeding by the
IRS or any other taxing authority against the Company or against Employee, or of
any claim for refund, appellate procedure, or suit brought by the Company or
Employee against the IRS or any other taxing authority, in each case relating to
the Excise Tax.
10.7.4
For the avoidance of doubt, the terms of this Section 10.7 shall apply with
respect to Employee in lieu of the terms of Section 3.4 of the COC Policy.
11.
Arbitration. Except as otherwise provided for in this Agreement and in Exhibit B
to this Agreement (which constitutes a material provision of this Agreement),
any controversy, dispute or claim directly or indirectly arising out of or
relating to this Agreement, or the breach thereof, or arising out of or relating
to the employment of Employee, or the termination thereof, shall be resolved by
binding arbitration pursuant to Exhibit B.
12.
Disputed Claim. In the event of any “Disputed Claim” (defined below in
Section 22), such Disputed Claim shall be resolved by binding arbitration
pursuant to Exhibit B. Unless and until the arbitration process for a Disputed
Claim is finally resolved in Employee’s favor and Employer thereafter fails to
satisfy such award within thirty (30) days of its entry, Employee shall not have
affected an Employee’s Good Cause termination and Employee shall not have any
termination rights pursuant to Section 10.3 with respect to such Disputed Claim.
Nothing herein shall preclude or prohibit Company from invoking the provisions
of Section 10.2, or of Company seeking or obtaining injunctive or other
equitable relief.
13.
Severability. If any section, provision, paragraph, phrase, word, and/or line
(collectively, “Provision”) of this Agreement is declared to be unenforceable,
then this Agreement will be deemed retroactively modified to the extent
necessary to render the otherwise unenforceable Provision, and the rest of the
Agreement, valid and enforceable. If a court or arbitrator declines to modify
this Agreement as provided herein, the invalidity or unenforceability of any
Provision of this Agreement shall not affect the validity or enforceability of
the remaining Provisions. This Section 13 does not limit the Company’s rights to
seek damages or such additional relief as may be allowed by law and/or equity in
respect to any breach by Employee of the enforceable provisions of this
Agreement.
15
14.
No Waiver of Breach or Remedies. No failure or delay on the part of Employee or
Employer in exercising any right, power or remedy hereunder shall operate as a
waiver thereof nor shall any single or partial exercise of any such right, power
or remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy hereunder. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
15.
Amendment or Modification. No amendment, modification, termination or waiver of
any provision of this Agreement shall be effective unless the same shall be in
writing and signed by Employee and a duly authorized member of Employer’s senior
management and be approved by the Compensation Committee. No consent to any
departure by Employee from any of the terms of this Agreement shall be effective
unless the same is signed by a duly authorized member of Employer’s senior
management and is approved by the Compensation Committee. Any such waiver or
16.
Governing Law. The laws of the State in which the Employer’s principal place of
business is located shall govern the validity, construction and interpretation
of this Agreement, and except for Disputed Claims and subject to the
Arbitrations provisions included herewith, exclusive jurisdiction over any claim
with respect to this Agreement shall reside in the courts of the State of
Nevada.
17.
Number and Gender. Where the context of this Agreement requires the singular
shall mean the plural and vice versa and references to males shall apply equally
to females and vice versa.
18.
Headings. The headings in this Agreement have been included solely for
convenience of reference and shall not be considered in the interpretation or
construction of this Agreement.
19.
Assignment. This Agreement is personal to Employee and may not be assigned by
Employee. Employee agrees that Employer may assign this Agreement. Without
limitation of the foregoing, Employee expressly agrees that Employer’s
successors, affiliates and assigns may enforce the provisions of Section 8
above, and that five percent (5%) of the annual salary Employer has agreed to
pay in Section 3 above is in consideration for Employee’s consent to the right
of Employer’s successors, affiliates and assigns to enforce the provisions of
Section 8.
20.
benefit of Employer’s successors and assigns.
21.
Prior Agreements. This Agreement replaces and supersedes in all respects any and
all other employment agreements which may have been entered into by and between
the parties, including, without limitation, the Employment Agreement between
Employee and Employer dated March 30, 2020 (the “2020 Prior Agreement”), which
agreements shall be of no force and effect.
16
22.
Certain Definitions. As used in this Agreement:
“Accounting Value” means the accounting value calculated by Employer’s Chief
Accounting Officer under procedures approved or modified by the Compensation
Committee from time to time.
“Bonus Determination Date” means, with respect to a fiscal year, the date the
Compensation Committee determines annual bonuses for such fiscal year payable to
the Company’s senior executives (but not earlier than January 1 or later than
March 15 of the year immediately following the end of the applicable fiscal
year).
“Business Contacts” are defined as the names, addresses, contact information or
any information pertaining to any persons, advertisers, suppliers, vendors,
independent contractors, brokers, partners, employees, entities, patrons or
customers (excluding Company’s Trade Secrets, which are protected from
disclosure in accordance with Section 8.2 above) upon whom or which Employee:
contacted or attempted to contact in any manner, directly or indirectly, or
which Company reasonably anticipated Employee would contact within six months of
Employee’s last day of employment at Company, or with whom or which Employee
worked or attempted to work during Employee’s employment by Company.
“Company” means MGM Resorts International, and all of its subsidiary and
affiliated entities, together with all of their respective officers, directors,
joint venturers, members, shareholders, employees, ERISA plans, attorneys and
assigns.
“Competitor” means any person, corporation, partnership, limited liability
company or other entity which is either directly, indirectly or through an
affiliated company, engaged in or proposes to engage in the development,
ownership, operation or management of (i) gaming facilities; (ii) convention or
meeting facilities; or (iii) one or more hotels if any such hotel is connected
in any way, whether physically or by business association, to a gaming
establishment and, further, where Competitor’s activities are within a 150 mile
radius of any location where any of the foregoing facilities, hotels, or venues
are, or are proposed to be, owned, operated, managed or developed by the
Company.
“Confidential Information” is defined as all Trade Secrets, Business Contacts,
business practices, business procedures, business processes, financial
information, contractual relationships, marketing practices and procedures,
management policies and procedures, and/or any other information of the Company
or otherwise regarding the Company’s operations and/or Trade Secrets or those of
any member of the Company and all information maintained or entered on any
database, document or report set forth on Exhibit A or any other loyalty, hotel,
casino or other customer database or system, irrespective of whether such
information is used by Employee during Employee’s employment by Company.
“Disputed Claim” means that Employee maintains pursuant to Section 10.3 that
Employer has materially breached its duty to Employee and Employer has denied
such material breach.
17
“Employee’s Good Cause” shall mean (i) any assignment to Employee of duties that
are materially and significantly different than those contemplated by the terms
of this Agreement; (ii) any material and significant limitation on the powers of
the Employee not contemplated by the terms of the Agreement; (iii) the failure
of Employer to continue Employee’s employment as Chief Executive Officer; or
(iv) the failure of Employer to pay Employee any compensation when due, save and
except a Disputed Claim to compensation.
“Employee’s Physician” shall mean a licensed physician selected by Employee for
purposes of determining Employee’s disability pursuant to the terms of this
Agreement.
“Employer’s Good Cause” shall mean:
(1) Employee’s death;
(2) Employee’s “Disability,” which is hereby defined to include incapacity for
medical reasons certified to by “Employer’s Physician” (defined below) which
precludes the Employee from performing the essential functions of Employee’s
duties hereunder for a consecutive or predominately consecutive period of six
(6) months, with or without reasonable accommodations. (In the event Employee
disagrees with the conclusions of Employer’s Physician, Employee (or Employee’s
representative) shall designate a physician of Employee’s choice, (“Employee’s
Physician”) and Employer’s Physician and Employee’s Physician shall then jointly
select a third physician, who shall make a final determination regarding
Employee’s Disability, which shall be binding on the parties). Employee
acknowledges that consistent and reliable attendance is an essential function of
Employee’s position. Employee agrees and acknowledges that a termination under
this paragraph does not violate any federal, state or local law, regulation or
ordinance, including but not limited to the Americans With Disabilities Act;
(3) (A) the Employee’s conviction of, or plea of guilty or nolo contendere to
(x) a crime relating to the Company or its affiliates or (y) any felony,
(B) Employee is found disqualified or not suitable to hold a casino or other
gaming license by a final, non-appealable determination (or if Employee fails to
appeal a determination that may be appealed) of an applicable governmental
gaming authority, which causes Employee’s failure or inability to satisfy gaming
licensing requirements set forth in this Agreement, (C) willful misconduct,
gross misconduct, or gross negligence in the performance of the Employee’s
duties to the Company, (D) a material breach by the Employee of any material
written agreement entered into between the Employee and the Company, or any
material written policy of the Company, including the Company’s sexual
harassment policy, (E) the Employee’s refusal or intentional failure to follow a
lawful and proper direction of the Board, or (F) any conduct (whether or not
listed in (A) through (E) of this paragraph) by the Employee, whether or not in
the course of performing the Employee’s responsibilities to the Company, that
has or is reasonably likely to have a material adverse effect on the business,
assets or reputation of the Company; in the cases of each of (C) through (F)
above, that, if curable, is not cured by the Employee within thirty (30) days
following the Employee’s receipt of written notice given to the Employee by the
Company; or
18
(4) Employee’s failure or inability to satisfy the requirements stated in
Section 6 above.
“Employer’s Physician” shall mean a licensed physician selected by Employer for
Agreement.
“Restrictive Period” means the twelve (12) month period immediately following
any separation of Employee from active employment for any reason occurring
during the Specified Term or the twelve (12) month period immediately following
the expiration of the Specified Term.
“Trade Secrets” are defined in a manner consistent with the broadest
interpretation of Nevada law. Trade Secrets shall include, without limitation,
Confidential Information, formulas, inventions, patterns, compilations, vendor
lists, customer lists, contracts, business plans and practices, marketing plans
and practices, financial plans and practices, programs, devices, methods,
know-hows, techniques or processes, any of which derive economic value, present
ascertainable by proper means by, other persons who may or could obtain any
economic value from its disclosure or use, including but not limited to the
general public.
23.
Employee acknowledges that MGM Resorts International is a publicly traded
company and agrees that in the event there is any default or alleged default by
Employer under the Agreement, or Employee has or may have any claims arising
from or relating to the Agreement, Employee shall not commence any action or
otherwise seek to impose any liability whatsoever against any person or entity
in its capacity as a stockholder of MGM Resorts International (“Stockholder”).
Employee further agrees that Employee shall not permit any party claiming
through Employee, to assert a claim or impose any liability against any
Stockholder (in its capacity as a Stockholder) as to any matter or thing arising
out of or relating to the Agreement or any alleged breach or default by
Employer.
24.
Section 409A.
24.1
This Agreement is intended to comply with, or otherwise be exempt from,
Section 409A of Internal Revenue Code of 1986, as amended (the “Code”) and any
regulations and Treasury guidance promulgated thereunder (“Section 409A”). If
Employer determines in good faith that any provision of this Agreement would
cause Employee to incur an additional tax, penalty, or interest under
Section 409A, the Compensation Committee and Employee shall use reasonable
efforts to reform such provision, if possible, in a mutually agreeable fashion
to maintain to the maximum extent practicable the original intent of the
applicable provision without violating the provisions of Section 409A or causing
the imposition of such additional tax, penalty, or interest under Section 409A.
The preceding provisions, however, shall not be construed as a guarantee by
Employer of any particular tax effect to Employee under this Agreement.
24.2
“Termination of employment,” or words of similar import, as used in this
Agreement means, for purposes of any payments under this Agreement that are
payments of deferred compensation subject to Section 409A, Employee’s
“separation from service” as defined in Section 409A.
19
24.3
For purposes of Section 409A, the right to a series of installment payments
under this Agreement shall be treated as a right to a series of separate
payments.
24.4
With respect to any reimbursement of Employee’s expenses, or any provision of
in-kind benefits to Employee, as specified under this Agreement, such
reimbursement of expenses or provision of in-kind benefits shall be subject to
the following conditions: (1) the expenses eligible for reimbursement or the
amount of in-kind benefits provided in one taxable year shall not affect the
expenses eligible for reimbursement or the amount of in-kind benefits provided
in any other taxable year, except for any medical reimbursement arrangement
providing for the reimbursement of expenses referred to in Section 105(b) of the
Code; (2) the reimbursement of an eligible expense shall be made pursuant to
Employer’s reimbursement policy but no later than the end of the year after the
year in which such expense was incurred; and (3) the right to reimbursement or
in-kind benefits shall not be subject to liquidation or exchange for another
benefit.
24.5
If a payment obligation under this Agreement that constitutes a payment of
“deferred compensation” (as defined under Treasury Regulation
Section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury
Regulation Sections 1.409A-1(b)(3) through (b)(12)) arises on account of
Employee’s separation from service while Employee is a “specified employee” (as
defined under Section 409A), any payment thereof that is scheduled to be paid
within six (6) months after such separation from service shall accrue without
interest and shall be paid within 15 days after the end of the six-month period
beginning on the date of such separation from service or, if earlier, within 15
days following Employee’s death.
25.
Ownership of Intellectual Property. Employee expressly acknowledges that all
trademarks, trade dress, copyrightable works, patentable inventions, ideas, new
or novel inventions, concepts, systems, methods of operation, improvements,
strategies, techniques, trade secrets including, but not limited to, customers
(including, but not limited to, customer names, contact information, historical
and/or theoretical play, or other information, and the right to market to such
customers), data of any type or nature and regardless of the form or media, as
well as all materials of any type of nature that comprise, reflect or embody any
of the foregoing including, without limitation, databases, software, artistic
works, advertisements, brochures, marketing plans, customer lists, memoranda,
business plans, and proposals (collectively, “Intellectual Property”) created,
conceived, developed, contributed to, or otherwise obtained, in whole or in part
by the Employee during the term of Employee’s employment by Employer shall at
all times be owned by Employer (and is hereby expressly assigned by Employee to
Employer) if the Intellectual Property: (a) was created, conceived, developed,
or contributed to: (1) using any of Employer’s property or resources; (2) on
Employer’s premises; or (3) during Employee’s hours of employment; or
(b) relates to Employee’s employment by Employer, even though creation of such
Intellectual Property was not within the scope of Employee’s duties and
responsibilities for which the Employer employs the Employee. All works of
authorship created by Employee
20
within the scope of this provision shall be deemed works made for hire as
defined in the Copyright Act of 1976, 17 U.S.C. § 101 To the extent such works
are deemed not to be works of authorship, Employee hereby irrevocably assigns
(or authorizes Employer to act as Employee’s agent to assign) all right, title
and interest in and to the copyrights in the works, including, without
limitation, right of attribution and all related moral rights, to the Employer.
Employee further agrees that any inventions and trade secrets covered by this
provision shall be owned absolutely and exclusively by Employer, including all
patent rights throughout the world. Employee acknowledges that this provision
provides Employer with rights greater than provided under certain applicable
laws including, without limitation, Nevada Revised Statutes § 600.500. Employee
shall promptly inform Employer about such patentable inventions and shall not
disclose to any third parties any information about the inventions without the
prior written consent of Employer. Employee agrees to execute and deliver to
Employer, upon request, such documents as may be necessary for Employer to
perfect its rights in any and all Intellectual Property covered by this
provision. To fulfill the intent of this paragraph, Employee irrevocably
appoints Employer and Employer’s authorized agents as his/her agent and attorney
in fact to transfer, vest or confirm Employer’s rights and to execute and file
any such applications and to do all other lawful acts to further the prosecution
and issuance of letters, patents or trademark or copyright registrations with
the same legal force as if done by Employee, in all instances in which Employer
is unable for any reason to secure Employee’s personal signature. Employee shall
not be entitled to any compensation or other consideration for any Intellectual
Property covered by this provision.
26.
Certain Protections.
26.1
Employee understands that nothing contained in this Agreement limits or
otherwise prohibits Employee from filing a charge or complaint with the Equal
Employment Opportunity Commission, the National Labor Relations Board, the
Occupational Safety and Health Administration, the Securities and Exchange
Commission or any other federal, state or local governmental agency or
commission (“Government Agencies”). Employee further understands that this
Agreement does not limit Employee’s ability to communicate with any Government
Agencies or otherwise participate in any investigation or proceeding that may be
conducted by any Government Agency, including providing documents or other
information (subject to paragraph 26.2 below), without notice to the Employer.
This Agreement does not limit Employee’s right to receive an award for
information provided to any Government Agencies.
26.2
Defend Trade Secrets Act Notice. Notwithstanding anything to the contrary in
this Agreement or otherwise, pursuant to the Defend Trade Secrets Act of 2016,
Employer hereby advises Employee as follows:
(a)
or State trade secret law for the disclosure of a trade secret that (i) is made
(a) in confidence to a Federal, State, or local government official, either
directly or indirectly, or to an attorney; and (b) solely for the purpose of
reporting or investigating a
21
suspected violation of law; or (ii) is made in a complaint or other document
filed in a lawsuit or other proceeding, if such filing is made under seal; and
(b)
individual (i) files any document containing the trade secret under seal; and
(ii) does not disclose the trade secret, except pursuant to court order.
27.
CARES Act. Notwithstanding anything to the contrary, to the extent required
pursuant to the terms of the Coronavirus Aid, Relief, and Economic Security Act
(as may be amended or modified, the “CARES Act”) in connection with the Company
entering into, or becoming eligible to enter into, a loan, loan guarantee or
other form of financial assistance with the Secretary of the Treasury or other
governmental entity under the CARES Act, (i) Employee shall agree to such
limitations or reductions with respect to Employee’s compensation (including,
without limitation, equity awards) or severance entitlements from the Company
that are required by any governmental entity to comply with the applicable
provisions of the CARES Act; and (ii) Employee’s compensation (including,
without limitation, equity awards) and severance entitlements from Employer may
be limited or reduced by the Compensation Committee to the extent necessary to
comply with the applicable provisions of the CARES Act. To the extent permitted
by the CARES Act or other applicable related law or agreement, any such
limitation or reduction shall be made in good faith consultation with Employee.
No limitation, reduction or other consequence of this Section 27 shall
constitute Employee’s Good Cause.
IN WITNESS WHEREOF, Employer and Employee have entered into this Agreement in
Las Vegas, Nevada, as of the date first written above.
EMPLOYEE – William J. Hornbuckle
/s/ William J. Hornbuckle
Dated: July 29, 2020 EMPLOYER – MGM Resorts International
/s/ John M. McManus
By: John M. McManus
22
EXHIBIT A
Name of Report
Generated By
Including, but not limited to: Arrival Report Room Reservation/Casino
Marketing Departure Report Room Reservation/Casino Marketing Master Gaming
Report Casino Audit Department Financial Statement Finance $5K Over High
Action Play Report Casino Marketing $50K Over High Action Play Report
Casino Marketing Collection Aging Report(s) Collection Department Accounts
Receivable Aging Finance Marketing Reports Marketing Daily Player Action
Report Casino Operations Daily Operating Report Slot Department Database
Marketing Reports Database Marketing Special Event Calendar(s) Special
Events/Casino Marketing Special Event Analysis Special Events/Casino
Marketing Tenant Gross Sales Reports Finance Convention Group
Tentative/Confirmed Pacing Reports Convention Sales Entertainment Event
Settlement Reports Finance Event Participation Reports Casino Marketing
Table Ratings Various Top Players Various Promotion Enrollment
Promotions Player Win/Loss Various
23
Execution Version
EXHIBIT B
ARBITRATION AGREEMENT
This Arbitration Agreement is entered into as of July 29, 2020 (the “Effective
Date”), by and between MGM Resorts International, its affiliates, parents,
subsidiaries, divisions, successors, assigns and their current and former
members, employees, officers, directors, and agents (hereafter collectively
referred to as the “Employer”) and William J. Hornbuckle on behalf of
him/herself, his/her heirs, administrators, executors, successors and assigns
By signing this Agreement, both Employee and Employer (collectively the
“Parties”) affirmatively assent and are specifically authorizing the resolution
of the covered claims (as set forth below) by final and binding arbitration per
the terms of this Agreement, rather than litigation before a judge and/or jury
in court. The Parties acknowledge that by agreeing to arbitration, they are
WAIVING ANY RIGHTS TO A JURY TRIAL.
Employee initials:
WJH
Employer initials:
JMM
A.
Scope of the Arbitration Agreement: Claims Covered and Not Covered.
1. Except as otherwise provided in this Arbitration Agreement, Employee and
Employer agree to resolve through final and binding arbitration any and all
claims, disputes, or controversies that could otherwise be filed in court
(“Claims”), whether legal or equitable, that Employee or Employer may have
against each other. Claims covered by the Arbitration Agreement include, but are
not limited to, those arising out of or relating to Employee’s obligations under
the Employment Agreement, dated as of the Effective Date, by and between
Employee and Employer (“employment Agreement”), as well as those arising out of
or relating to Employee’s application for employment, the employment
relationship, and Employee’s separation from employment; Title VII of the Civil
Rights Act of 1964 (as amended); the Fair Labor Standards Act; the Equal Pay
Act; the Family and Medical Leave Act; the Age Discrimination in Employment Act;
the Genetic Information and Nondisclosure Act; the Americans with Disabilities
Act; the Employee Retirement Income Security Act of 1974 (“ERISA”); the Fair
Credit Reporting Act; Sections 1981 through 1988 of Title 42 of the United
States Code; the Pregnancy Discrimination Act; the Rehabilitation Act; the
Worker Adjustment and Retraining Notification Act; any other federal, state, or
local law, ordinance or regulation relating to the employment relationship
between Employee and Employer, including, but not limited to, the payment of
wage of any kind or based on any public policy, contract, tort, or common law;
or any claim for damages, costs, fees, or other expenses or legal or equitable
relief, including attorneys’ fees. Moreover, and notwithstanding anything to the
contrary below, it is the Parties’ clear and unmistakable intent that all Claims
be resolved through binding arbitration to the fullest extent permitted by
federal law (and state law that is not preempted by federal law), not an
administrative proceeding or court.
2. Certain claims are not covered by this Arbitration Agreement: (i) claims for
workers’ compensation benefits; (ii) claims for unemployment compensation
benefits; (iii) claims which by federal law may not be subject to mandatory
binding pre-dispute arbitration, such as certain claims under the Dodd-Frank
Wall Street Reform Act; (iv) claims against a federal
contractor that may not be the subject of a pre-dispute arbitration agreement as
provided by valid, applicable, and enforceable federal Executive Orders and
their implementing rules, regulations, and guidance; (v) claims asserted on an
individual basis alleging quid pro quo or hostile work environment sexual
harassment, and sex discrimination claims based on sexually harassing conduct
under federal and state law (but excluding claims of sexual harassment and sex
discrimination asserted on a class or representative basis, and excluding sex
discrimination pay equity claims); and, (vi) claims under employee pension,
welfare benefit or stock option plans if those plans provide a dispute
resolution procedure.
3. Notwithstanding the parties’ agreement to be bound by this Arbitration
Agreement, Employee understands and agrees that failure to abide by Employee’s
promises under the Employment Agreement would impair Employer’s essential
ongoing business plans and financial arrangements and would cause Employer
irreparable harm. As such, Employee understands and agrees that Employer may
apply to a court of competent jurisdiction for temporary, preliminary, or
emergency injunctive relief in the event Employer believes in good faith that
Employee has breached such promises. This Arbitration Agreement also does not
prohibit Employee or the Employer from filing a motion in court to compel
arbitration. This Arbitration Agreement does not prohibit Employee from filing
administrative charges with a federal, state, or local administrative agency
such as the National Labor Relations Board (NLRB), Equal Employment Opportunity
Commission (EEOC), or Securities Exchange Commission, nor does anything in this
Arbitration Agreement preclude, prohibit, or otherwise limit, in any way,
Employee’s rights and abilities to contact, communicate with, report matters to,
or otherwise participate in any whistleblower program administered by any such
agencies.
B.
Class/Collective Action Waiver.
Except where prohibited by federal law, covered claims must be brought on an
individual basis only. The parties agree that by signing this Arbitration
Agreement, they waive their right to commence, or be a party to, any class,
collective, representative, or multi-plaintiff claims. The parties agree any
claim can be pursued, but only on an individual basis, except the lack of
co-plaintiffs shall not, in and of itself, be a bar to pursuit of a pattern and
practice claim. Any disputes concerning the validity of this multi-plaintiff,
class, collective, and representative action waiver will be decided by a court
of competent jurisdiction, not by the arbitrator. In the event a court
determines that this waiver is unenforceable with respect to any claim or
portion of a claim, this waiver shall not apply to that claim or portion of the
claim, which may then only proceed in court as the exclusive forum.
C. Authority to Determine Arbitrability.
Except as expressly provided for above, the arbitrator shall have the exclusive
authority to resolve any dispute relating to the enforceability or formation of
this Arbitration Agreement (including all defenses to contract enforcement such
as, for example, waiver and unconscionability) or the arbitrability of any
claim. Enforcement of this Arbitration Agreement may not be precluded on the
grounds that (1) a party to this Arbitration Agreement is also a party to a
pending court action or special proceeding with a third party arising out of the
same transaction or series of related transactions, or (2) a party to this
Arbitration Agreement asserts arbitrable and non-arbitrable claims
2
D.
The Arbitration Process.
1. This Arbitration Agreement is governed by and shall be enforced pursuant to
the Federal Arbitration Act (the “FAA”). The arbitration will be heard by a
neutral arbitrator and will be administered by the Judicial Arbitration
Mediation Service (“JAMS”), pursuant to the JAMS Employment Arbitration Rules
(“JAMS Rules”). A copy of the JAMS Rules may be obtained from the Employer or
downloaded from JAMS (www.jamsadr.com) or by calling JAMS at 1(800)352-5267. To
the extent any of the provisions in this Arbitration Agreement conflict with the
JAMS Rules or any other rules of JAMS, this Arbitration Agreement shall prevail.
The parties may agree upon an individual arbitrator to hear the case or follow
the JAMS Rules relating to selection of an arbitrator. The arbitrator shall have
the power to award any type of legal or equitable relief on an individual basis
that would be available in a court of competent jurisdiction including, but not
limited to, costs (except as provided for in Section E.3 below) and attorneys’
fees, to the extent available under applicable law. The arbitrator must issue a
written award and decision. Any arbitral award may be entered as a judgment in
any court of competent jurisdiction, as permitted by and in accordance with the
FAA.
2. The party initiating an arbitration must submit a written demand for
arbitration to JAMS within the statute of limitations applicable to the claims
asserted in the demand for arbitration. Any claim for arbitration will be timely
only if brought within the statute of limitations applicable to the claim or
claims in the demand. Within the same time frame, the party initiating the
arbitration also should send a copy of the demand for arbitration to the other
party. Employer will send demands for arbitration to Employee at the address the
Employer has on file for Employee.
3. Employer agrees to bear JAMS filing fees and administrative costs, as well as
the cost of the arbitrator, including the arbitrator’s travel expenses, if any,
and will reimburse Employee for any fees Employee may be required to pay for
filing the demand for arbitration. The parties each shall bear their own
attorneys’ fees and costs (if any) relating to any arbitration proceeding
itself, except as part of any remedy that may be awarded, the arbitrator shall
have the authority to award the parties his, her, or its attorneys’ fees and
costs where required or permitted by law or by operation of law pursuant to an
offer of judgment.
4. The arbitration will take place in the city and state in which Employee is
employed or was last employed by Employer. In adjudicating the claim(s), the
arbitrator shall apply the substantive laws of the state in which Employee is
employed or was last employed by Employer or the state in which the claim(s)
arose. Each party shall have the right to conduct discovery adequate to fully
and fairly present the claims and defenses consistent with the streamlined
nature of arbitration.
5. If for whatever reason JAMS declines to act as the neutral, the parties shall
utilize NAM (www.namadr.com) as the neutral for the arbitration/appeal and shall
utilize its Rules for Resolution of Employment Disputes. Each party agrees that
it has had an opportunity to review the current JAMS Employment Arbitration
Rules.
3
E.
Consideration For This Arbitration Agreement.
The Parties agree that new or continued employment, the Employer’s agreement to
pay all fees and costs including JAMS filing fees and administrative costs, as
well as the cost of the arbitrator, and the mutual promises to arbitrate the
claims covered by this Arbitration Agreement serve as adequate consideration.
F.
Severability and Related Issues.
If any provision or portion of a provision is found to be invalid, void, or
unenforceable, the provision or portion of the provision shall be interpreted in
a manner or modified to make it enforceable. If that is not possible, it shall
be severed, and the remaining portions of the provisions and other provisions of
this Arbitration Agreement shall remain in full force and effect. Neither JAMS
(defined below) nor the arbitrator shall have power under this Arbitration
Agreement to modify or alter this Arbitration Agreement so as to permit the
arbitrator or JAMS to consolidate claims and/or to hear a multi-plaintiff,
class, collective, or representative action.
G.
Other Provisions of this Arbitration Agreement.
This Arbitration Agreement contains the complete agreement between the parties
regarding the subjects covered in it and supersedes any prior or inconsistent
agreements that might exist between Employee and Employer as to the subjects
addressed herein. This Arbitration Agreement can be modified only by an express
written agreement signed by Employee and an authorized Legal Representative for
Employer. This Arbitration Agreement shall survive the termination of Employee’s
employment.
Neither the terms nor conditions described in this Arbitration Agreement are
intended to create a contract of employment for a specific duration of time.
Employment with the Employer is voluntarily entered into, and Employee is free
to resign at any time. Similarly, the Employer may terminate the employment
relationship at any time for any reason, with or without prior notice.
BY ISSUANCE OF THIS ARBITRATION AGREEMENT, THE EMPLOYER AGREES TO BE BOUND TO
ITS TERMS WITHOUT ANY REQUIREMENT TO SIGN THIS ARBITRATION AGREEMENT.
I KNOWINGLY AGREE TO THIS MUTUAL AGREEMENT TO ARBITRATE CLAIMS, WHICH OTHERWISE
COULD HAVE BEEN BROUGHT IN COURT. I UNDERSTAND THAT THIS ARBITRATION AGREEMENT,
WHICH MAY BE ENFORCED IN COURT, REQUIRES THAT CLAIMS COVERED BY THIS ARBITRATION
AGREEMENT BE SUBMITTED TO ARBITRATION PURSUANT TO THIS ARBITRATION AGREEMENT
RATHER TO A JUDGE OR JURY IN COURT. I AFFIRM THAT I HAVE HAD SUFFICIENT TIME TO
READ AND UNDERSTAND THE TERMS OF THIS ARBITRATION AGREEMENT AND THAT I HAVE BEEN
ADVISED OF MY RIGHT TO SEEK LEGAL COUNSEL REGARDING THE MEANING AND EFFECT OF
THIS ARBITRATION AGREEMENT PRIOR TO SIGNING.
7/29/20
William J. Hornbuckle Date
4 |
Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION -OXLEY ACT OF 2002 In connection with the Quarterly Report of Northern Technologies International Corporation (the “Company”) on Form 10-Q for the period ended February28, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, G. Patrick Lynch, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. G. Patrick. Lynch President and Chief Executive Officer (principal executive officer) Circle Pines, Minnesota April 12, 2013
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Title: Can I enter Canada with an expunged DUI?
Question:Backstory: I live in Illinois. In 2015, in the state of Iowa, I was convicted of an OWI (Operating While Intoxicated (same as DUI)). Illinois revoked my driver's license for one year. After one year, Iowa expunged the OWI.
I've gotten a copy of my criminal background check and it is clean. However, I believe it is still on my driving abstract.
Will I be able to enter Canada if I wanted to visit?
Answer #1: You should contact the Canadian embassy for an actual answer. |
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) September 24, 2012 Commission file number 0-10035 LESCARDEN INC. (Exact name of small business issuer as specified in its charter) New York 13-2538207 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 420 Lexington Avenue, New York, NY 10170 (Address of principle executive offices)(Zip Code) Issuer's telephone number (212) 687-1050 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 3.02. UNREGISTERED SALES OF EQUITY SECURITIES. As used in this Current Report, the term the “Company” refers to Lescarden Inc. Effective August 10, 2012, the Company entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Charles T. Maxwell (“Maxwell”), its chairman of the board, to provide working capital for inventory purchases through an unregistered issuance of common stock.Effective as of August 8, 2012 the board of directors approved the Stock Purchase Agreement and adopted a resolution to set the purchase price at an amount equal to the average closing market price of the Company’s common stock during the three weeks preceding the closing date for the sale and issuance of the common stock. Because there was no public offering, the issuance of common stock pursuant to the Stock Purchase Agreement was undertaken by the Company in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933. Pursuant to the Stock Purchase Agreement, the Company will issue a number of shares of common stock to the majority shareholder and Chairman of the Board equal $200,000 divided by average closing market price of the Company’s common stock during the three weeks preceding the date of the closing, or $0.023133 per share.Upon issuance, Maxwell will receive 8,645,533 shares of common stock resulting in a beneficial ownership of 30,512,378 shares, or 62.63%. The following sets forth the information required by Item 701 of Regulation S-K with respect to the unregistered sale of equity securities the Company completed on September 24, 2012: ● Effective August 10, 2012, the Company entered into a Stock Purchase Agreement with Maxwell pursuant to which Maxwell agreed to purchase, and the Company agreed to sell and issue 8,645,533 shares of common stock, $.001 par value for an aggregate purchase price of $200,000.The shares issued pursuant to the Stock Purchase Agreement were issued exclusively to one person who qualified as an "accredited investor" within the meaning of Rule 501(a) of Regulation D under the Securities Act of 1933 as amended (the "Securities Act").The shares issued are “restricted securities” under the Securities Act. ● The Company paid no fees or commissions in connection with the issuance of the Shares.The sale of the Securities was undertaken without registration under the Securities Act in reliance upon an exemption from the registration requirements of the Securities Act set forth in Section 4(2) there under.The investor qualified as an "accredited investor" within the meaning of Rule 501(a) of Regulation D.The Company did not engage in any public advertising or general solicitation in connection with this transaction, and the investor was provided with disclosure of all aspects of the Company’s business, including reports filed with the Securities and Exchange Commission and other financial, business and corporate information. ● The proceeds from the issuance of stock are to be used for the purchase of inventory. ITEM 9.01.FINANCIAL STATEMENTS AND EXHIBITS. (d)Exhibits. The exhibits listed in the following Exhibit Index are filed as part of this current report. Exhibit No. Description Stock Purchase Agreement. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. LESCARDEN, INC. (Registrant) Date: September 26, 2012 By: /s/William Luther William Luther Chief Executive and Chief Financial Officer
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported: September 29, 2014 Viggle Inc. (Exact name of Registrant as Specified in its Charter) Delaware 0-13803 33-0637631 (State or other jurisdiction of incorporation) (Commission File Number) (I.R.S. Employer Identification Number) 902 Broadway, 11th Floor New York, New York (Address of principal executive offices) (Zip Code) (212)231-0092 (Registrant’s Telephone Number, including Area Code) (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions ( see General Instruction A.2 below): o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425). oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12). o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)). o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)). Item 2.02 Results of Operations and Financial Condition. On September 29, 2014, Viggle Inc. (the “Company”) announced its financial and operating results for the fiscal year ended June 30, 2014 in the press release furnished herewith as Exhibit 99.1 and incorporated herein by reference. The information in this Report, including the Exhibit, is being furnished pursuant to Item 2.02 of Form 8-K and General Instruction B.2 thereunder. Such information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act. Item 8.01.Other Events. The press release also announced a conference call scheduled for Monday, September 29, 2014 at 9:00 A.M. Eastern Time (ET) to review results for the fourth quarter and fiscal 2014 ended June 30, 2014. Item 9.01.Financial Statements and Exhibits. (d) Exhibits Exhibit No. Description Press release dated September 29, 2014 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. VIGGLE INC. September 29, 2014 By: /s/Mitchell J. Nelson Mitchell J. Nelson Executive Vice President
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A (Mark One) þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended May 31, 2011 . o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _ to . Commission file number: 000-52784 ABAKAN INC. (Exact name of registrant as specified in its charter) Nevada (State or other jurisdiction of incorporation or organization) 98-0507522 (I.R.S. Employer Identification No.) 2665 S. Bayshore Drive, Suite 450, Miami, Florida 33133 (Address of principal executive offices) (Zip Code) Registrants telephone number, including area code: (786) 206-5368 Securities registered under Section 12(b) of the Act: none. Securities registered under Section 12(g) of the Act: common stock (title of class), $0.0001 par value. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No þ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K/A or any amendment to this Form 10-K/A. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. Smaller reporting company þ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ The aggregate market value of the registrants common stock, $0.0001 par value (the only class of voting stock), held by non-affiliates (36,157,425 shares) was $49,716,459 based on the average of the bid and ask price ($1.375) for the common stock on September 12, 2011. At September 12, 2011, the number of shares outstanding of the registrants common stock, $0.0001 par value (the only class of voting stock), was 59,377,425. 1 TABLE OF CONTENTS PART I Item1. Busines s 4 Item 1A. Risk Factor s 21 Item 1B. Unresolved Staff Comment s 24 Item 2. Propertie s 25 Item 3. Legal Proceeding s 26 Item 4. (Removed and Reserved ) 26 PART II Item 5. Market for Registrants Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securitie s 27 Item 6. Selected Financial Dat a 31 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation s 31 Item 7A. Quantitative and Qualitative Disclosures about Market Ris k 38 Item 8. Financial Statements and Supplementary Dat a 38 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosur e 39 Item 9A. Controls and Procedures 39 Item 9B. Other Informatio n 40 PART III Item 10. Directors, Executive Officers, and Corporate Governanc e 41 Item 11. Executive Compensatio n 49 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matter s 52 Item 13. Certain Relationships and Related Transactions, and Director Independenc e 54 Item 14. Principal Accountant Fees and Service s 55 PART IV Item 15. Exhibits, Financial Statement Schedule s 55 Signature s 56 2 As used herein the terms Company , we , our , and us refer to Abakan Inc. unless context indicates otherwise. EXPLANATORY NOTE The Companys Form 10-K filed on September 13, 2011 (the Original Filing) has been amended hereby in its entirety on Form 10-K/A (this Amendment) to: (i) add specification regarding the Company's combined interest in MesoCoat and regarding the Company's patents; (ii) clarify disclosure in the Managements Discussion and Analysis section and in the Legal Proceedings section; and (iii) to rectify the disclosures audit report, financial statements, and the notes thereto. Unless indicated otherwise, the disclosures in this Amendment continue to describe conditions as of the date of the Original Filing, and the disclosures contained herein have not been updated to reflect events, results or developments that have occurred after the Original Filing, or to modify or update those disclosures affected by subsequent events. Among other things, forward-looking statements made in the Original Filing have not been revised to reflect events, results or developments that have occurred or facts that have become known to us after the date of the Original Filing, and such forward-looking statements should be read in their historical context. This Amendment should be read in conjunction with the Companys filings made with the Securities and Exchange Commission ( Commission ) subsequent to the Original Filing, including any amendments to those filings. 3 ITEM 1. BUSINESS Corporate History The Company was incorporated in the State of Nevada on June 27, 2006 under the name Your Digital Memories Inc. Waste to Energy Group Inc., a wholly-owned subsidiary of the Company, was incorporated in the state of Nevada on August 13, 2008. Waste to Energy Group Inc., and the Company entered into an Agreement and Plan of Merger on August 14, 2008. The board of directors of Waste to Energy Group Inc. and that of the Company deemed it advisable in the best interests of their respective shareholders that Waste to Energy Inc. be merged into the Company with the Company being the surviving entity as Waste to Energy Group Inc. Abakan Inc., a wholly-owned subsidiary of the Company, was incorporated in the state of Nevada on November 6, 2009. Abakan Inc. and the Company entered into an Agreement and Plan of Merger on November 6, 2009. The board of directors of Abakan Inc. and that of the Company deemed it advisable in the best interests of their respective shareholders that Abakan Inc. be merged into the Company with the Company being the surviving entity as Abakan Inc. We are a development stage company. Our corporate office is located at 2665 S. Bayshore Drive, Suite 450, Miami, Florida, 33133 and our telephone number is (786) 206-5368. Our registered agent is EastBiz.com, Inc., located at 5348 Vegas Drive, Las Vegas, Nevada, 89108, and their telephone number is (702) 871-8678. Our common stock is quoted on the OTCQB electronic quotation system under the symbol ABKI. The Company The Company intends to become a leader in the multi-billion dollar advanced coatings and metal formulations markets by assembling controlling interests in a small number of next generation technology firms. We expect to achieve this goal by investing in R&D firms and technology start-ups that have the potential to substantially impact the surface engineering and energy management needs of Fortune 1000 companies and government entities. The Company is actively involved in supporting the R&D, market development, and commercialization efforts of those entities in which it has invested. We have to date acquired a 51% controlling interest in MesoCoat, Inc. ( MesoCoat ) and a 41% non-controlling interest in Powdermet, Inc. ( Powdermet ). Since Powdermet owns 49% of MesoCoat, the Companys interest in Powdermet represents a 20% indirect interest in MesoCoat. MesoCoat, Inc. On December 11, 2009, the Company executed an Investment Agreement, dated December 9, 2009, with MesoCoat and Powdermet in order to purchase 79,334 newly issued MesoCoat shares, equal to a fully diluted 34% equity interest in MesoCoat for $1,400,030. Powdermet was MesoCoats sole shareholder prior to the transaction owned 52% by Andrew Sherman (the CEO and a director of both MesoCoat and Powdermet who became a director of the Company on August 20, 2010), 41% by Kennametal, Inc. (an unrelated company) and 7% by other unrelated parties. On March 21, 2011, the Company purchased 596,813 shares of Powdermet from Kennametal equal to a fully diluted 41% interest in Powdermet. 4 On July 11, 2011 the Company placed MesoCoat and Powdermet on notice of its intent to complete the purchase of an additional equity interest in MesoCoat in accordance with the Investment Agreement. The Company completed the purchase of 86,156 newly issued shares, equal to a fully diluted 17% equity interest for $2,800,000 on July 13, 2011 thereby increasing its direct ownership of MesoCoat to a fully diluted 51% interest. The Company has to date acquired a 51% controlling interest in MesoCoat and a 41% non-controlling interest in Powdermet. Since Powdermet owns 49% of MesoCoat, the Companys interest in Powdermet represents a 20% indirect interest in MesoCoat equal to a 71% combined interest in MesoCoat. The Investment Agreement provides us with additional options to increase our equity interest in MesoCoat, as follows: An option which entitles the Company to purchase an additional 24% equity interest in exchange for $16,000,000 by July 13, 2012. The exercise of this option would increase the Companys direct holdings to a fully diluted 75% of MesoCoat and entitle the Companys management to appoint a fourth member to MesoCoats five-person board of directors (the Company currently has a right to appoint three of MesoCoats directors, one of which must be independent). An option which entitles minority shareholders of MesoCoat, for a period of 12 months after the exercise of the option detailed above, to cause the Company to pay an aggregate amount of $14,600,000, payable in shares of the Companys common stock or a combination of cash and shares, in exchange for all remaining outstanding shares of MesoCoat. MesoCoats Business MesoCoat is an Ohio-based materials-science company intent on becoming a technology leader in metal protection and repair based on its metal coating and metal cladding technologies designed to address specific industry needs related to conventional oil and gas, oil sands, mining, aerospace, defense , infrastructure, and shipbuilding. The company was originally formed as a wholly owned subsidiary of Powdermet, known as Powdermet Coating Technologies, Inc., to focus on the further development and commercialization of Powdermets nanocomposite coatings technologies. The company was renamed as MesoCoat in March of 2008. Thereafter, in July of 2008, the coatings and cladding assets of Powdermet were conveyed to MesoCoat through an asset transfer, an IP license, and a technology transfer and manufacturing support agreement. MesoCoat has exclusively licensed and developed a proprietary metal cladding application process as well as advanced nano-composite coating materials that combinecorrosion and wear resistant alloys, and nano-engineered cermet materials with proprietary high-speed application systems. The result is protective cladding applications that will be offered on a competitive basis with existing market solutions. The coating materials unite high strength, hardness, fracture toughness, and a low coefficient of friction into one product structure. MesoCoats products are currently undergoing extensive testing by the U.S. Air Force, U.S. Navy and Marine Corp, oil field service companies, and original equipment manufacturers (OEMs). MesoCoat products nearing commercialization are CermaClad TM for cladding applications and PComP TM for cermet-metallic composite powder thermal spray applications. 5 CermaClad CermaClad is a premier metallurgically bonded, high rate cladding solution optimized to manage the risks and consequences of corrosion damage and the failure of large assets such as oil and gas pipelines, refineries, ships, and bridges. In corrosive environments, including seawater, road salt, unprocessed oil, chemical processing, metals production, and other industrial applications, asset owners and operators either need to periodically maintain and replace major assets, using expensive, corrosion resistant alloy materials, which substantially run up costs, or clad their carbon steel with a corrosion resistant alloy coating. Cladding solutions such as CermaClad can save up to 80% of the cost of using solid alloys, while providing equivalent maintenance free corrosion lifetimes equal to the life of the asset. Clad metals are widely used in oil and gas exploration and production, marine transportation, mining, petrochemical processing and refining, nuclear, paper and pulp, desalination, and power generation industries. Each industry sector has different needs for this material. For instance, to meet growing global energy demands, oil companies continue to extend their offshore drilling efforts into deeper seas. The higher temperatures and corrosivity of deeper reserves eliminate plastics and other solutions from consideration, increasing the use of corrosion resistant alloys and lower-cost clad pipe alternatives. CermaClad is MesoCoats proprietary cladding process which utilizes a high density infrared fusion heat source an arc lamp to metallurgically bond (make inseparable) metals, corrosion resistant alloys and/or cermets onto a metal substrate. Using this process, products like pipe and plates can be protected against harsh operating environments with great efficiency and speed compared to competing weld overlay products. Today, cladded steel is a specialized segment of the steel industry where it is estimated that demand outstrips supply. The competitive advantages of CermaClad over current competing technologies and products are: · Cermaclad and other clad overlays are substantially lower cost than pure alloy products · CermaClad produces a metallurgically bonded overlay, reducing risk of catastrophic failure and buckling of lined pipes such as industry leader Buttings BuBi bimetallic pipe · CermaClad can be applied to seamless pipe, eliminating 90% of welds which are a common source of early failure. · CermaClad application technology occurs with a 30-40cm wide torch compared to less than 1 cm for laser or inert gas welding torches, resulting in planned application rates over an order of magnitude faster than current weld overlay technologies. · CermaClad produces a smooth overlay that is virtually free of base metal dilution, improving inspectability and corrosion resistance, and eliminating many sources of corrosion and fatigue initiation. Smooth surfaces also decrease flow resistance, enabling reduced friction losses in pipeline applications. The CermaClad product line in development today is as follows: CermaClad CR (Corrosion Resistant Alloys) CermaClad WR (Wear Resistant) CermaClad HT (High Temperature) CermaClad LT (Low Thickness) 6 PComP PComP is a series of nanocomposite cermet coatings that are used to impart wear and corrosion resistance, and to restore dimensions, of metal components. PComP competes against chrome and nickel plating, and tungsten carbide in the multibillion dollar inorganic metal finishing market. Competing materials like hexavalent chrome, carbides and tungsten carbide cobalt have become major headaches for industrial producers in the metal finishing industry since these materials are on the EPAs hazardous materials watch list and are legally banned in several countries. Industry spends billions annually on these hazardous materials, and Mesocoats customers can gain a competitive advantage while mitigating environmental liabilities by adopting green products and processes into their product offerings. While businesses grapple with the need to transition away from these harmful products, MesoCoat has developed a solution platform that we plan to offer at substantially lower cost and higher productivity than leading chrome alternatives, and which has shown order of magnitude improvements in head to head wear and corrosion performance testing PComP, named for its particulate composite powders, is one of the few economically viable industry replacement solutions for hard chrome and carbides due to the product lines advanced corrosion, friction, wear and thermal barrier properties. MesoCoat scientists have developed and patented a family of corrosion resistant coating solutions that combine extreme wear resistance, fracture toughness (resiliency), and a low friction coefficient all in one product structure. In conventional materials science toughness normally decreases as hardness and wear resistance increases by combining nano-level structure control and advanced materials science, , MesoCoat has developed a patented coating structure that can be both very tough and very wear resistant. Equally important, the hardness of a wear coating normally limits the ease with which it can be machined. The unique nanostructural design of the PComP coating solutions results in a coatings that can be machined through a finish grinder much faster than a product with a traditional carbide coating. The speed of coating application and final machining results in higher productivity and lower costs in metal finishing operations. MesoCoats engineers have also been able to build an increased ductility into the PComP product structure combined with a lower stiffness than traditional carbides, imparting and ability to resist coating failure and spallation under heavy loads. Hard and brittle coatings often crack and flake off metals when stressed. PComP has been designed to have increased ductility and strain tolerance. Products coated with PComP are extremely wear resistant and can sustain very high loads without cracking and flaking, making it suitable for use in highly loaded components such as oilfield equipment like mandrels, plungers, drill bits, hydraulics, and others used in highly turbulent offshore oil production. The PComP product line was specifically designed to meet the needs of two large markets: hard chrome plating and tungsten carbide coating replacement . The PComP family of nanocomposite coatings consists of five products, all of which have shown, in testing by third parties, to provide better wear, corrosion and mechanical properties at a lower life cycle cost than most of todays alternatives. 7 MesoCoat intends to sell these products through different channels. Commercial sector accounts will have access to these advanced coatings by buying thermal spray application services from MesoCoat. Large OEMs and Government agencies like the U.S. Air Force would procure raw powders as they are vertically integrated to do their own thermal spray applications using dedicated maintenance and repair depots. Recently, several defence organizations have been given congressional mandates to make better use of their existing equipment (planes, helicopters, jets, tanks and other armoured vehicles, etc.) as budgets for the purchase of new equipment will be limited over the next few years. MesoCoats low-cost, long-life coating materials should appeal to government buyers striving to meet budgetary restrictions. Finally, to achieve more rapid penetration of a territorial (geographic) market, MesoCoat is actively qualifying preferred provider partners in certain territories (Houston and Los Angeles as two examples) to provide services in territories it is not currently able to service. The competitive advantages of PComP for each of its two markets are as follows: Chrome replacement · PComP T-HT (High Toughness) is a high corrosion/wear resistant high velocity oxygen fuel (HVOF) coating for hard chrome replacement in hydraulic cylinders, boilers, chemical, and petrochemical applications. PComP provides both wear and corrosion resistance (unlike chrome), and significantly reduces environmental safety and health liabilities. Furthermore, in many applications, thermal spray coatings such as PComP provide life multiples over chrome. Lower coefficient of friction protects seals from premature wear and reduces energy consumption in rotating components through lower friction losses, and the lower coating stresses and higher toughness enable thicker coatings to be applied than chrome or other alternatives, meaning component life can be extended through enabling additional repair cycles. PComP T-HT has significantly higher build-up rates than that of carbides, and grinding and finishing can be done faster and cheaper with conventional grinding techniques compared to the expensive diamond finishing process used for competing carbide coatings. · PComP T-HH (High Hardness) is a higher wear resistance, cobalt based version of PComP T-HT coating for hard chrome replacement in environments that need better wear resistance but have less severe corrosion requirements. PComP T-HH also provides good corrosion resistance in non-water environments and its low coefficient of friction and lack of coarse by-products also protects seals and mating surfaces from premature wear. · PComP S is a hard chrome replacement solution for aerospace applications that exhibits high toughness, wear resistance and displays increased spallation resistance. PComP S also has the lowest density of any chrome alternative, enabling significant fuel savings to be realized in transportation markets. Tungsten carbide replacement · PComP-T materials offer customers an alternative to escalating tungsten prices arising out of chinas near-monopoly on tungsten supplies. Unlike tungsten carbide coatings, PComP uses primarily non-strategic, domestic materials such that PComP costs will decrease with increased volume, while tungsten prices have tripled in the last few years and are expected to have increase volatility in the future. Initial pricing is based on achiving a 50% cost reduction over current WC-Co-Cr component repair costs. 8 · PComPW is Mesocoats nano-engineered tungsten carbide coating solution, and offers significantly improved toughness and wear resistance over industry-standard tungsten carbide coatings, making it better for critical high wear applications such as gate valves. PComP W can replace conventional tungsten carbide cobalt in the thermal spray industry and provides increased wear resistance in abrasive wear applications, with higher toughness and impact resistance than ceramic alternatives such as alumina-titania. PComP-W is also significantly more robust than competing detonation gun and alternate coatings, achieving excellent results with much higher throughput and lower operating cost equipment such as standard HVOF guns. Stage of Development None of MesoCoats materials are currently produced on a full-scale commercial production basis even though some materials have been produced on a small scale. Even though some of the materials are in limited release, certain of MesoCoats materials are expected to be ready for commercial market entry and production within the next twelve months. The following table indicates our estimated timeline for the commercial introduction of those products that are most imminent: Product Production Scale Time (months) PComP T Market Entry 6 PComP W Market Entry 6 PComP S Market Entry 12 CermaClad CR Full Production 9 CermaClad WR Market Entry 3 CermaClad WR Full Production 15 License agreement with Powdermet, Inc. On July 22, 2008 MesoCoat entered into a license agreement with Powdermet. The agreement gives MesoCoat a royalty-free, exclusive, perpetual license to PComP intellectual property, certain equipment, and contracts and business lists, including seven supporting patents, the trademark, and supporting confidential and trade secret information, including formulations, processes, customer lists and contracts, for all Powdermet technologies in the field of wear and corrosion resistant coatings. MesoCoat was at the time of licensing a wholly owned subsidiary of Powdermet, and Powdermet currently retains a 49% ownership position in MesoCoat. The agreement also includes Powdermets commitment to provide manufacturing expertise and technical capabilities supporting PcomP powders on a priority basis. Powdermet retains the exclusive manufacturing rights for the first 50 tons of PComP powders through July 1, 2013. The license agreement will end upon the last to expire valid claim of licensed patents, unless terminated earlier within the terms of the agreement. MesoCoat's exclusivity agreement with Mattson Technology, Inc. Mattson Technology, Inc. ( Mattson ) is the developer and manufacturer of the Vortek high power plasma arc lamps, and is a high energy plasma arc lamp developer. The principal provisions of an exclusivity agreement dated April 7, 2011 between MesoCoat and Mattson Technology, Inc. are as follows: · Mattson has provided the exclusive right and license to MesoCoat to use the high intensity Vortek lamp in MesoCoats products in the wear reducing and corrosion resistant coatings, claddings and related surface treatments market. 9 · The exclusivity period runs to the end of 2017 and is conditional on an escalating minimum number of 5 lamps being ordered on an annual basis starting in 2012. · In return for these rights MesoCoat will pay to Mattson a fee of $2 million in five equal instalments starting from the date of the successful performance of the first unit. · Included in this agreement is a sliding scale price discount based upon the number of units to be ordered each year. · A supply agreement between the two parties is currently being negotiated to fully complete some of the detailed commercial points of this relationship. MesoCoats exclusive patent license agreement with UT-Battelle LLC. MesoCoat has obtained a two stage, exclusive license from UT-Battelle, LLC to utilize two patents in its processes to develop products for wear and corrosion applications. The initial non-commercial exclusive license was entered into on September 22, 2009 which enabled MesoCoat to conduct development work to prove out the technology within the field of use. The second stage of the agreement comprises a commercial exclusive licence, executed on March 7, 2011, permits MesoCoat to conduct commercial sales utilizing the licensed process and technology. The license is valid through the expiration of the last patent in 2024 and required that MesoCoat invest in additional research and development of both the technology and the market for products that stem from the technology by committing to a certain level of personnel hours and $350,000 in expenditures which conditions have been met. Stage I and II license fees of $50,000 have been paid against the agreement and a royalty of $15,000 or 2.5% of revenues generated in the United States that utilize the technology, minus allowable costs as defined by contract, whichever is greater, are due March 31 on an annual basis beginning after the first commercial sale. For the first calendar year after the achievement of a certain milestone and the following two calendar years during the term of the agreement, MesoCoat is obligated to pay a minimum annual royalty payment of $10,000, $15,000 and $20,000 respectively. No royalty payments have been made pursuant to this agreement through May 31, 2011. Cooperation agreement with Petroleo Brasileiro S.A An agreement dated January 7, 2011 was signed by MesoCoat to cooperate with Petroleo Brasileiro S.A ( Petrobras ) to carry out qualification tests and development for application technology of cladding materials on internal and external surfaces of pipes. The term of the agreement is for 18 months during which time MesoCoat will, with Petrobras assistance, carry out tests over two phases. The first phase, planned for the first 8 months, is designed to qualify the materials and process being used and the configuration of the Arc Head Lamp developed for MesoCoat (by Mattson). The second phase, over the following 10 months, is designed to scale up the process to demonstrate, verify and identify design requirements to construct a prototype facility to coat the inner surface of a 10 inch diameter pipe. Should results be successful, the materials and process are expected to result in API approval and MesoCoat has agreed to negotiate a further agreement with Petrobras to enter into a possible third phase designed to finalize the design and construct a pilot plant coating facility in Brazil with the capacity for producing cladding on the interior diameter of pipes and tubes with section lengths of at least 12 meters. Powdermet Inc. On March 21, 2011, the Company fulfilled the terms of a Stock Purchase Agreement with Kennametal Inc., dated June 28, 2010, as amended on September 7, 2010 and replaced on March 25, 2011 by an Accord and Satisfaction Agreement, to complete the purchase of Kennametals 596,813 shares of Powdermet equal to a 41% interest for $1,650,000. 10 Powdermets Business Powdermet was formed in 1996 and has since developed a product platform of advanced materials solutions derived from nano-engineered particle agglomerate technology and derived hierarchically structured materials. These advanced materials include energy absorbing ultra-lightweight syntactic- and nano-composite metals in addition to the PComP nanocomposite cermets exclusively licensed to MesoCoat. The business has historically financed itself through corporate engineering consulting fees, government contracts and grants (over 90), and recently through partnerships with prime contractors and systems integrators. Powdermet now expects to transition from an engineered nano-powder R&D lab and toll powder manufacturer into a commercial sector company. While MesoCoats product focus is on developing advanced cermets to address corrosion and wear coating needs, Powdermets product differentiation is based on its ability to build advanced nano-structured metal formulations to address energy efficiency, reduction in hazardous materials, and life cycle cost reduction. Powdermets technologies are particularly useful in crash and ballistic energy management markets since they offer weight reduction and the ability to dissipate substantially more impact energy than the aluminum alloys and foamed metals currently available. Powdermet has four materials solution families under development: · SComP - A family of syntactic metal composites known for their light weight properties and ability to absorb more energy than any other known material. SComP can provide weight savings over cast aluminum and magnesium without magnesiums corrosion and wear limitations. · MComP - A family of hierarchically structured, rare earth free, nanocomposite metal and metal matrix composites meantto enable higherstrengthand temperature capability compared to traditional light metals. They have been designed to be a market replacement for beryllium, aluminum and magnesium in structuralapplications, without relying on scare and expensive rare earths to produce high strength and thermal stability. · EnComP - A diverse family of engineered microstructure energy based solutions includes substitutes for rocket fuel, hydrogen storage and obscuring products with a primary product now being final tested by the U.S. Army to replace red phosphorous in munitions equipment. · SynFoam -A family ofstructural, thermally insulating syntactic ceramic composites combining strength, high temperature functionality and low thermal conductivity into one multifunctional material. Powdermets two products closest to commercialization are SComP and EnComP. AMP Distributors Inc. AMP Distributors Inc. ( AMP ) was formed by the Company in June of 2011 as a Cayman Island company for the primary purpose of negotiating, executing and administrating international sales of MesoCoat's products. AMP will also be tasked with acquiring equipment and coating materials for Companys international transactions. The company has appointed a managing director with over 15 years of experience in the offshore financial services industry and retained Kariola Limited, a consultancy organization, to assist it with technical advice and entry into the Far East markets. 11 Future Acquisition Targets The Company utilizes multiple resources to identify future acquisition targets. In addition to a professional network of senior management and relationships with national labs, such as the Oak Ridge National Lab, we also use the methods below to search for innovative technologies and companies, which could lead us to additional acquisitions: · Patent Search We conduct bi-monthly searches for provisional patents and published patents on the U.S. Patent and Trademark Office and World Intellectual Property Organization patent websites to keep a track on any new patents published or licensed by our competitors and partners, and also any new patents filed/published by universities and early stage companies that might be of interest to us. · Conferences, Events, and Tradeshows Teams from the Company, MesoCoat, and Powdermet attend close to 50 technology conferences, tradeshows, and events every year. We have found these to be an excellent resource for learning about new technologies, especially since these events center on our interests and expertise as well as that of potential acquisitions. · Meltwater News Meltwater News monitors and analyzes online news in more than 110 countries, delivering business intelligence and insight to corporations and organizations worldwide so clients can make informed decisions. We use Meltwater as an online repository where we archive important news related to our partners, competitors, competing technologies, and new innovative technologies/companies that seem to be a good investment proposition. Our management team reviews all the new technologies and companies every two weeks to evaluate their potential and make subsequent decisions/actions. · Universities We are on the mailing list of several universities that focus on research in nanotechnology, advanced materials, surface engineering, and advanced processing. These universities send us regular updates on the technologies currently in development, as well as any new patents or products that culminate from the research work. In addition to interacting with universities tech transfer departments, we are in regular contact with professors that manage research projects in our areas of interest who are certain that their technology has high potential but their universities patent offices have insufficient budgets. · Press Releases Our most recent press releases have begun to generate external interest in our firms and operations. As such, outside parties proactively engage us in a dialogue about their technology and/or company. · LinkedIn We are active participants in several LinkedIn groups related to new technologies, venture capital, angel investors, and early stage capital. We regularly evaluate new technologies in the surface engineering arena that are posted on various LinkedIn groups and then continue further discussion with them. Every future opportunity will be evaluated based on several investment criteria. Prospective companies must have individual market solutions intended to solve critical industry problems and have the potential to generate at least a $100 million in revenue within five years of investment. Most companies that are ultimately included in the Companys investments will have more than one market solution. We are therefore restricted to firms that have established R&D programs, with a preference for firms that have solutions in final stages of R&D or in pilot-scale production. The Company is directing its attention to owners that are willing to accept a multi-phased investment option while guaranteeing operational control. We plan to support these technology-centric R&D opportunities and investments with our own corporate strategy, market development, licensing and contracted support. 12 Industry Overview External Environment: Corrosion The U.S. Department of Commerce monitors a large number of industry sectors that face problems with corrosion, which is a growing issue faced by companies worldwide. Metallic corrosion is the degradation that results from interaction of metals with various environments such as air, water, naturally occurring bacteria, chemical products and pollutants. Steel accounts for almost all of the worlds metal consumption and therefore an astoundingly high percentage of corrosion issues involve steel products and by-products. These issues affect many sectors of the worldwide economy. Although worldwide corrosion studies began in earnest in the 1970s, there has never been a standardized way for countries to measure corrosion costs. As a result, estimates of economic damage are difficult to compare. What is clear, however, is that the impact of corrosion is serious and severe. As a result of corrosion, manufacturers and users of metallic products incur a wide range of costs, including: · painting, coating and other methods of surface preparation; · utilizing more expensive corrosion resistant materials; · downtime costs; · larger spare parts inventories; and · increased maintenance. There are also related costs that may be less obvious. For instance, some of the nations energy demand is generated by firms fixing metallic degradation problems. Studies have shown that this increased energy demand would be avoidable if corrosion was addressed at the preventable stage. Some of this demand could be reduced through the economical, best-practice application of available corrosion control technology. External Environment: Wear Corrosion is not the only concern of engineers and material scientists. In most industries, the deterioration of surfaces is also a huge problem. Wear is often distinct from corrosion and describes the deterioration of parts or machinery due to use. The effects of wear can generally be repaired. However, it is also usually very expensive. Prevention and wear protection is the most economical way to offset the high costs associated with component repair or replacement. To accomplish this, hard-face coatings are applied to problematic wear surfaces for the purpose of reducing wear and/or the loss of material through abrasion, cavitation, compaction, corrosion, erosion, impact, metal-to-metal, and oxidation. Some companies focus on the prevention side of the business (applying coatings to prevent wear) while others focus on the repair side of the business (reforming metal or applying coatings to fix metal substrate problems). In order to properly select a coating alloy for a specific requirement, it is necessary to understand what has caused the surface deterioration. The various types of wear can be categorized and defined as follows: · Abrasion is the wearing of surfaces by rubbing, grinding, or other types of friction that usually occurs due to metal-to metal contact. It is a scraping, grinding wear that rubs away metal surfaces and can be caused by the scouring action of sand, gravel, slag, earth, and other gritty material. · Cavitation wear results from turbulent flow of liquids that carry small suspended abrasive particles. 13 · Compression is a deformation type of wear caused by heavy static loads or by slowly increasing pressure on metal surfaces. Compression wear causes metal to move and lose dimensional accuracy. · Corrosion wear is the gradual deterioration of unprotected metal surfaces, caused by the effects of the atmosphere, acids, gases, alkalies, etc. This type of wear creates pits and perforations and may eventually dissolve metal parts. · Erosion is the wearing away or destruction of metals and other materials by the abrasive action of water, steam, slurries which carry abrasive materials. Pump parts are subject to this type of wear. · Impact wear is the striking or slamming contact of one object against another and this type of wear causes a battering, pounding type of wear that breaks, splits, and deforms metal surfaces. · Metalto-Metal wear is a seizing and/or galling type of wear that rips and tears out portions of metal surfaces. It is often caused by metal parts seizing together because of lack of lubrication. It usually occurs when the metals moving together are of the same hardness. Frictional heat promotes this type of wear. · Oxidation is a type of wear causing flaking or crumbling layers of metal surfaces when unprotected metal is exposed to a combination of heat, air and moisture. Rust is an example of oxidation. Generally, the initial coating selected to protect a product against wear is also the same product applied to correct the problem once the product is worn. However, at that time, engineers can determine whether some of the characteristics they set for the initial preventative coating have withstood the environment or other pressures initially assumed in the products design. If it is determined that the initial coating selection was not adequate, material scientists can change the application parameters of the prior coating material (like amount or width of coating material applied) or select a new coating material that has new properties. For instance once the type of wear is identified, a material engineer might determine that a new coating material with better lubricity and other characteristics is needed for repair. Presently there is no governmental standardized method to classify or specify degrees of wear. Nor is there a central agency that collects market data on the cost of wear-based issues, primarily because firms account for repair costs differently. Each industry sector has its own means of evaluation and approach to repair, based on the type of part that needs repair, the urgency of that repair, the availability of a coating solution and the cost associated with downtime. In general, companies already have plans in place on how to fix a part once it goes down. However, if an unexpected problem occurs, firms utilize the expertise of experienced materials engineers that have worked with numerous coating suppliers to evaluate a solution. Sometimes this evaluation is done by reviewing vendor data only (suppliers typically provide complete data product information worksheets which detail product properties, testing specifications, best applications methods and conditions). If self-review is insufficient, consultants and vendors are flown it to help assist companies in their material selection or solution repair needs. Those solutions then go through review to determine their merit and cost benefit. Sometimes, parts cannot be repaired and new ones are required. Competition The companies in which the Company has invested can expect to face intense competition within their respective market segments upon product commercialization. The industrial coatings industry is highly fragmented by companies with competing technologies each seeking to develop a standard for the industry. Industrial coatings research and development has been ongoing for some time and several firms are perceived as the industry leaders. 14 MesoCoat A handful of large companies cater to this market segment JSW Steel Co. controls the clad plate market with majority of the market share, Butting GmbH and Cladtek International Pty Ltd. are the largest players in the mechanically clad pipe market, whereas ProClad Group is the majority player in the metallurgically clad pipe market. Most of these large companies participating in the cladding market have very similar technologies and control the market mostly on their scale of production (availability), relationships, and price. Several smaller companies spread across the globe are also involved in this market segment, like Arc Energy Resources, IODS, High Energy Metals, and Kladarc, all of which offer weld overlay services for the oil and gas industry and make approximately $1-15 million in annual revenues. Other examples include Matrix Wear Technologies, Cladtech Canada, Brospec LP, Almac, and Clearwater Welding and Fabrication LP all of which offer weld overlay processes to those working in the Canadian oil sands with annual revenues that range from $15-50 million. The higher revenues for the Canadian weld overlay companies is primarily due to their presence in Canada where oil sands operations require huge amounts of clad pipe and components, and the emphasis is on local shops and faster turnaround times. CermaClad is being positioned as a lower overall risk option between the lower mechanical risk (but low capacity, and higher corrosion risk) weld overlay products, and the higher mechanical (buckling) risk of lined products. Market indicators evidence that the overall market for metallurgically bonded clad products will grow dramatically if the price point for these types of products can be reduced and capacity increased significantly. When offered on a commercial basis the CermaClad process is expected to d isrupt the traditional market for cladding products and compete from with an advantage over current producers based on the following factors: · Time and productivity o Much faster than weld/laser cladding, more scaleable for production volume o Capital investment significantly lower than mechanical cladding for similar capacity o Ability to provide local content in scalable manner at reasonable capital investment levels o Reduces lead times compared to current market, and provides high scalability for market flexibility. Potentially enables distribution and customization of pipe for fast-turnaround project needs o CermaClad can be applied to very large pipes (above 18), where lined pipe cannot currently be produced, and where current weld overlay technology by comparison is considered too slow and expensive. · Performance risk o True metallurgical bond, reduces potential for catastrophic failure. o Smoother surface (high flow, easier inspection), reduces perceived risk by being easily inspected o Crack-free hard coatings to 10mm thickness enable performance multiples in hardfacing o Better properties than weld overlay due to lower dilution or dissolution. o Cermaclad enables the use of metallurgically bonded clad seamless pipe, eliminating 90% or more of the welds compared to other product offerings. 15 · Cost o Faster Application and high throughput lowers cost basis for metallurgically bonded clad product o Technology allows the application of thinner clad layers, potentially enabling dramatic cost reduction at sustained margins o High productivity and scalability can enable reduced lead times, reducing capital costs for large projects. PComP nanoenginered cermet products have relatively few competitors. Although there are a few companies like Nanosteel, Integran, Inframat, Xtallic, and Modumetal that offer similar solutions; no competitor has been able to engineer the properties that MesoCoat has built into its PComP product line. The company has been able to manufacture a corrosion resistant product that has high strength, hardness and fracture toughness. Toughness and hardness are normally inversely proportional characteristics and no other company has been able to reverse the nature of these properties which is what makes the PComP products unique in the market place. MesoCoat has also increased the ductility factor in the PComP products so basically not only has PComP shown to provide a harder coating surface, but the hard objects are able to bend more without breaking. In order to understand the type of market impact these materials could have if launched successfully, it is important to note that PComP-W, MesoCoats tungsten cobalt carbide replacement solution, exhibits high deposition efficiency and at aVickers hardness similar to that of tungsten carbide while being stronger than the conventional carbide coatings it is designed to replace. Good toughness tolerates more flexing of the part than other HVOF WC coatings without the usual cracking of the coating. The structure of the PComP coatings also allow for conventional grinding techniques, eliminating the expensive diamond finishing process needed for conventional materials used in tungsten carbide and cobalt coating solutions. Powdermet The ENComP product line is in final stages of testing as an obscurant. The product is a red phosphorous replacement solution that is being tested as an environmentally friendly smoke screen product for combat troops. Powdermet knows of only one firm in the world which supplies red phosphorous gas obscurants to the U.S. military but it knows of the toxic dangers associated with this obscurant and has been seeking a replacement for the last several years. The primary competition for the ENComP product line may be the U.S. military itself as several U.S. Army labs have products in development but as far as we know none are as advanced as Powdermets products. SComP is not as close to commercialization as EnComP but this solution addresses a much larger market need. Todays engineered materials market offers nothing like SComP and its closest competition would be engineered honeycomb structures and foamed metals, neither of which have SComPs energy absorption capabilities, metal-like aesthetics and ease of use. One of the largest benefits of these syntactic metal composites is their ability to absorb energy from impacts and ballistic events through deformation. Powdermet is aware of one firm, APS, Inc., that offers a similar product. Market competition may come from nanotube companies which are attempting to build energy absorption features using this type of technology but without the same property characteristics as Powdermets products, especially in the area of thermal resistance. SComP is expected to fare well when introduced to the commercial market. General Company Competitive Advantages The following factors serve as keys to the Companys success: 16 · Management A well-balanced, experienced management team provides the Company and its subsidiaries with the guidance and strategic direction to successfully gain market entry. · Products The Companys products represent innovations in key, multi-billion dollar markets. · Intellectual Property The intellectual property of MesoCoat and Powdermet include exclusive licensing rights to technologies that make market penetration effective and feasible. · Qualification and Testing As U.S. government agencies and private sector entities qualify and test MesoCoats and Powdermets products, significant barriers to entry are automatically created for potential competitors. · Fundraising - As a publicly traded entity, the Company gains financing from public equity markets which provide more liquidity and easier access to capital in the fundraising process. The Company has also constructed the following barriers for potential competitors: · product development expertise in both MesoCoat and Powdermet; · exclusive license for the high density fusion cladding process from Oak Ridge National Lab; · strong product pipeline that would be ready for market in the next 2-3 years ; · exclusive access to arc lamp technology developed by Mattson Technologies; and · R&D innovation. Based on the powders developed by Powdermet, MesoCoat can successfully introduce its application services for corrosion -resistant alloys and wear-resistant coatings. Central to the MesoCoat coating process is its use of Mattsons arc lamp technology. Mattsons lamp acts as a high intensity heat source which replicates conditions at the surface of the sun, fusing the coating materials with a products surface area to create a smoother finish. The arc lamp also covers a much larger surface area than competing laser cladding technology, allowing coatings to be applied at a much faster rate. Finally, MesoCoats continued investment in R&D is expected to improve its current technology and service offerings and spur further innovation. MesoCoat does face its own barrier to entry in the coatings industry. The most immediate challenge consists of achieving American Petroleum Institute certification for its CermaClad products . In order to successfully sell to the oil and gas industry, MesoCoats coatings must receive official approval and certification, a process that requires partnership with a major oil and gas entity. However, the cooperation agreement with Petroleo Brasileiro S.A. and the construction of our Euclid, Ohio plant are positive steps towards achieving this goal. Moreover, it should be noted that wear-resistant coatings do not require any certification or approval from any industry or government entity, allowing MesoCoat to enter markets such as the oil sands development with minimal resistance. The barriers to entry in the coatings industry rely primarily on developing the best technology and protecting it through intellectually property measures and consistent R&D. Marketability The ultimate success of any product will depend on market acceptance in its many forms, including cost, efficiency, convenience and application. The market for MesoCoats prospective products is potentially enormous and will require the Company to apply a significant portion of its focus on how to best initiate market introductions and into which segments. The commercial possibilities for those products currently under development at Powdermet are no less expansive and will likewise require that significant resources are dedicated to an effective marketing strategy as commercialization draws near. 17 MesoCoat Overview A tremendous need exists today to find better corrosion protection and wear prevention technologies to replace many of the coating materials currently used in the coatings industry. The inorganic metal finishing industry alone is one of the largest industrial users of hazardous and carcinogenic chemicals. Hazardous metals such as lead, cadmium, chromium, and to a lesser extent, cobalt, tungsten carbide, and volatile organic compounds used to strip rust and repair large steel structures are being phased out or subjected to increasingly strict environmental regulations. Companies annually spend billions of dollars just on coatings made from hazardous materials. Private companies and government defence agencies often use harmful products like chrome because these solutions have been the best corrosion resistant products available for the last 20 years. However, private and public users are now recognizing the environmental problems these materials cause and the potential safety issues for those who come in contact with these materials. Many companies would stop using these hazardous materials if a cost effective substitute product could be brought to market. Legally, users may soon have no choice but to desist from using hazardous materials as the EPA and other international environmental organizations are moving to ban their use. Manufacturers are now modifying their products bill of materials list and seeking substitute coating products with similar or better corrosion and wear resistant properties in advance of impending legal changes. Many are turning to next generation coatings made from alternative technologies like nanotechnology-based materials to accomplish their goals. Innovative companies that can develop non-toxic and longer life coating alternatives that have equal or superior corrosion and wear protection capability relative to todays materials stand to reap significant financial rewards in the next several decades. CermaClad The Company has entered into an agreement with Petrobras to utilize the CermaClad process in the field. MesoCoat plans to sell this solution to the oil industry first as it is expected that the CermaClad processes capability to clad the interior diameter of seamless pipes will result in an immediate market success. Management has made sizeable investments in redesigning the technology to commit to this initial market solution. The internationally acclaimed engineering firm, Mattson Technology, has finalized the development of a new inside diameter HDIR lamp head and other firms have been contracted to develop other translational technologies needed for large scale production. The end result is that MesoCoat expects to be able to accomplish high speed cladding of pipe diameter interiors in sizes ranging from 8 to 36 inches for lengths up to 40 feet. MesoCoat plans to use this new equipment to obtain American Petroleum Institute (API) certification. MesoCoat plans to sell their CermaClad market solution at approximately 20% below the market price of todays corrosion resistant alloy (CRA) clad materials. The ability to decrease below the market price of current offerings is due primarily to the efficiency of the process. Allowing for a 20% discount, MesoCoat still expects a gross profit margin of approximately 40% on this product line. MesoCoats expansion within the market will be tied to its ability to attract project financing or joint venture partners to build fabrication plants. Given the projected profitability of such plants and the anticipated short payback period anticipated, management foresees no problem attracting interested market partners. The Companys management is interested in marketing CermaClad in certain geographical locations. 18 PComP MesoCoat expects to sell PComP application services to commercial buyers like Boeing, Caterpillar B.F. Goodrich, and several OEM's from the oil and gas industry . Application services will be sold on a per square inch basis and pricing will be reflective of market pressures and the volume of work received from each commercial customer. Pricing variables will be taken into consideration for each application service order. MesoCoats forecast for PComP growth is conservative due to the initial emphasis placed on sales of the CermaClad product line. Nevertheless, managements forecast could be understated if sales to military maintenance and repair organizations exceed expectations. The military spends billions each year to address wear and corrosion issues associated with new and used equipment. The U.S. Department of Defense has widely publicized that in the future its budgets will be focused on sustaining current platforms rather than developing or producing new ones. Based on input received from government agencies, MesoCoat expects that it will be able to offer ideal environmentally friendly anti-corrosion/wear resistant material solutions needed today to sustain current platforms. Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements and Labor Contracts The Company has no patents, trademarks, licenses, franchises, concessions, royalty agreements or labor contracts other than those held by MesoCoat and Powdermet. MesoCoat's patents include: one non-exclusively licensed patent which remains in place until February 21, 2016; six exclusively licensed patents from Powdermet, the earliest of which expires May 30, 2020 (see dates below); two exclusively licensed patents from Oak Ridge National Lab, which expire on March 15, 2019 and July 30, 2024; and three pending U.S. Patents and two pending global patents, all of which expire in 2030 or after. Powdermet's patents include: six U.S. Patents, which have expiry dates of May 30, 2020, December 7, 2020, July 12, 2022, August 22, 2022, April 6, 2025 and June 23, 2026; and an exclusively licensed patent from Ultramet Inc., which expires on February 21, 2016. Powdermet also has trademarks and licenses which it will use to protect its assets as necessary. Patents in general remain in place 20 years from application and 17 years from issuance. Governmental and Environmental Regulation The Company is subject to local, state and national taxation. Additionally, the Companys operations are subject to a variety of national, federal, state and local laws, rules and regulations relating to, among other things, worker safety and the use, storage, discharge and disposal of environmentally sensitive materials. We believe that MesoCoat is in full compliance with the Resource Conservation Recovery Act, the key legislation dealing with hazardous waste generation, management and disposal. Nonetheless, under some of the laws regulating the use, storage, discharge and disposal of environmentally sensitive materials, an owner or lessee of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances located on or in, or emanating from, such property, as well as related costs of investigation and property damage. Laws of this nature often impose liability without regard to whether the owner or lessee knew of, or was responsible for, the presence of hazardous or toxic substances. We believe that MesoCoat and Powdermet are in compliance in all material respects with all laws, rules, regulations and requirements that affect their respective businesses. Further, we believe that compliance with such laws, rules, regulations and requirements does not impose a material impediment on either MesoCoats or Powdermets ability to conduct business. 19 Climate Change Legislation and Greenhouse Gas Regulation A majority of the climate change related studies over the past couple decades have indicated that emissions of certain gases contribute to warming of the Earths atmosphere. In response to these studies, many nations have agreed to limit emissions of greenhouse gases or GHGs pursuant to the United Nations Framework Convention on Climate Change, and the Kyoto Protocol. Although the United States did not adopt the Kyoto Protocol, several states have adopted legislation and regulations to reduce emissions of greenhouse gases. Additionally, the United States Supreme Court has ruled, in Massachusetts, et al. v. EPA , that the EPA abused its discretion under the Clean Air Act by refusing to regulate carbon dioxide emissions from mobile sources. As a result of the Supreme Court decision the EPA issued a finding that serves as the foundation under the Clean Air Act to issue other rules that would result in federal greenhouse gas regulations and emissions limits under the Clean Air Act, even without Congressional action. Finally, acts of Congress, the decisions of lower courts, large numbers of states, and foreign governments could widely affect climate change regulation. Greenhouse gas legislation and regulation could have a material adverse effect on our business, financial condition, and results of operations. Research and Development The Company is focused on the research and development of those entities in which it holds an interest. MesoCoat and Powdermet have a history of working on critical R&D projects for the private and public sector over a broad range of research fields, with further work extending into peripheral areas. MesoCoat and Powdermet have adopted this approach because they believe that excellent products can be created when a backdrop of diversified sciences and technologies exist. From this broad range, their respective R&D staffs work closely with sales and operations management teams to establish priorities and effectively manage individual projects. Grants to MesoCoat from the Federal Government, Departments of Energy and Commerce totaled $1,765,924 and $519,098 for the years ended May 31, 2011 and 2010, respectively. Grants to MesoCoat from State Governments were $82,852 and $77,901 for the years ended May 31, 2011 and 2010, respectively. MesoCoat revenues from end users of $486,164 and $10,957 were realized for the years ended May 31, 201 1 and 2010, respectively. Currently, MesoCoat and Powdermet are working on several critical and high risk-high reward R&D projects primarily funded by the federal government, state government and end users. MesoCoats PComP and Powdermets SComP product lines that are the end product of federally funded R&D. Employees As of September 12, 2011 the Company had two employees and 13 contracted consultants. We use additional consultants, attorneys, and accountants as necessary to assist in the development of our business. As of September 12, 2011 MesoCoat had 20 employees. As of September 12, 2011 Powdermet had 15 employees. 20 ITEM 1A. RISK FACTORS The Companys operations and securities are subject to a number of risks. Below we have identified and discussed the material risks that we are likely to face. Should any of the following risks occur, they will adversely affect our business, financial condition, and/or results of operations as well as the future trading price and/or the value of our securities. The Company has a history of significant operating losses and such losses may continue in the future. The Company incurred net losses of $5,203,116 for the period from June 27, 2006 (inception) to May 31, 2011. Since we have been without significant revenue since inception and currently have no revenue producing operations outside of that produced by MesoCoat, historical losses may continue into the future. The Companys success is dependent on its ability to assist MesoCoat and Powdermet to commercialize proprietary technologies to the point of generating sufficient revenues to sustain and expand operations. The Companys near term future operation is dependent on its ability to assist MesoCoat and Powdermet in the commercial application of proprietary technologies to produce sufficient revenue to sustain and expand operations. The same successful efforts criteria will be required for any additional targets that are acquired by the Company. The success of these endeavours will require that sufficient funding be available to the Company to assist in the development of its investments. Currently, the Companys financial resources are limited, which limitation may slow the pace at which proprietary technologies can be commercialized and deter the prospect of additional acquisitions. Should we be unable to improve our financial condition through debt or equity offerings, our ability to successfully advance our business plan will be severely limited. We face significant commercialization risks related to technological businesses. The industries in which MesoCoat and Powdermet operate and plan to operate are characterized by the continual search for higher performance at lower cost. Our growth and future financial performance will depend on the ability of MesoCoat and Powdermet to develop and market products that keep pace with technological developments and evolving industry requirements. Further, the research and development involved in commercializing products requires significant investment and innovation to keep pace with technological developments. Should we be unable to keep pace with outside technological developments, respond adequately to technological developments or experience significant delays in product development, our products might become obsolete. Should these risks overcome our ability to keep pace there is a significant likelihood that our ability to successfully advance our business will be severely limited. The coatings industry is likely to undergo technological change so our products and processes could become obsolete at any time. Evolving technology, updated industry standards, and frequent new product and process introductions are likely to characterize the coatings industry going forward so our products or processes could become obsolete at any time. Competitors could develop products or processes similar to or better than our own, finish development of new technologies in advance of our research and development, or be more successful at marketing new products or processes, any of which factors may hurt our prospects for success. 21 The Company competes with larger and better financed corporations. Competition within the industrial coatings industry and other high technology industries is intense. While the Companys products are distinguished by next-generation innovations that are more sophisticated and cost effective than many competitive products currently in the market place, a number of entities and new competitors may enter the market in the future. Some of our existing and potential competitors have longer operating histories, greater name recognition, larger customer bases and significantly greater financial, technical and marketing resources than we do, including well known multi-national corporations. Accordingly, our products could become obsolete at any time. Competitors could develop products similar to or better than our own, finish development of new technologies in advance of the Companys research and development, or be more successful at marketing new products, any of which factors may hurt our prospects for success. Market acceptance of the products and processes produced by MesoCoat and Powdermet is critical to our growth. We expect to generate revenue from the development and sale of products and processes produced by MesoCoat and Powdermet. Market acceptance of those products is therefore critical to our growth. If our customers do not accept or purchase those products or processes produced by MesoCoat and Powdermet, then our revenue, cash flow and operating results will be negatively impacted. General economic conditions will affect our operations. Changes in the general domestic and international climate may adversely affect the financial performance of the Company, MesoCoat and Powdermet. Factors that may contribute to a change in the general economic climate include industrial disputes, interest rates, inflation, international currency fluctuations and political and social reform. Further, the delayed revival of the global economy is not conducive to rapid growth, particularly of technology companies with newly commercialized products. MesoCoat and Powdermet rely upon patents and other intellectual property. MesoCoat and Powdermet rely on a combination of patent applications, trade secrets, trademarks, copyrights and licenses, together with non-disclosure and confidentiality agreements, to establish and protect proprietary rights to technologies they develop. Should either of MesoCoat or Powdermet be unable to adequately protect their intellectual property rights or become subject to a claim of infringement, their businesses and that of the Company may be materially adversely affected. MesoCoat and Powdermet expect to prepare patent applications in accordance with their respective worldwide intellectual property strategies on acquiring new technologies. However, neither they nor the Company can be certain that any patents will be issued with respect to future patents pending or future patent applications. Further, neither they nor the Company know whether any future patents will be upheld as valid, proven enforceable against alleged infringers or be effective in preventing the development of competitive patents. The Company believes that MesoCoat and Powderment have each implemented a sophisticated internal intellectual property management system to promote effective identification and protection of their products and know-how in connection with the technologies they have developed and may develop in the future 22 We may not be able to effectively manage our growth. We expect considerable future growth in our business. Such growth will come from the addition of new plants, the increase in global personnel, and the commercialization of new products. Additionally, our products should have an impact on the cladding industry; as companies learn that they can receive materials with a short lead time at a higher quality and lower price, market demand should grow, expanding the overall market itself. To achieve growth in an efficient and timely manner, we will have to maintain strict controls over our internal management, technical, accounting, marketing, and research and development departments. We believe that we have retained sufficient quality personnel to manage our anticipated future growth though we are still striving to improve financial accounting oversight to ensure that adequate reporting and control systems in place. Should we be unable to successfully manage our anticipated future growth by adherence to these strictures, costs may increase, growth could be impaired and our ability to keep pace with technological advances may be impaired which failures could result in a loss of future customers. Environmental laws and other governmental legislation may affect our business. Should the technologies which each of MesoCoat and Abakan have under development not comply with applicable environmental laws the Companys business and financial results could be seriously harmed. Furthermore, changes in legislation and governmental policy could also negatively impact us. Although we are currently unaware of any introduced or proposed bills, or policy, that might cause us to make specific changes to our operations, no assurance can be given that if new legislation is passed we will be able to make the changes to comport our technologies with future regulatory requirements. The Company and those subsidiaries in which it holds an interest may face liability claims on future products. Although MesoCoat and Powdermet intend to implement exhaustive testing programs to identify potential material defects in technology they develop, any undetected defects could harm their reputation and that of the Company, diminish their customer base, shrink revenues and expose themselves and us to product liability claims. Any imposition of liability that is not covered by insurance or is in excess of insurance coverage could have a material adverse effect on our business, results of operations and financial condition. The market for our stock is limited and our stock price may be volatile. The market for our common stock has been limited due to low trading volume and the small number of brokerage firms acting as market makers. Due to the limitations of our market and the volatility in the market price of our stock, investors may face difficulties in selling shares at attractive prices when they want to sell. The average daily trading volume for our stock has varied significantly from week to week and from month to month, and the trading volume often varies widely from day to day. We incur significant expenses as a result of the Sarbanes-Oxley Act of 2002, which expenses may continue to negatively impact our financial performance. We incur significant legal, accounting and other expenses as a result of the Sarbanes-Oxley Act of 2002, as well as related rules implemented by the Commission, which control the corporate governance practices of public companies. Compliance with these laws, rules and regulations, including compliance with Section 404 of the Sarbanes-Oxley Act of 2002, has substantially increased our expenses, including legal and accounting costs, and made some activities more time-consuming and costly. 23 The Companys common stock is currently deemed to be penny stock, which makes it more difficult for investors to sell their shares. The Companys common stock is and will be subject to the penny stock rules adopted under section 15(g) of the Exchange Act. The penny stock rules apply to companies whose common stock is not listed on the NASDAQ Stock Market or other national securities exchange and trades at less than $5.00 per share or that have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than established customers complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If the Company remains subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for the Companys securities. If the Companys securities are subject to the penny stock rules, investors will find it more difficult to dispose of the Companys securities. Since internal controls over financial reporting are not considered effective our conclusion may result in a loss of investor confidence and in turn have an adverse effect on our stock price. Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 we are required to furnish a report by our management on our internal controls over financial reporting. Such report must contain, among other matters, an assessment of the effectiveness of our internal controls over financial reporting as of the end of the year, including a statement as to whether or not our internal controls over financial reporting are effective. This assessment must include disclosure of any material weaknesses in our internal controls over financial reporting identified by management. Since we are unable to assert that our internal controls are effective, our investors may lose confidence in the accuracy and completeness of our financial reports, which in turn could cause our stock price to decline. The elimination of monetary liability against the Companys directors, officers and employees under Nevada law and the existence of indemnification rights to the Companys directors, officers and employees may result in substantial expenditures by the Company and may discourage lawsuits against the Companys directors, officers and employees. The Companys certificate of incorporation contains a specific provision that eliminates the liability of directors for monetary damages to the Company and the Companys stockholders; further, the Company is prepared to give such indemnification to its directors and officers to the extent provided by Nevada law. The Company may also have contractual indemnification obligations under its employment agreements with its executive officers. The foregoing indemnification obligations could result in the Company incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which the Company may be unable to recoup. These provisions and resultant costs may also discourage the Company from bringing a lawsuit against directors and officers for breaches of their fiduciary duties and may similarly discourage the filing of derivative litigation by the Companys stockholders against the Companys directors and officers even though such actions, if successful, might otherwise benefit the Company and its stockholders. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable to smaller reporting companies. 24 ITEM 2. PROPERTIES The Company maintains 800 sq. ft. of executive office space at 2665 S. Bayshore Drive, Suite 450, Miami, Florida, 33133 on a month to month basis at a cost of $2,213 a month paid to Prosper Financial, Inc., a related party. The Company does not believe that it will need to maintain a larger office at any time in the foreseeable future in order to carry out its operations. Powdermet maintains 48,000 sq. ft. of research and development space located at 24112 Rockwell Drive, Euclid, Ohio 44117. The cost of the lease is $13,500 per month paid to Sherman Properties LLC., a related party and the term of the lease runs through May 31, 2020 with the right to sub-lease the premises. MesoCoat maintains 22,000 sq. feet of the research and development space located at 24112 Rockwell Drive, Euclid, Ohio 44117 of that space leased by Powdermet on a sub-lease basis. The cost of the sub-lease for MesoCoat is $6,700 paid to Powdermet on a month to month basis. MesoCoat is also in the process of building a $6-million, 11,000 sq. ft. plant in Euclid, Ohio. The plant will include a CermaClad
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1 September 30, 2010 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1 TO Registrant, Address of I.R.S. Employer Principal Executive Offices Identification State of Commission File Number and Telephone Number Number Incorporation 1-08788 NV ENERGY, INC. 88-0198358 Nevada 6226 West Sahara Avenue Las Vegas, Nevada89146 (702) 402-5000 2-28348 NEVADA POWER COMPANY d/b/a 88-0420104 Nevada NV ENERGY 6226 West Sahara Avenue Las Vegas, Nevada 89146 (702) 402-5000 0-00508 SIERRA PACIFIC POWER COMPANY d/b/a 88-0044418 Nevada NV ENERGY P.O. Box 10100 (6100 Neil Road) Reno, Nevada 89520-0400 (89511) (775) 834-4011 Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþ Noo (Response applicable to all registrants) Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yesþ Noo(Response applicable to all registrants) Indicate by check mark whether any registrant is a large accelerated filer, an accelerated filer,a non-accelerated filer, or a smaller reporting company.See definition of “large accelerated filer","accelerated filer", "non-accelerated filer" and "smaller reporting company"in Rule 12b-2 of the Exchange Act. NV Energy, Inc.: Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting companyo Nevada Power Company: Large accelerated filer o Accelerated filer o Non-accelerated filer þ Smaller reporting companyo Sierra Pacific Power Company: Large accelerated filer o Accelerated filer o Non-accelerated filer þ Smaller reporting companyo Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).YesoNo þ (Response applicable to all registrants) Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date. Class Outstanding at October 28, 2010 Common Stock, $1.00 par value of NV Energy, Inc. 235,176,008Shares NV Energy, Inc. is the sole holder of the 1,000 shares of outstanding Common Stock, $1.00 stated value, of Nevada Power Company. NV Energy, Inc. is the sole holder of the 1,000 shares of outstanding Common Stock, $3.75 stated value, of Sierra Pacific Power Company. This combined Quarterly Report on Form 10-Q is separately filed by NV Energy, Inc., Nevada Power Company and Sierra Pacific Power Company.Information contained in this document relating to Nevada Power Company is filed by NV Energy, Inc. and separately by Nevada Power Company on its own behalf.Nevada Power Company makes no representation as to information relating to NV Energy, Inc. or its subsidiaries, except as it may relate to Nevada Power Company.Information contained in this document relating to Sierra Pacific Power Company is filed by NV Energy, Inc. and separately by Sierra Pacific Power Company on its own behalf.Sierra Pacific Power Company makes no representation as to information relating to NV Energy, Inc. or its subsidiaries, except as it may relate to Sierra Pacific Power Company. NV ENERGY, INC. NEVADA POWER COMPANY SIERRA PACIFIC POWER COMPANY QUARTERLY REPORTS ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2010 TABLE OF CONTENTS PART I – FINANCIAL INFORMATION Acronyms & Terms 3 ITEM 1. Financial Statements NV Energy, Inc. Consolidated Income Statements– Three and Nine Months Ended September 30, 2010 and 2009 5 Consolidated Balance Sheet – September 30, 2010 and December 31, 2009 6 Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2010 and 2009 8 Nevada Power Company Consolidated Income Statements– Three and Nine Months Ended September 30, 2010 and 2009 9 Consolidated Balance Sheet – September 30, 2010 and December 31, 2009 10 Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2010 and 2009 12 Sierra Pacific Power Company Consolidated Income Statements – Three and Nine Months Ended September 30, 2010 and 2009 13 Consolidated Balance Sheet – September 30, 2010 and December 31, 2009 14 Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2010 and 2009 16 Condensed Notes to Financial Statements Note 1.Summary of Significant Accounting policies 17 Note 2.Segment Information 18 Note 3.Regulatory Actions 20 Note 4.Long-Term Debt 22 Note 5.Fair Value of Financial Instruments 23 Note 6.Derivatives and Hedging Activities 23 Note 7.Retirement Plan and Post-Retirement Benefits 25 Note 8.Commitments and Contingencies 28 Note 9.Earnings Per Share (NVE) 30 Note 10.Assets Held for Sale 31 Note 11.Shareholders’ Equity 32 ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 34 NV Energy, Inc. 41 Nevada Power Company 45 Sierra Pacific Power Company 53 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 64 ITEM 4 and 4T. Controls and Procedures 64 PART II – OTHER INFORMATION ITEM1. Legal Proceedings 65 ITEM1A. Risk Factors 65 ITEM2. Unregistered Sales of Equity Securities and Use of Proceeds 65 ITEM3. Defaults Upon Senior Securities 65 ITEM5. Other Information 66 ITEM6. Exhibits 67 Signature Page and Certifications 69 2 ACRONYMS AND TERMS (The following common acronyms and terms are found in multiple locations within the document) Acronym/Term Meaning 2009 Form 10-K NVE’s, NPC’s and SPPC’s Annual Report on Form 10-K, as amended by a Form 10-K/A, for the year ended December 31, 2009 AFUDC-debt Allowance for Borrowed Funds Used During Construction AFUDC-equity Allowance for Equity Funds Used During Construction ASD Advanced Service Delivery (now known as NV Energize) ASU Accounting Standards Update BCP Bureau of Consumer Protection BOD Board of Directors BTER Base Tariff Energy Rate BTGR Base Tariff General Rate CalPeco California Pacific Electric Company Clark Generating Station 550 megawatt nominally rated William Clark Generating Station CPUC California Public Utilities Commission CWIP Construction Work-In-Progress d/b/a Doing business as DEAA Deferred Energy Accounting Adjustment DOE Department of Energy DSM Demand Side Management Dth Decatherm EEC Ely Energy Center EEIR Energy Efficiency Implementation Rate EEPR Energy Efficiency Program Rate EPA Environmental Protection Agency EPS Earnings Per Share FASB Financial Accounting Standards Board FASC FASB Accounting Standards Codification FERC Federal Energy Regulatory Commission Fitch Fitch Ratings, Ltd. GAAP Generally Accepted Accounting Principles in the United States GBT Great Basin Transmission, LLC GRC General Rate Case Harry Allen Generating Station 142 megawatt nominally rated Harry Allen Generating Station Higgins Generating Station 598 megawatt nominally rated Walter M. Higgins, III Generating Station IRP Integrated Resource Plan kV Kilovolt Lenzie Generating Station 1,102 megawatt nominally rated Chuck Lenzie Generating Station LIBOR London Interbank Offered Rate MMBtu Million British Thermal Units Mohave Generating Station 1,580megawatt nominally rated Mohave Generating Station Moody’s Moody’s Investors Services, Inc. MW Megawatt MWh Megawatt hour Navajo Generating Station 255 megawatt nominally rated Navajo Generating Station NEICO Nevada Electrical Investment Company Ninth Circuit United States Court of Appeals for the Ninth Circuit NPC Nevada Power Company d/b/a NV Energy NPC Credit Agreement $600 million Revolving Credit Facility entered into in April 2010 between NPC and Wells Fargo, N.A., as administrative agent for the lenders a party thereto NPC’s Indenture NPC’s General and Refunding Mortgage Indenture dated as of May 1, 2001, between NPC and the Bank of New York Mellon Trust Company N.A., as Trustee NRSRO Nationally Recognized Statistical Rating Organization NVE NV Energy, Inc. NV Energize Advanced Service Delivery (formerly known as ASD) ON Line 250 mile 500 kV transmission line connecting NVE’s northern and southern service territories PEC Portfolio Energy Credit Portfolio Standard Renewable Energy Portfolio Standard PPA Purchased Power Agreement PUCN Public Utilities Commission of Nevada Reid Gardner Generating Station 325 megawatt nominally rated Reid Gardner Generating Station REPR Renewable Energy Program Rate ROE Return on Equity ROR Rate of Return S&P Standard & Poor’s Salt River Salt River Project SEC United States Securities and Exchange Commission Silverhawk Generating Station 395 megawatt nominally rated Silverhawk Generating Station SPPC Sierra Pacific Power Company d/b/a NV Energy SPPC Credit Agreement $250 million Revolving Credit Facility entered into in April 2010 between SPPC and Bank of America, N.A., as administrative agent for the lenders a party thereto SPPC’s Indenture SPPC’s General and Refunding Mortgage Indenture, dated as of May 1, 2001, between SPPC and the Bank of New York Mellon Trust Company N.A., as Trustee TMWA Truckee Meadows Water Authority 3 Tracy Generating Station 541 megawatt nominally rated Frank A. Tracy Generating Station TRED Temporary Renewable Energy Development TUA Transmission Use and Capacity Exchange Agreement, by and among Nevada Power Company (d/b/a NV Energy) and Sierra Pacific Power Company (d/b/a NV Energy) and Great Basin Transmission, LLC, dated as of August 20, 2010 U.S. United States of America Utilities Nevada Power Company and Sierra Pacific Power Company Valmy Generating Station 261 megawatt nominally rated Valmy Generating Station VIE Variable Interest Entity WSPP Western Systems Power Pool 4 NV ENERGY, INC. CONSOLIDATED INCOME STATEMENTS (Dollars in Thousands, Except Per Share Amounts) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, OPERATING REVENUES $ OPERATING EXPENSES: Fuel for power generation Purchased power Gas purchased for resale Deferred energy Other operating expenses Maintenance Depreciation and amortization Taxes other than income Total Operating Expenses OPERATING INCOME OTHER INCOME (EXPENSE): Interest expense (net of AFUDC-debt: $6,485, $3,679, $17,349 and $15,847) Interest income (expense) on regulatory items ) AFUDC-equity Other income Other expense ) Total Other Income (Expense) Income Before Income Tax Expense Income tax expense NET INCOME $ Amount per share basic and diluted - (Note 9) Net income per share - basic $ Net income per share - diluted $ Weighted Average Shares of Common Stock Outstanding - basic Weighted Average Shares of Common Stock Outstanding - diluted Dividends Declared Per Share of Common Stock $ The accompanying notes are an integral part of the financial statements. 5 NV ENERGY, INC. CONSOLIDATED BALANCE SHEETS (Dollars in Thousands, Except Shares) (Unaudited) September 30, December 31, ASSETS Current Assets: Cash and cash equivalents $ $ Accounts receivable less allowance for uncollectible accounts: 2010 - $31,816; 2009 - $32,341 Materials, supplies and fuel, at average cost Risk management assets (Note 6) Income taxes receivable - Deferred income taxes Other current assets Total Current Assets Utility Property: Plant in service Construction work-in-progress Total Less accumulated provision for depreciation Total Utility Property, Net Investments and other property, net Deferred Charges and Other Assets: Deferred energy (Note 3) Regulatory assets Regulatory asset for pension plans Risk management assets (Note 6) 64 Other deferred charges and assets Total Deferred Charges and Other Assets Assets Held for Sale (Note 10) TOTAL ASSETS $ $ (Continued) 6 NV ENERGY, INC. CONSOLIDATED BALANCE SHEETS (Dollars in Thousands, Except Shares) (Unaudited) September 30, December 31, LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current maturities of long-term debt $ $ Accounts payable Accrued expenses Risk management liabilities (Note 6) Deferred energy (Note 3) Other current liabilities Total Current Liabilities Long-term debt Commitments and Contingencies (Note 8) Deferred Credits and Other Liabilities: Deferred income taxes Deferred investment tax credit Accrued retirement benefits Risk management liabilities Regulatory liabilities Other deferred credits and liabilities Total Deferred Credits and Other Liabilities Liabilities Held for Sale (Note 10) Shareholders' Equity: Common stock ($1.00 par value; 350 million shares authorized; 235,172,624 and 234,834,169 issued and outstanding for 2010 and 2009, respectively) Other paid-in capital Retained earnings Accumulated other comprehensive loss ) ) Total Shareholders' Equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ $ The accompanying notes are an integral part of the financial statements. (Concluded) 7 NV ENERGY, INC CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited) For the Nine Months Ended September 30, CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ $ Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization Deferred taxes and deferred investment tax credit AFUDC-equity ) ) Deferred energy Gain on sale of asset ) - Amortization of other regulatory assets Deferred rate increase ) ) Other, net Changes in certain assets and liabilities: Accounts receivable ) ) Materials, supplies and fuel Other current assets Accounts payable ) Accrued retirement benefits ) ) Other current liabilities ) ) Risk management assets and liabilities Other deferred assets ) ) Other regulatory assets ) ) Other deferred liabilities ) ) Net Cash from Operating Activities CASH FLOWS USED BY INVESTING ACTIVITIES: Additions to utility plant (excluding AFUDC-equity) ) ) Proceeds from sale of asset - Customer advances for construction ) ) Contributions in aid of construction Investments and other property - net ) ) Net Cash used by Investing Activities ) ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt Retirement of long-term debt ) ) Sale of Common Stock Dividends paid ) ) Net Cash from Financing Activities Net Increase in Cash and Cash Equivalents Beginning Balance in Cash and Cash Equivalents Ending Balance in Cash and Cash Equivalents $ $ Supplemental Disclosures of Cash Flow Information: Cash paid during period for: Interest $ $ Income taxes $
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SECURITIES PURCHASE AGREEMENT (this "AGREEMENT," “PURCHASE AGREEMENT,” or
“SECURITIES PURCHASE AGREEMENT”), dated as of May___, 2008, by and among
UNIVERSAL ENERGY CORP., a Delaware corporation, ("COMPANY"), and each buyer
listed on the Schedule of Buyers attached hereto (each, including its successors
and assigns, a “BUYER” and collectively the “BUYERS”).
WHEREAS:
A. The Company and the Buyers are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Rule 506
under Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 ACT" or the “Securities Act”);
B. Buyers desire to purchase and the Company desires to issue and sell in a
private offering, upon the terms and conditions set forth in this Agreement, (i)
convertible debentures (the “Debentures”) of the Company and (ii) Warrants (as
defined in Section 1(b)(iv) in the form described in this Agreement, to purchase
shares of common stock, par value $.0001 per share, of the Company (“Common
Stock”). The maximum aggregate Subscription Amount of this offering of the
Debentures all of the Buyers shall be Two Million U.S. Dollars (U.S.
$2,000,000)(the “Maximum Amount”)(collectively, the “Offering”);
C. The terms of the Debentures, including the terms on which the Debentures
may be converted into Common Stock, are set forth in Debenture, in the form
attached hereto as
Exhibit A;
D. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement,
in the form attached hereto as Exhibit B (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
under the 1933 Act and the rules and regulations promulgated thereunder, and
applicable state securities laws.
NOW THEREFORE, the Company and each Buyer, severally and not jointly,
1. PURCHASE AND SALE OF DEBENTURES AND WARRANTS. (a) Certain
Definitions. This Securities Purchase Agreement, the Debenture, the
Registration Rights Agreement, the Warrants, and any other agreements delivered
together with this Agreement or in connection herewith shall be referred to
herein as the “Transaction Documents.” The Company and the each Buyer (severally
and not jointly) mutually agree to the terms of each of the Transaction
Documents. For purposes hereof:
“1934 Act” shall mean the Securities Exchange Act of 1934.
1
"Approved Stock Plan" means any employee benefit plan which has been duly
adopted by a majority of members of the Board of Directors of the Company or a
majority of the members of a committee of directors established for such
purpose, pursuant to which the Company's securities may be issued to any
employee, consultant, officer or director for services provided to the Company.
“Closing Legal Opinion” shall have the meaning set forth in Section 1(b)(v)(C)
below.
Subsidiaries which would entitle the holder thereof to acquire, directly or
indirectly, at any time Common Stock, including without limitation, any debt,
preferred stock, rights, options, warrants or other instrument that is at any
time convertible into or exercisable or exchangeable for, or otherwise entitles
the holder thereof to receive, Common Stock.
“Conversion Shares” shall have the meaning set forth in Section 2(a) below.
“Convertible Securities” shall have the meaning ascribed to it in the Debenture.
“Designated Insiders” shall have the meaning set forth in Section 4(r) below.
“Effective Date” shall mean the date that the initial Registration
Statement required to be filed pursuant to the Registration Rights Agreement is
declared effective by the SEC.
"Eligible Market" means the over the counter Bulletin Board (“OTC-BB”), the
New York Stock Exchange, Inc., the Nasdaq Capital Market, the Nasdaq Global
Market, the Nasdaq Global Select Market or the American Stock Exchange.
“Exempt Issuance” means the issuance of:
(a) any Common Stock issued or issuable in connection with any Approved
Stock Plan of the outstanding Common Stock, in the aggregate (provided that no
such options shall be issued to consultants or advisors unless such options are
not registered, either at the time of issuance or at any time thereafter, and
are subject to volume limitations under Rule 144;
(b) securities issuable upon (i) conversion of the debentures or exercise
of the warrants (the “September 2007 Securities”) issued pursuant to the
September 2007 Financing (ii) conversion of the debentures or exercise of the
warrants (the “November 2007 Securities”) issued pursuant to the November 2007
Financing and (iii) conversion of the Debentures or exercise of the Warrants
issued pursuant to this Agreement; other than the issuance of the September 2007
Securities, the November 2007 Securities and the Securities, no issuance of
Variable Equity Securities shall be an Exempt Issuance.
(c) securities upon the exercise, exchange of, conversion or redemption of,
or payment of interest or liquidated or similar damages on, any Securities
issued hereunder;
2
(d) other securities exercisable, exchangeable for, convertible into, or
redeemable for shares of Common Stock issued and outstanding on the date of this
Agreement, provided that such securities have not been amended since the date of
this Agreement to directly or indirectly effectively increase the number of such
securities or to decrease the exercise, exchange or conversion price of such
securities (and including any issuances of securities pursuant to the
anti-dilution provisions of any such securities);
(e) any Common Stock issued or issuable in connection with a fixed price
offering provided that the price at which such Common Stock is issued is greater
than the then applicable Fixed Conversion Price (as defined in the Debentures)
as the same may be adjusted in accordance with the terms of the Debentures;
(f) any issuance of securities to which the Buyers have consented to in
writing; and (g) any Common Stock issued or issuable in connection with
any acquisition by the
Company, whether through an acquisition of stock or a merger of any business,
assets or technologies the primary purpose of which is not to raise equity
capital.
“Indebtedness” shall have the meaning set forth in Section 3(mm) below.
“Initial Warrant Exercise Price” shall have the meaning set forth in Section
1(b)(iv)
below.
“Intellectual Property” shall have the meaning set forth in Section 3(j) below.
“Intellectual Property Rights” shall have the meaning set forth in Section 3(j)
below.
“Key Person Life Insurance Policy” shall have the meaning set forth in Section
3(u)
below.
“Legend Removal Date” shall have the meaning set forth in Section 6(a).
“Lien” shall have the meaning set forth in Section 5 below.
“Limited Standstill Agreements” shall have the meaning set forth in Section 4(r)
below.
"Market Price," for any security as of any date, shall have the meaning
ascribed to it in the applicable security.
“Material Adverse Effect” shall have the meaning set forth in Section 3(a)
below.
“November 2007 Financing” means the offer and sale of an aggregate of
$1,742,647 principal amount of the Company’s amortizing 8% convertible
debentures and associated warrants, pursuant to the terms and conditions of a
Securities Purchase Agreement dated as of
3
November 26, 2007, between the Company and the purchasers of the debentures and
warrants who are signatories thereto, consummated on or about November 26, 2007.
“Officer’s Certificate” shall have the meaning set forth in Section 8(c) below.
“Ongoing Share Reservation Requirement” shall have the meaning set forth in
Section 4(h)(i) below.
“Options” shall have the meaning ascribed to it in the Debenture.
“Patents” shall have the meaning set forth in Section 3(j) below.
“Payment Shares” shall mean (i) Default Shares (as defined in the
Debenture), (ii) Interest Payment Shares (as defined in the Debenture) and (iii)
shares issuable upon conversion of Required Cash Payments (as each is defined in
the Debenture) into Common Stock of the Company. The Payment Shares shall be
treated as Common Stock issuable upon conversion of the Debentures for all
purposes hereof and thereof and shall be subject to all of the limitations and
afforded all of the rights of the other shares of Common Stock issuable
hereunder or thereunder, including without limitation, the right to be included
in the Registration Statement (as defined in the Registration Rights Agreement)
filed pursuant to the Registration Rights Agreement.
“Permitted Liens” shall mean: (i) Liens on equipment purchased in the
ordinary course of business, (ii) Liens subordinate to the liens, if any created
by this Agreement as long as the lienholder enters into a subordination
agreement acceptable to the Buyers in their reasonable discretion, (iii)
landlords', carriers', warehousemen's, mechanics' and other similar Liens
arising by operation of law in the ordinary course of the Company's business;
provided, however, that all such Liens shall be discharged or bonded off within
sixty (60) days from the filing thereof; (iv) Liens arising out of pledge or
deposits under worker's compensation, unemployment insurance, old age pension,
social security, retirement benefits or other similar legislation; (v) Liens for
taxes (excluding any Lien imposed pursuant to any provision of ERISA) not yet
due or which are being contested in good faith by appropriate proceedings and
the Company maintains appropriate reserves in respect thereto provided that in
Buyer's judgment such Lien does not adversely affect Buyer's rights or the
priority of Buyer's Lien in the Collateral; (vi) Liens created by or pursuant to
the September 2007 Financing and (vii) easements, rights of way, restrictions
and other similar charges or Liens relating to real property and not interfering
in a material way with the ordinary conduct of the Company's business.
“Person” shall mean an individual, a limited liability company, a
partnership, a joint venture, an exempted company, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.
“Principal Market” shall have the meaning set forth in Section 4(j) below.
“Purchase Price” shall have the meaning set forth in Section 1(b)(ii) below.
4
“Registration Rights Agreement” shall have the meaning set forth in Recital “D”
above.
“Required Holders” shall have the meaning ascribed to it in the Debenture.
“Security Agreement” shall have the meaning ascribed to it in Recital “E” above.
“SEC Documents” shall have the meaning set forth in Section 3(g) below.
“Securities” shall have the meaning set forth in Section 2(a) below.
“September 2007 Financing” means the offer and sale of an aggregate of
$5,110,294 principal amount of the Company’s amortizing senior 8% secured
convertible debentures and associated warrants, pursuant to the terms and
conditions of a Securities Purchase Agreement dated as of September 10, 2007,
between the Company and the purchasers of the debentures and warrants who are
signatories thereto, consummated on or about September 14, 2007.
“Subscription Amount” shall have the meaning set forth in Section 10 below.
“Subsidiaries” shall have the meaning set forth in Section 3(a) below.
“Trading Market” means the Eligible Market on which the Common Stock is
listed or quoted for trading on the date in question.
“Underlying Shares” means the shares of Common Stock issued and issuable
upon conversion or redemption of the Debentures or as Payment Shares, issued and
issuable upon exercise of the Warrants and issued and issuable in lieu of the
cash payment of interest on the Debentures in accordance with their terms.
“Variable Equity Securities” shall have the meaning set forth in Section 4(e)
below.
following clauses that applies: (a) if the Common Stock is then listed or quoted
on a Trading Market, the daily volume weighted average price of the Common Stock
for such date (or the nearest preceding date) on the Trading Market on which the
time); (b) if the Common Stock is not then listed or quoted for trading on a
Trading Market and if prices for the Common Stock are then reported in the “Pink
Sheets” published by Pink Sheets, LLC (or a similar organization or agency
share of the Common Stock so reported; or (c) in all other cases, the fair
appraiser selected in good faith by the Buyers of a majority in interest of the
Securities then outstanding and reasonably acceptable to the Company.
“Warrants” shall mean the “I Warrants,” as defined in Section 1(b) below.
5
“Warrant Amount” shall mean the “I Warrant Amount,” as defined in Section 1(b)
below.
“Warrant Shares” shall have the meaning set forth in Section 2(a) below.
(b) Closing of Purchase of Debentures and Warrants. Subject to the
satisfaction or waiver of the terms and conditions of this Agreement, on the
Closing Date (as defined below), the Company shall issue and sell to each Buyer
and each Buyer, severally and not jointly, agrees to purchase from the Company
the Debenture in a principal amount equal to the Subscription Amount (as defined
in Section 10) and an accompanying number of Warrants (as described below) to
purchase a number of shares equal to the Warrant Amount (as defined below).
(i) Form of Debenture. The Debenture shall be in the form annexed hereto
as Exhibit A. (ii) Form Of Payment. The aggregate purchase
price for the Debenture
and the Warrants to be purchased by each Buyer at the Closing (the "Purchase
Price") shall be the amount set forth opposite such Buyer's name in column (5)
of the Schedule of Buyers annexed hereto. Each Buyer shall pay $0.80 for each
$1.00 of principal amount of Debentures and related Warrants to be purchased by
such Buyer at the Closing, representing a twenty percent (20%) original issue
discount (the “Original Issue Discount”). On or before the Closing Date (as
defined below), (i) each Buyer shall pay the Purchase Price for the Debentures
and the Warrants to be issued and sold to it at the Closing (as defined below)
by wire transfer of immediately available funds to the Company, in accordance
with the Company's written wiring instructions, against delivery of duly a
executed Debenture having an aggregate initial principal amount (the “Original
Principal Amount”) equal to the Purchase Price and the number of Warrants equal
to the Warrant Amount, and (ii) the Company shall deliver such Debentures and
Warrants duly executed on behalf of the Company, to such Buyer, against delivery
of such Purchase Price.
(iii) Closing Date. Subject to the satisfaction or waiver of the terms and
conditions of this Agreement, the "Closing" with respect to a Buyer shall occur
when subscriber funds representing the aggregate Original Principal Amount of
the Debenture being purchased by such Buyer are transmitted by wire transfer of
immediately available funds by each Buyer to the Company, assuming that the
Transaction Documents are signed by both parties prior to or within three (3)
business days following such transmission. The date of the Closing shall be
referred to herein as the “Closing Date.” Unless otherwise mutually agreed by
the parties, the last Closing of the transactions contemplated hereunder shall
occur not later than June 16, 2008. The Closing contemplated by this Agreement
shall occur on the applicable Closing Date at the offices of the Company, or at
such other location as may be agreed to by the parties.
(iv) Warrants. Each Buyer’s Debenture shall be accompanied by a number of
warrants (the “I Warrants”) to purchase a number of shares of Common Stock equal
to 100% of the Original Principal Amount of the Debentures being purchased by
such Buyer,
6
divided by the Initial Conversion Price (as defined in the Debenture) (the “I
Warrant Amount”). The I Warrants shall be in the form of the Warrant annexed
hereto as Exhibit E, except that the “Initial Exercise Price,” as defined
therein, shall equal $0.25 (the “Initial I Warrant Exercise Price”), subject to
adjustment therein. The I Warrants shall contain Exercise Price adjustment
provisions that are consistent with the adjustment provisions afforded to the
Conversion Price of the Debenture in the Debenture and shall have a five (5)
year term.
(v) Closing Deliveries. On the Closing Date, the Company will deliver or
cause to be delivered to each Buyer (the “Company Documents”):
(A) the items required to be delivered to Buyer pursuant to Section 8, duly
executed by the Company where so required,
(B) omitted, (C) a legal opinion of the Company's counsel, dated as
of the
Closing Date, in form, scope and substance reasonably satisfactory to the Buyer
and in substantially the same form as Exhibit F attached hereto in relation to
the Company, the applicable Debenture, the applicable Warrant and the
Transaction Documents ("Closing Legal Opinion"),
(D) a duly executed Debenture with a principal amount equal to such Buyer’s
Subscription Amount, divided by 0.8 to account for the Original Issue Discount,
registered in the name of such Buyer,
(E) a duly executed I Warrant registered in the name of such Buyer to
purchase up to a number of shares of Common Stock equal to the I Warrant Amount
(as defined in Section 1(b)(iv)) with an exercise price equal to the Initial I
Warrant Exercise Price (as defined in Section 1(b)(iv)) subject to adjustment
therein,
(F) Limited Standstill Agreements, duly executed by each of the Designated
Insiders (as defined in Section 4(m));
(G) The Company shall have delivered to such Buyer a true copy of
certificate evidencing the formation and good standing of the Company and each
of its Subsidiaries in such entity's jurisdiction of formation issued by the
Secretary of State (or comparable office) of such jurisdiction, as of a date
within 10 days of the Closing Date.
(H) The Company shall have delivered to such Buyer a true copy of
certificate evidencing the Company's qualification as a foreign corporation and
good standing issued by the Secretary of State (or comparable office) of each
jurisdiction in which the Company conducts business, as of a date within five
(5) days of the Closing Date.
7
(I) The Company shall have delivered to such Buyer a certified copy of the
Certificate of Incorporation as certified by the Secretary of the State of
Delaware as of a date that is five (5) days prior to the Closing Date.
On the Closing Date, each Buyer shall deliver or cause to be delivered to
the Company the following (the “Buyer Documents”):
(A) this Securities Purchase Agreement and the Registration Rights
Agreement duly executed by such Buyer; and
(B) such Buyer’s Subscription Amount by wire transfer to the account as
specified in writing by the Company (subject to offsets for any expenses to
which such Buyer is entitled hereunder).
2. BUYER’S REPRESENTATIONS AND WARRANTIES. Each Buyer represents and
warrants to the Company solely as to such Buyer that:
(a) Investment Purpose. As of the date hereof, the Buyer is purchasing the
Debenture and the shares of Common Stock issuable upon conversion of the
Debenture or otherwise pursuant to the Debenture and the other Transaction
Documents (including, without limitation, the Payment Shares) (such shares of
Common Stock being collectively referred to herein as the “Conversion Shares")
and the Warrants and the shares of Common Stock issuable upon exercise thereof
(the "Warrant Shares" and, collectively with the Debenture, Warrants and
Conversion Shares, the "Securities") for its own account and not with a present
view towards the public sale or distribution thereof, except pursuant to sales
registered or exempted from registration under the 1933 Act; PROVIDED, HOWEVER,
registration statement or an exemption under the 1933 Act and applicable state
securities laws.
(b) Accredited Investor Status. The Buyer is an "accredited investor" as
that term is defined in Rule 501(a) of Regulation D (an "Accredited Investor").
(c) Reliance On Exemptions. The Buyer understands that the Securities are
being offered and sold to it in reliance upon specific exemptions from the
that the Company is relying upon the truth and accuracy of, and the Buyer's
Securities.
(d) Information. The Buyer and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Securities which
have been requested by the Buyer or its advisors. The Buyer and its advisors, if
any, have been afforded the opportunity to ask questions of the
8
Company. Neither such inquiries nor any other due diligence investigation
or affect Buyer's right to rely on the Company's representations and warranties
Securities involves a significant degree of risk.
(e) Transfer Or Re-Sale. The Buyer understands that (i) except as provided
in the Registration Rights Agreement, the sale or re-sale of the Securities has
not been and is not being registered under the 1933 Act or any applicable state
securities laws, and the Securities may not be transferred or resold unless (a)
the Securities are sold pursuant to an effective registration statement under
the 1933 Act, (b) the Buyer shall have delivered to the Company an opinion of
counsel (which opinion shall be in form, substance and scope reasonably
satisfactory to counsel to the Company) to the effect that the Securities to be
such registration, (c) the Securities are sold or transferred to an "affiliate"
(as defined in Rule 144 promulgated under the 1933 Act (or a successor rule)
("Rule 144") of the Buyer who agrees to sell or otherwise transfer the
Securities only in accordance with this Section 2(e) and who is an Accredited
Investor, or (d) the Securities are sold pursuant to Rule 144; and (ii) any sale
of such Securities made in reliance on Rule 144 may be made only in accordance
with the terms of said Rule. Notwithstanding the foregoing or anything else
(f) Organization; Authorization; Enforcement. Buyer is a duly organized,
which it is organized. Buyer has all requisite power and authority to enter into
and perform this Agreement and the other Transaction Documents to which Buyer is
a signatory and to consummate the transactions contemplated hereby and thereby
in accordance with the terms hereof and thereof. The execution and delivery of
this Agreement and the other Transaction Documents to which Buyer is a signatory
have been duly and validly authorized and no further consent or authorization of
Buyer, its manager or members is required. This Agreement has been duly executed
and delivered on behalf of the Buyer, and this Agreement constitutes, and upon
execution and delivery by the Buyer of the other Transaction Documents to which
Buyer is a signatory, such agreements will constitute, legal, valid and binding
agreements of the Buyer enforceable in accordance with their terms except (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
(g) Residency. The Buyer’s residency is as indicated on its signature page
hereto. (h) Knowledge And Experience. Buyer has such knowledge and
experience in
financial and business matters that it is capable of evaluating the merits and
risks of the investment in the Securities.
(i) Short Sales Prior To The Date Hereof. Buyer and its Affiliates have not
from the time that such Buyer first received a term sheet (written or oral) from
the Company or
9
any other person setting forth the material terms of the transactions
contemplated hereunder until the date hereof entered into or effected, or
attempted to induce any third party to enter into or effect, any short sales of
the Common Stock, or any hedging transaction which establishes a net short
position with respect to the Common Stock.
(j) Independent Investment Decision. Such Buyer has independently evaluated
the merits of its decision to purchase the Securities pursuant to the
Transaction Documents, and such Buyer confirms that it has not relied on the
advice of any other Buyer's business and/or legal counsel in making such
decision.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to each Buyer that, except as set forth on the Company’s disclosure
schedules referred to herein and attached hereto or any update thereto prior to
the Closing Date (so long as such schedules do not contain any material adverse
change)(collectively, the “Disclosure Schedules”). If an exception is adequately
disclosed in any one section of the Disclosure Schedule it shall be deemed
disclosed for purposes of each other applicable section of the Disclosure
Schedule.
(a) Organization And Qualification. The Company and each of its
Subsidiaries (as defined below), if any, is a corporation duly organized,
where now owned, leased, used, operated and conducted. Schedule 3(a) sets forth
a list of all of the Subsidiaries of the Company and the jurisdiction in which
each is incorporated. The Company and each of its Subsidiaries is duly qualified
as a foreign corporation to do business and is in good standing in every
jurisdiction in which its ownership or use of property or the nature of the
business conducted by it makes such qualification necessary except where the
failure to be so qualified or in good standing would not have a Material Adverse
Effect. "Material Adverse Effect" means any material adverse effect on (i) the
Securities, (ii) the business, operations, assets, financial condition or
prospects of the Company and its Subsidiaries, if any, taken as a whole, (iii)
on the transactions contemplated hereby or by the agreements or instruments to
be entered into in connection herewith or (iv) the authority or the ability of
the Company to perform its obligations under this Agreement, the Registration
Rights Agreement, the Debenture or the Warrants. "Subsidiaries" means any
corporation or other organization, whether incorporated or unincorporated, in
which the Company owns, directly or indirectly, any equity or other ownership
interest.
(b) Authorization; Enforcement. (i) The Company has all requisite corporate
power and authority to enter into and perform this Agreement, the Registration
Rights Agreement, the Debenture and the Warrants and to consummate the
transactions contemplated hereby and thereby and to issue the Securities, in
accordance with the terms hereof and thereof, (ii) except as otherwise set forth
in Schedule 3(b), the execution and delivery of this Agreement, the Registration
Rights Agreement, the Debenture and the Warrants by the Company and the
consummation by it of the transactions contemplated hereby and thereby
(including without limitation, the issuance of the Debenture and the Warrants
and the issuance and reservation for issuance of the Conversion Shares issuable
upon conversion of or otherwise pursuant to the
10
Debenture and the Warrant Shares issuable upon exercise of or otherwise pursuant
to the Warrants) have been duly authorized by the Company's Board of Directors
and no further consent or authorization of the Company, its Board of Directors,
or its stockholders is required, (iii) this Agreement has been duly executed and
delivered by the Company, and (iv) this Agreement constitutes, and upon
execution and delivery by the Company of the Registration Rights Agreement, the
Debenture and the Warrants, each of such agreements and instruments will
general equitable principles and applicable bankruptcy, insolvency,
(c) Capitalization. As of the date hereof, the authorized capital stock of
the Company is as set forth on Schedule 3(c-1). The authorized capital stock of
the Company consists of 250,000,000 shares of Common Stock, par value $0.0001
per share, of which approximately 29,897,233 shares are outstanding as of the
date hereof. There are no outstanding securities which are convertible into
shares of Common Stock, whether such conversion is currently exercisable or
exercisable only upon some future date or the occurrence of some event in the
future, except as disclosed on Schedule (c-1). If any such securities are listed
on the Schedule (c-1), the number or amount of each such outstanding convertible
security and the conversion terms are set forth in said Schedule (c-1). All of
such outstanding shares of capital stock set forth in Schedule 3(c-1) are, or
upon issuance will be, duly authorized, validly issued, fully paid and
nonassessable.
No shares of capital stock of the Company are subject to preemptive rights
or any other similar rights of the stockholders of the Company or any liens or
encumbrances imposed through the actions or failure to act of the Company.
Except as disclosed in Schedule 3(c-2), as of the effective date of this
Agreement, (i) there are no outstanding options, warrants, scrip, rights to
subscribe for, puts, calls, rights of first refusal, agreements, understandings,
claims or other commitments or rights of any character whatsoever relating to,
or securities or rights convertible into or exchangeable for any shares of
capital stock of the Company or any of its Subsidiaries, or arrangements by
which the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries,
(ii) there are no agreements or arrangements under which the Company or any of
its Subsidiaries is obligated to register the sale of any of its or their
securities under the 1933 Act (except the Registration Rights Agreement) and
(iii) there are no anti-dilution or price adjustment provisions contained in any
security issued by the Company (or in any agreement providing rights to security
holders) that will be triggered by the issuance of the Debenture, the Warrants,
the Conversion Shares, the Payment Shares, or the Warrant Shares. The Company
has furnished to each Buyer true and correct copies of the Company's Articles of
Incorporation as in effect on the date hereof ("Articles Of Incorporation"), the
Company's By-laws, as in effect on the date hereof (the "By-Laws"), and the
terms of all securities convertible into or exercisable for Common Stock of the
Company and the material rights of the holders thereof in respect thereto. In
the event that the date of execution of this Agreement is not the Closing Date,
the Company shall provide each Buyer with a written update of this
representation signed by the Company's President and Chief
11
Executive or Chief Financial Officer on behalf of the Company as of the Closing
Date (“Closing Bring-Down Certificate”). No further approval or authorization of
any stockholder, the Board of Directors of the Company or others is required for
the issuance and sale of the Securities. There are no stockholders agreements,
voting agreements or other similar agreements with respect to the Company’s
capital stock to which the Company is a party or, to the knowledge of the
Company, between or among any of the Company’s stockholders.
(d) Issuance of Shares. Upon issuance upon conversion of the Debenture and
upon exercise of the Warrants in accordance with their respective terms, and
receipt of the exercise price therefor, the Conversion Shares and Warrant
Shares, along with any Payment Shares or any other shares issued pursuant to the
terms of the Transaction Documents, will be validly issued, fully paid and
non-assessable, and free from all taxes, liens, claims and encumbrances and
shall not be subject to preemptive rights or other similar rights of
stockholders of the Company and will not impose personal liability upon the
holder thereof.
(e) Acknowledgment Of Dilution. The Company understands and acknowledges
the potentially dilutive effect to the Common Stock upon the issuance of the
Conversion Shares upon conversion of or otherwise pursuant to the Debentures or
upon issuance of the Warrant Shares upon exercise of or otherwise pursuant to
the Warrants. The Company's directors and executive officers have studied and
fully understand the nature of the Securities being sold hereunder. The Company
further acknowledges that its obligation to issue Conversion Shares upon
conversion of or otherwise pursuant to the Debentures, to issue Warrant Shares
upon exercise of or otherwise pursuant to the Warrants in accordance with this
Agreement, and to otherwise issue Payment Shares or other shares of Common Stock
to the Buyer is absolute and unconditional regardless of the dilutive effect
that such issuance may have on the ownership interests of other stockholders of
the Company. Taking the foregoing into account, the Company's Board of Directors
has determined, in its good faith business judgment, that the issuance of the
Securities hereunder and under the Debentures and the Warrants and the
consummation of the transactions contemplated hereby and thereby are in the best
interest of the Company and its stockholders.
(f) No Conflicts. Except as otherwise set forth in Schedule 3(f), the
execution, delivery and performance of each of the Transaction Documents by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the issuance and reservation
for issuance of the Conversion Shares and Warrant Shares) will not (i) conflict
with or result in a violation of any provision of the Certificate of
Incorporation or By-laws, (ii) trigger any resets of conversion or exercise
prices in other outstanding convertible securities, warrants or options of the
Company, (iii) trigger the issuance of securities by the Company to any third
party, (iv) violate or conflict with, or result in a breach of any provision of,
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture, patent,
patent license or instrument to which the Company or any of its Subsidiaries is
a party, or (v) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations
and regulations of any self-regulatory organizations to which the Company or its
securities are subject) applicable to the Company or any of its Subsidiaries or
by which any
12
property or asset of the Company or any of its Subsidiaries is bound or affected
(except, in the case of clauses (i), (iv) and (v) above, for such conflicts,
defaults, terminations, amendments, accelerations, cancellations and violations
Neither the Company nor any of its Subsidiaries is in violation of its
Certificate of Incorporation, By-laws or other organizational documents and
neither the Company nor any of its Subsidiaries is in default (and no event has
occurred which with notice or lapse of time or both could put the Company or any
of its Subsidiaries in default) under, and neither the Company nor any of its
Subsidiaries has taken any action or failed to take any action that would give
to others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party or by which any property or assets of the Company or any
of its Subsidiaries is bound or affected, except for possible defaults as would
businesses of the Company and its Subsidiaries, if any, are not being conducted,
and shall not be conducted so long as a Buyer owns any of the Securities, in
violation of any law, ordinance or regulation of any governmental entity the
violation of which would have a Material Adverse Effect. Except as disclosed in
Schedule 3(f) or as specifically contemplated by this Agreement or as required
under the 1933 Act and any applicable state securities laws, the Company is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court, governmental agency, regulatory agency, self
regulatory organization or stock market or any third party in order for it to
execute, deliver or perform any of its obligations under this Agreement, the
Registration Rights Agreement, the Debentures or the Warrants in accordance with
the terms hereof or thereof or to issue and sell the Debentures and Warrants in
accordance with the terms hereof and to issue the Conversion Shares upon
conversion of or otherwise pursuant to the Debentures and the Warrant Shares
upon exercise of or otherwise pursuant to the Warrants. Except as disclosed in
Schedule 3(f), all consents, authorizations, orders, filings and registrations
which the Company is required to obtain pursuant to the preceding sentence have
been obtained or effected on or prior to the date hereof. The Company is not in
violation of the listing or trading requirements of the Principal Market (as
defined herein) and does not reasonably anticipate that the Common Stock will
cease to be listed or traded on the Principal Market in the foreseeable future.
(g) SEC Documents; Financial Statements. Since at least the beginning of
the most recent fiscal quarter that began more than two (2) years prior to the
Closing Date, the Company has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the 1934 Act (all of the foregoing filed prior
to the date hereof and since at least the beginning of the most recent fiscal
quarter that began more than two (2) years prior to the Closing Date, and all
therein, being hereinafter referred to herein as the "SEC Documents"). For
purposes of this Agreement, “Timely Filed” shall mean that the applicable
document was filed (i) by its original due date under the 1934 Act, or, if a
request for an extension was timely filed, (ii) by such extended due date. True
and complete copies of the SEC Documents are available on the SEC’s internet
website (www.sec.gov), except for such exhibits and incorporated documents. Upon
the request of a Buyer, the Company will promptly provide
13
copies of the SEC Documents to such Buyer. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the 1934
Act and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC, contained any untrue statement of a material fact or omitted to
made, not misleading. None of the statements made in any such SEC Documents is,
or has been, required to be amended or updated under applicable law (except for
such statements as have been amended or updated in subsequent filings prior to
the date hereof). As of their respective dates, the financial statements of the
Company (and the Buyers thereto) included in the SEC Documents complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with United States generally
accepted accounting principles, consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto, or (ii) in the case of unaudited interim statements, to
the extent they may not include footnotes or may be condensed or summary
statements) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth in the financial
statements of the Company included in the SEC Documents, the Company has no
liabilities, contingent or otherwise, other than (i) liabilities incurred in the
ordinary course of business subsequent to the date of the Company’s most recent
10-QSB or 10-KSB and (ii) obligations under contracts and commitments incurred
in the ordinary course of business and not required under generally accepted
accounting principles to be reflected in such financial statements, which,
individually or in the aggregate, are not material to the financial condition or
operating results of the Company.
(h) Absence Of Certain Changes. Except for losses incurred in the ordinary
course of business that have been publicly disclosed at least five (5) days
prior to the date hereof or as set forth on Schedule 3(h) hereof, since the date
of the Company’s most recent 10-Q or 10-K, there has been no material adverse
change and no material adverse development in the assets, liabilities, business,
properties, operations, financial condition, results of operations or prospects
of the Company or any of its Subsidiaries. For purposes of this Section 3(h),
the terms
"Material Adverse Change" and "Material Adverse Development" shall exclude
continuing losses that are consistent with the Company's historical losses.
Except as disclosed in Schedule 3(h), since the date of the Company’s most
recent audited financial statements contained in a Form 10-K, neither the
Company nor any of its Subsidiaries has
(i) declared or paid any dividends on its Common Stock; (ii) sold
any assets, individually or in the aggregate, in excess of $100,000 outside
of the ordinary course of business;
(iii) except as set forth in Schedule 3(h), had capital expenditures,
individually or in the aggregate, in excess of $100,000;
14
(iv) issued any stock, bonds or other corporate securities or any rights,
options or warrants with respect thereto;
(v) borrowed any amount or incurred or become subject to any liabilities
(absolute or contingent) except current liabilities incurred in the ordinary
course of business which are comparable in nature and amount to the current
liabilities incurred in the ordinary course of business during the comparable
portion of its prior fiscal year, as adjusted to reflect the current nature and
volume of the Company's or such subsidiary's business;
(vi) discharged or satisfied any lien or encumbrance or paid any obligation
or liability (absolute or contingent), other than current liabilities paid in
(vii) declared or made any payment or distribution of cash or other
property to stockholders with respect to its stock, or purchased or redeemed, or
made any agreements so to purchase or redeem, any shares of its capital stock;
(viii) sold, assigned or transferred any other tangible assets, or canceled
any debts or claims, except in the ordinary course of business;
(ix) sold, assigned or transferred any patent rights, trademarks, trade
names, copyrights, trade secrets or other intangible assets or intellectual
property rights, or disclosed any proprietary confidential information to any
person except to customers in the ordinary course of business or to the Buyers
or their representatives;
(x) suffered any material losses or waived any rights of material value,
whether or not in the ordinary course of business, or suffered the loss of any
material amount of prospective business;
(xi) made any changes in employee compensation except in the ordinary
course of business and consistent with past practices;
(xii) made capital expenditures or commitments therefor that aggregate in
excess of $50,000; (xiii) entered into any other transaction
other than in the ordinary course of
business, or entered into any other material transaction, whether or not in the
(xiv) made charitable contributions or pledges in excess of $10,000;
(xv) suffered any material damage, destruction or casualty loss, whether or
not
covered by insurance;
(xvi) experienced any material problems with labor or management in
connection with the terms and conditions of their employment;
15
(xvii) effected any two or more events of the foregoing kind which in the
aggregate would be material to the Company or its subsidiaries; or
(xviii) entered into an agreement, written or otherwise, to take any of the
foregoing actions.
Except as set forth in Schedule 3(h), neither the Company nor any of its
Subsidiaries has taken any steps to seek protection pursuant to any bankruptcy
law nor does the Company have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy proceedings or any actual
knowledge of any fact which would reasonably lead a creditor to do so. The
Company and its Subsidiaries, individually and on a consolidated basis, are not
as of the date hereof, and after giving effect to the transactions contemplated
hereby to occur at the Closing, will not be Insolvent (as defined below). For
purposes of this Section 3(h), “Insolvent” means, without giving effect to this
transactions contemplated hereby, (i) the present fair saleable value of the
Company’s assets is less than the amount required to pay the Company’s total
Indebtedness, (ii) the Company is unable to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured, (iii) the Company intends to incur or believes that it
will incur debts that would be beyond its ability to pay as such debts mature or
(iv) the Company has unreasonably small capital with which to conduct the
business in which it is engaged as such business is now conducted and is
proposed to be conducted.
(i) Absence Of Litigation. Except as disclosed in Schedule 3(i-1), to the
knowledge of the Company or any of its subsidiaries, there is no action, suit,
claim, proceeding, inquiry or investigation before or by any court, public
board, government agency, self-regulatory organization or body pending or, to
the knowledge of the Company or any of its Subsidiaries, threatened against or
affecting the Company or any of its Subsidiaries, or their officers or directors
in their capacity as such. Schedule 3(i-2) contains a complete list and summary
description of any known pending or threatened proceeding against or affecting
the Company or any of its Subsidiaries, without regard to whether it, if
adversely decided, would have a Material Adverse Effect. The Company and its
Subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing.
(j) Patents, Copyrights, Etc. All of the Company’s material patents, patent
applications, Patents (as defined below), patent rights, inventions, know-how,
trade secrets, trademarks, trademark applications, service marks, service names,
trade names and copyrights ("Intellectual Property") are set forth in Schedule
3(j-1) hereof. The Company and its Subsidiaries own or possess adequate rights
or licenses to use all of the Intellectual property and the rights to receive
proceeds from patent licensing agreements, patent infringement litigation or
other litigation related to such intellectual property (collectively, the
“Intellectual Property Rights”). Any Liens, encumbrances or licenses that have
been granted against the Intellectual Property are listed in Schedule 3(j-2).
Except as set forth in Schedule 3(j-2), none of the Company's Intellectual
Property Rights have expired or terminated, or are expected to expire or
terminate, within three years from the date of this Agreement. Except as
otherwise set forth on Schedule 3(j-2), the Company owns all right and title to
the Intellectual Property free and clear
16
of any Liens or encumbrances and has not granted any licenses or rights to use
any of the Patents to any third party. The Company and each of its Subsidiaries
owns or possesses the requisite licenses or rights to use all Intellectual
Property necessary to enable it to conduct its business as now operated,
including but not limited to the intellectual property set forth in Schedule
3(j-1) hereof (and, except as otherwise set forth in Schedule 3(j-2) hereof, to
the best of the Company's knowledge, as presently contemplated to be operated in
the future), except for such licenses or rights the failure of which to own or
possess would not, individually or in the aggregate, have a Material Adverse
Effect; there is no claim or action by any person pertaining to, or proceeding
pending, or to the Company's knowledge threatened, which challenges the right of
the Company or of a Subsidiary with respect to any Intellectual Property
necessary to enable it to conduct its business as now operated (and, except as
otherwise set forth in Schedule 3(j-2) hereof, to the best of the Company's
knowledge, as presently contemplated to be operated in the future), except for
actions or claims which, if adversely decided, would not have a Material Adverse
Effect; to the best of the Company's knowledge, the Company's or its
Subsidiaries' current and intended products, services and processes do not
infringe on any Intellectual Property Rights or other rights held by any person,
and the Company is unaware of any facts or circumstances which might give rise
to any of the foregoing. The Company and each of its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of their Intellectual Property.
For purposes hereof, "Patents" means all domestic and foreign letters
patent, design patents, utility patents, industrial designs, inventions, trade
secrets, ideas, concepts, methods, techniques, processes, proprietary
information, technology, know-how, formulae, rights of publicity and other
general intangibles of like nature, now existing or hereafter acquired
(including, without limitation, all domestic and foreign letters patent, design
patents, utility patents, industrial designs, inventions, trade secrets, ideas,
concepts, methods, techniques, processes, proprietary information, technology,
know-how and formulae described in Schedule 3(j-1) hereof), all applications,
registrations and recordings thereof (including, without limitation,
applications, registrations and recordings in the United States Patent and
Trademark Office, or in any similar office or agency of the United States or any
other country or any political subdivision thereof), and all reissues,
divisions, continuations, continuations in part and extensions or renewals
thereof, in each case owned by the Company or an of its Subsidiaries. The
Company does not own or have any rights in and to any Patents.
(k) No Materially Adverse Contracts, Etc. Except as set forth on Schedule 3
(k), neither the Company nor any of its Subsidiaries is subject to any charter,
corporate or other legal restriction, or any judgment, decree, order, rule or
regulation which in the judgment of the Company's officers has or is reasonably
likely in the future to have a Material Adverse Effect. Neither the Company nor
any of its Subsidiaries is a party to any contract or agreement, or has
knowledge of a breach of any contract or agreement to which the Company or any
of its Subsidiaries is a party, either of which in the judgment of the Company's
officers has or is reasonably likely to have a Material Adverse Effect.
(l) Tax Status. Except as set forth on Schedule 3(l), the Company and each
of its Subsidiaries has made or filed all federal, state and foreign income and
all other tax returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the
17
extent that the Company and each of its Subsidiaries has set aside on its books
provisions reasonably adequate for the payment of all unpaid and unreported
taxes) and has paid all taxes and other governmental assessments and charges
reports and declarations, except those being contested in good faith and has set
aside on its books provisions reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed to
collection of any foreign, federal, state or local tax. Except as set forth on
Schedule 3(l), none of the Company's tax returns is presently being audited by
any taxing authority.
(m) Transactions With And Obligations To Affiliates. Other than the grant
of stock options disclosed on Schedule 3(m), none of the officers, directors, or
Company or any of its Subsidiaries (other than customary employment contracts
for ordinary course services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of
employee or, to the knowledge of the Company, any corporation, partnership,
trust or other entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner. Schedule
3(m) sets forth any loans, payables, payments, transactions, debt or equity
securities, or similar agreements or obligations between the Company and any
officers, directors, management or affiliates of the Company.
(n) Acknowledgment Regarding Buyer’s Purchase Of Securities. The Company
acknowledges and agrees that each Buyer is acting solely in the capacity of
arm's length purchaser with respect to this Agreement and the transactions
contemplated hereby. The Company further acknowledges that each Buyer is not
hereby and that any statement made by each Buyer or any of its respective
to the Buyer’s purchase of the Securities and has not been relied upon by the
Company, its officers or directors in any way. The Company further represents to
each Buyer that the Company's decision to enter into this Agreement has been
based solely on the independent evaluation of the Company and its
representatives.
(o) No Integrated Offering. Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf, has directly or indirectly made
any offers or sales of any security or solicited any offers to buy any security
issuance of the Securities to any Buyer. The issuance of the Securities to each
Buyer will not be integrated with any other issuance of the Company's securities
(past, current or future) for purposes of any stockholder approval provisions
18
(p) No Brokers. The identity of any brokers or placement agents (each, a
“Placement Agent”) that are receiving compensation in respect to this Offering,
along with the amount of cash, warrants or other consideration that compose any
compensation to each such broker or placement agent, are disclosed in Schedule
3(p) hereto. Other than as set forth on Schedule 3(p), the Company has taken no
action which would give rise to any claim by any person for brokerage
commissions, finder's fees or similar payments relating to this Agreement or the
transactions contemplated hereby. The Company shall indemnify and hold harmless
each of Buyer, its employees, officers, directors, agents, and partners, and
their respective Affiliates, from and against all claims, losses, damages, costs
(including the costs of preparation and attorney's fees) and expenses suffered
in respect of any such claimed or existing fees.
(q) Conduct of Business; Regulatory Permits; Compliance. The Company and
each of its Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exemptions, consents,
certificates, approvals and orders necessary to own, lease and operate its
properties and to carry on its business as it is now being conducted
(collectively, the "Company Permits"), except where the failure to so possess
any such Company Permits would not have a Material Adverse Effect, and there is
expected to have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is in violation of any term of or in default under its respective
Certificates or Articles of Incorporation or its Bylaws or their organizational
charter or bylaws, respectively. Since the beginning of the most recent fiscal
quarter that began more than two (2) years prior to the Closing Date, neither
Neither the Company nor any such Subsidiary has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit. To the best of the Company’s knowledge, neither the
Company nor any of its Subsidiaries is in violation of any judgment, decree or
order or any statute, ordinance, rule or regulation applicable to the Company or
its Subsidiaries, and neither the Company nor any of its Subsidiaries will
conduct its business in violation of any of the foregoing, except for possible
expected to have a Material Adverse Effect. Without limiting the generality of
the foregoing, the Company is not in violation of any of the rules, regulations
or requirements of the Principal Market and has no knowledge of any facts or
circumstances that would reasonably lead to delisting or suspension of the
Common Stock by its Principal Market in the foreseeable future. Since at least
September 2, 2004, (i) the Common Stock has been designated for quotation on the
Principal Market, (ii) trading in the Common Stock has not been suspended by the
SEC or the Principal Market and (iii) the Company has received no communication,
written or oral, from the SEC or the Principal Market regarding the suspension
or delisting of the Common Stock from the Principal Market.
19
(r) Title To Property. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all Liens,
encumbrances and defects except such as are described in Schedule 3(r) or such
as would not have a Material Adverse Effect. Any real property and facilities
held under lease by the Company and its Subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as would not have
a Material Adverse Effect.
(s) Foreign Corrupt Practices. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any Subsidiary has, in the course of his actions
for, or on behalf of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977;
payment to any foreign or domestic government official or employee.
(t) Solvency. The Company (both before and after giving effect to the
transactions contemplated by this Agreement) is solvent (i.e., its assets have a
fair market value in excess of the amount required to pay its probable
liabilities on its existing debts as they become absolute and matured) and
currently the Company has no information that would lead it to reasonably
conclude that the Company would not have the ability to, nor does it intend to
take any action that would impair its ability to, pay its debts from time to
time incurred in connection therewith as such debts mature. Except as disclosed
in Schedule 3(t), the Company did not receive a qualified opinion from its
auditors with respect to its most recent fiscal year end and does not anticipate
respect of its current fiscal year.
(u) No Investment Company. The Company is not, and upon the issuance and
sale of the Securities as contemplated by this Agreement will not be, an
"investment company" required to be registered under the Investment Company Act
of 1940 (an "Investment Company"). The Company is not controlled by an
Investment Company.
(v) No Undisclosed Liabilities. The Company has no liabilities or
obligations which are material, individually or in the aggregate, other than
those incurred in the ordinary course of the Company's businesses which have
been disclosed in the Company’s public filings and which, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect other
than as set forth in Schedule 3(v).
(w) No Disagreements With Accountants And Lawyers. There are no
disagreements of any kind presently existing, or reasonably anticipated by the
Company to arise, between the Company and the accountants and lawyers formerly
or presently employed by the
20
Company, including but not limited to disputes or conflicts over payment owed to
such accountants and lawyers.
(x) Company Acknowledgment. The Company hereby acknowledges that each Buyer
may elect to hold its Debenture and the Warrants for various periods of time, as
permitted by the terms of the Transaction Documents and the Company further
acknowledges that Buyer has made no representations or warranties, either
written or oral, as to how long the Securities will be held by such Buyer or
regarding Buyer’s trading history or investment strategies.
(y) Disclosure. The Company confirms that neither it nor any other Person
acting on its behalf has provided any of the Buyers or their agents or counsel
with any information that constitutes material, nonpublic information concerning
the Company or its Subsidiaries other than the existence of the transactions
contemplated by this Agreement or the other Transaction Documents. The Company
understands and confirms that each of the Buyers will rely on the foregoing
representations in effecting transactions in securities of the Company. All
disclosure provided to the Buyers regarding the Company, its business and the
transactions contemplated hereby, including the Schedules to this Agreement,
furnished by or on behalf of the Company is true and correct and does not
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Each press release
issued by the Company or any of its Subsidiaries during the twelve (12) months
preceding the date of this Agreement did not at the time of release contain any
light of the circumstances under which they were made, not misleading. No event
or circumstance has occurred or information exists with respect to the Company
or any of its Subsidiaries or its or their business, properties, prospects,
operations or financial conditions, which, under applicable law, rule or
regulation, requires public disclosure or announcement by the Company but which
has not been so publicly announced or disclosed.
(z) Absence Of Certain Company Control Person Actions Or Events. To the
Company’s knowledge, during the past five (5) years:
(i) No petition under the federal bankruptcy laws or any state insolvency
law was filed by or against, and no receiver, fiscal agent or similar officer
was appointed by a court for the business or property of such Company Control
Person, or any partnership in which he was a general partner at or within two
years before the time of such filing, or any corporation or business association
of which he was an executive officer at or within two years before the time of
such filing;
(ii) No Company Control Person was convicted in a criminal proceeding or is
a named subject of a pending criminal proceeding (excluding traffic violations
and other minor offenses);
(iii) No Company Control Person has been the subject of any order, judgment
or decree, that was not subsequently reversed, suspended or vacated, of any
court of competent
21
jurisdiction, permanently or temporarily enjoining him from, or otherwise
limiting, the following activities:
(A) acting, as an investment advisor, underwriter, broker or dealer in
securities, or as an affiliated person, director or employee of any investment
company, bank, savings and loan association or insurance company, as a futures
commission merchant, introducing broker, commodity trading advisor, commodity
pool operator, floor broker, any other Person regulated by the Commodity Futures
Trading Commission (“CFTC”) or engaging in or continuing any conduct or practice
in connection with such activity;
(B) engaging in any type of business practice; or (C) engaging in
any activity in connection with the purchase or
sale of any security or commodity or in connection with any violation of federal
or state securities laws or federal commodities laws;
(iv) No Company Control Person has been the subject of any order, judgment
or decree, not subsequently reversed, suspended or vacated, of any federal or
state authority barring, suspending or otherwise limiting for more than 60 days
the right of such Company Control Person to engage in any activity described in
paragraph (3) of this item, or to be associated with Persons engaged in any such
activity; or
(v) No Company Control Person was found by a court of competent
jurisdiction in a civil action or by the CFTC or SEC to have violated any
federal or state securities law, and the judgment in such civil action or
finding by the CFTC or SEC has not been subsequently reversed, suspended, or
vacated.
For purposes hereof, “Company Control Person” means each director,
executive officer, promoter, and such other Persons as may be deemed in control
of the Company pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934
Act.
(aa) DTC Status. The Company's transfer agent is a participant in and the
Common Stock is eligible for transfer pursuant to the Depository Trust Company
Automated Securities Transfer Program. The name, address, telephone number, fax
number, contact person and email address of the Company transfer agent is set
forth on Schedule 3(aa) hereto.
(bb) Sarbanes-Oxley; Internal Accounting Controls. The Company is in
are applicable to it as of the Closing Date.
(cc) Seniority. The Debentures are junior and subordinate to the Company's
senior 8% secured convertible debentures issued in conjunction with the
September 2007
22
Financing and the 8% unsecured convertible debentures issued in conjunction with
the November 2007 Financing. Except as set forth in the immediately preceding
sentence, and except as set forth on Schedule 3 (cc), as of the Closing Date, no
indebtedness or other equity of the Company is senior to or pari passu with the
Debentures in right of payment, whether with respect to interest or upon
liquidation or dissolution, or otherwise.
(dd) Registration Rights. Except for the registration rights granted in
connection with the September 2007 Financing, the November 2007 Financing and as
otherwise set forth on Schedule 3(dd) hereto, other than each of the Buyers, no
Person has any right to cause the Company to effect the registration under the
Securities Act of any securities of the Company.
(ee) Off Balance Sheet Arrangements. There is no transaction, arrangement,
or other relationship between the Company and an unconsolidated or other off
balance sheet entity that is required to be disclosed by the Company in its 1934
Act filings and is not so disclosed or that otherwise would be reasonably likely
(ff) Indebtedness And Other Contracts. Except as disclosed in Schedule
3(ff), neither the Company nor any of its Subsidiaries (i) has any outstanding
indebtedness (as defined below), (ii) is a party to any contract, agreement or
instrument, the violation of which, or default under which, by the other
party(ies) to such contract, agreement or instrument would result in a Material
Adverse Effect, (iii) is in violation of any term of or in default under any
contract, agreement or instrument relating to any indebtedness, or (iv) is a
party to any contract, agreement or instrument relating to any Indebtedness, the
performance of which, in the judgment of the Company's officers, has or is
expected to have a Material Adverse Effect. Schedule 3(ff) provides a detailed
description of the material terms of any such outstanding Indebtedness.
(gg) Conduct Of Business. Neither the Company nor its Subsidiaries is in
violation of any term of or in default under its Certificate of Incorporation,
Bylaws or their organizational charter or bylaws, respectively. Except as
disclosed in Schedule 3(gg), neither the Company nor any of its Subsidiaries is
in violation of any judgment, decree or order or any statute, ordinance, rule or
regulation applicable to the Company or its Subsidiaries, and neither the
Company nor any of its Subsidiaries will conduct its business in violation of
any of the foregoing, except for possible violations which would not,
individually or in the aggregate, have a Material Adverse Effect. Without
limiting the generality of the foregoing, the Company is not in violation of any
of the rules, regulations or requirements of the Principal Market other than
violations which could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect and has no knowledge of any facts
or circumstances which would reasonably lead to delisting or suspension of the
Common Stock by the Principal Market in the foreseeable future. Except as
disclosed on Schedule 3(gg) since September 2, 2004, (i) the Common Stock has
been designated for quotation on the Principal Market, (ii) trading in the
Common Stock has not been suspended by the SEC or the Principal Market and (iii)
the Company has received no communication, written or oral, from the SEC or the
Principal Market regarding the suspension or delisting of the Common Stock from
the Principal Market, and the Company has not received any letters of inquiry
from the SEC Division of Enforcement or state securities regulators in the past
24 months related to any potential or alleged violation of state or
23
federal securities laws. The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate regulatory
authorities necessary to conduct their respective businesses, except where the
failure to possess such certificates, authorizations or permits would not have,
individually or in the aggregate, a Material Adverse Effect, and neither the
Company nor any such Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization or
permit.
(hh) No Undisclosed Events, Liabilities, Developments Or
Circumstances. Except as disclosed in the Disclosure Schedules, no event,
liability, development or circumstance has occurred or exists, or is
contemplated to occur with respect to the Company, its Subsidiaries or their
respective business, properties, prospects, operations or financial condition,
that would be required to be disclosed by the Company under applicable
securities laws on a registration statement on Form SB-2 or any other
appropriate form filed with the SEC relating to an issuance and sale by the
Company of its Common Stock and which has not been publicly announced.
(ii) Obligations To Issue Additional Securities. Schedule 3(ii) lists all
outstanding debt or equity securities, warrants or options, or Common Stock
Equivalents, and all contractual agreements of the Company, in each case, that
contain any provisions (“Triggering Provisions”) that could require the
adjustment to conversion or exercise prices of existing securities, or the
issuance of additional securities triggered as a result of the issuance of
securities by the Company or by the passage of time on or after the date of this
Securities Purchase Agreement.
(jj) Regulation M Compliance. The Company has not, and to its knowledge no
soliciting purchases of, any of the securities of the Company or (iii) paid or
(iii), compensation paid to the Company’s placement agent in connection with the
4. COVENANTS. Unless otherwise specified below, with respect to the
covenants in Sections 4 and 5 applicable to the Company: the Company’s
obligations to follow such covenants shall continue until such time as less than
20% of the principal amount of Debenture issued in the Offering remain
outstanding; and, any or all of such covenants may be waived by the written
consent of the Required Holders (as defined in the Debenture).
(a) Form D; Blue Sky Laws. The Company agrees to file a Form D with respect
to each Buyer promptly after such filing. The Company shall, on or before the
necessary to qualify the Securities for sale to the Buyer at the Closing
pursuant to this Agreement under applicable securities or "blue sky" laws of the
states of the United States (or to obtain an exemption from such qualification),
and shall provide evidence of any such action so taken to each Buyer on or prior
to the Closing Date.
24
(b) Reporting Status. The Company's Common Stock is registered under 12(b)
or 12(g) of the 1934 Act. So long as any Buyer beneficially owns any of the
Securities, the Company shall timely file all reports required to be filed with
the SEC pursuant to the 1934 Act (“1934 Act Filings”), and the Company shall not
termination.
(c) Use Of Proceeds. The Company shall use the proceeds from the sale of
the Debentures and the Warrants in the manner set forth in Schedule 4(c)
attached hereto and made a part hereof and, except as otherwise expressly
specified in Schedule 4(c), the Company shall not use any of such proceeds (i)
to repay any of its corporate debt or other Indebtedness, (ii) to redeem any
Common Stock or Common Stock Equivalents, (iii) to settle any outstanding
litigation, or (iv) to repay any debt or obligation to any officer, director or
manager of the Company, including but not limited to the Company’s president,
chief executive officer, chief financial officer and chief operations officer,
and any of their affiliates or family members (collectively, “Insiders”).
(d) Securities Issuance Restrictions; Capital Raising Limitations; Right Of
Participation.
(i) Lock-Up of Issuance of Securities. Except for Exempt Issuances, the
transactions or other issuances of securities by the Company to the Buyers as
contemplated by the Transaction Documents, during the period from the date
hereof until the earlier of (i) the date that is 90 days following the Effective
Date or (ii) twelve (12) months from the Closing Date (the “Limitation Period”),
neither the Company nor any Subsidiary shall issue shares of Common Stock or
Common Stock Equivalents (the “Equity Issuance Lock-Up”), provided, however, the
90 day period set forth in this Section 4(d)(i) shall be extended for the number
of Trading Days during such period in which (i) trading in the Common Stock is
suspended by any Trading Market, or (ii) following the Effective Date, the
Registration Statement is not effective or the prospectus included in the
Registration Statement may not be used by the Buyers for the resale of the
Underlying Shares The Equity Issuance Lock-Up shall not apply in respect of an
Exempt Issuance.
(ii) Capital Raising Limitations. During the period that any Debentures
remain outstanding, notwithstanding whether or not an issuance of securities is
an Exempt Issuance, the Company shall not issue or sell, or agree to issue or
sell Variable Equity Securities (as defined below)(the “Variable Equity
Securities Lock-Up”), without obtaining the prior written approval of each of
the Buyers, with the exception of any such agreements or transactions that (x)
exist as of the date hereof and (y) are not amended or modified after the date
hereof. For purposes hereof, the following shall be collectively referred to
herein as, the “Variable Equity Securities”: (A) any debt or equity securities
which are convertible into, exercisable or exchangeable for, or carry the right
to receive additional shares of Common Stock either (1) at any conversion,
the trading prices of or quotations for Common Stock at any time after the
initial issuance of such debt or equity security, or (2) with a fixed
conversion, exercise or exchange
25
price that is subject to being reset at some future date at any time after the
initial issuance of such debt or equity security due to a change in the market
price of the Company’s Common Stock since date of initial issuance, or (B) any
amortizing convertible security which amortizes prior to its maturity date,
where the Company is required to or has the option to (or the investor in such
transaction has the option to require the Company to) make such amortization
payments in shares of Common Stock (whether or not such payments in stock are
subject to certain equity conditions), or (C) any transaction involving a
written agreement between the Company and an investor or underwriter whereby the
Company has the right to “put” its securities to the investor or underwriter
over an agreed period of time and at an agreed price or price formula (each, an
“Equity Line” transaction). For purposes of the above, the “Market Price” at
time of closing shall mean the Market Price, as defined in the Debentures.
It is expressly agreed and understood that the Variable Equity Securities
Lock-Up shall apply in respect of an Exempt Issuance and that no issuance of
(iii) Omitted.
(iv) Buyer’s Right of Participation in Future Financings.
(A) From the date hereof and during the period that any portion of the
Debenture is outstanding, upon any financing by the Company or any of its
subsidiaries (each, a “Subsequent Financing”) of Common Stock or Common Stock
Equivalents (as defined in Section 1(a)), excluding any securities issued
pursuant to the Offering described in this Agreement, each Buyer shall have the
right to participate (the “Buyer’s Right Of Participation”) in up to the Buyer’s
Participation Maximum (as defined below) of the Subsequent Financing, provided
that any securities issued to the Buyer hereunder, and any securities issuable
pursuant to the conversion or exercise of such securities, shall be subject to
the Beneficial Ownership Limitation.
(B) At least ten (10) days prior to the closing of the Subsequent
Financing, the Company shall deliver to each Buyer a written notice of its
intention to effect a Subsequent Financing (an “Advance Notice Of Financing”),
which Advance Notice of Financing shall ask such Buyer if it wants to review the
details of such financing (such additional notice, a “Subsequent Financing
Notice”). Upon the request of a Buyer, and only upon a request by such Buyer,
for a Subsequent Financing Notice, the Company shall promptly, but no later than
one (1) Trading Day after such request, deliver a Subsequent Financing Notice to
such Buyer. The Subsequent Financing Notice shall describe in reasonable detail
the proposed terms of such Subsequent Financing, the amount of proceeds intended
to be raised thereunder, the Person with whom such Subsequent Financing is
proposed to be effected, and attached to which shall be a term sheet or similar
document relating thereto and complete, definitive legal documentation (“Legal
Documents”) for the transaction.
(C) Any Buyer desiring to participate in such Subsequent Financing must
provide written notice (“Participation Notice”) to the Company by not later than
5:30 p.m. (New York City time) on the tenth (10th) Trading Day after such Buyer
has
26
received the Advance Notice of Financing that the Buyer is willing to
participate in the Subsequent Financing, the amount of the Buyer’s
participation, and that the Buyer has such funds ready, willing, and available
for investment on the terms set forth in the Subsequent Financing Notice. If the
Company receives no notice from a Buyer as of such tenth (10th) Trading Day,
such Buyer shall be deemed to have notified the Company that it does not elect
to participate. Buyer shall not be obligated to participate in a Subsequent
Offering after delivering a Participation Notice to the Company until after the
Buyer has reviewed and agreed to the final Legal Documents for such offering.
(D) If by 5:30 p.m. (New York City time) on the tenth (10th) Trading Day
after all of the requesting Buyers have received the Advance Notice of
Financing, notifications by the Buyers of their willingness to participate in
the Subsequent Financing (or to cause their designees to participate) is, in the
aggregate, less than the total amount of the Subsequent Financing, then the
Company may effect the remaining portion of such Subsequent Financing on the
terms and to the Persons set forth in the Subsequent Financing Notice.
after all of the Buyers have received the Advance Notice of Financing, the
Company receives responses to a Subsequent Financing Notice from Buyers seeking
to purchase more than the aggregate amount of the Subsequent Financing, each
such Buyer shall have the right to purchase up to (the “Buyer’s Participation
Maximum”) (a) their Pro Rata Portion (as defined below) of the Subsequent
Financing, plus (b) a pro rata amount (based upon the relative amount of the
participating Buyers’ respective Pro Rata Portions) of the aggregate of the
unused Pro Rata Portions of the other Buyers. For purposes hereof, “Pro Rata
Portion” shall mean the ratio of (x) the aggregate Purchase Price of Securities
purchased on the Closing Date by a Buyer participating under this Section
4(e)(iv) and (y) the sum of the aggregate Purchase Price of Securities purchased
on the Closing Date by all Buyers participating under this Section 4(d)(iv).
(F) For purposes of clarity, in the event that there is any amount of a
Subsequent Financing that is not requested to be purchased by a Buyer, then any
other Buyer shall have the right to purchase such remaining amount of the
Subsequent Financing.
(G) The Company must provide the Buyers with a second Subsequent Financing
Notice, and the Buyers will again have the right of participation set forth
above in this Section 4(d)(iv), if the Subsequent Financing subject to the
initial Subsequent Financing Notice is not consummated for any reason on the
terms set forth in such Subsequent Financing Notice within thirty (30) Trading
Days after the date of the initial Subsequent Financing Notice.
(H) The Company and the Buyers agree that if any Buyer elects to
participate in the Subsequent Financing, (x) neither the agreement regarding the
Subsequent Placement (the "Subsequent Placement Agreement") with respect to such
Subsequent Financing nor any other transaction documents related thereto
(collectively, the "Subsequent Placement Documents") shall include any term or
provisions whereby any Buyer shall be required to agree to any restrictions in
trading as to any securities of the Company owned by
27
such Buyer prior to such Subsequent Placement, and (y) the Buyers shall be
entitled to the same registration rights provided to other investors in the
Subsequent Placement.
(v) Most Favored Nation (MFN) Securities Exchange Provision.
From the date hereof until the date when such Buyer holds less than 20% in
principal amount of Debentures originally purchased by such Buyer hereunder, if
the Company effects a Subsequent Financing, each Buyer may elect, in its sole
discretion, to exchange (an “MFN Exchange”) all or some of the Debentures then
held by such Buyer for any securities or units issued in a Subsequent Financing
on a $1.00 for $1.00 basis based on the outstanding principal amount of such
Debentures, along with any accrued but unpaid interest, liquidated damages and
other amounts owing thereon, and the effective price at which such securities
were sold in such Subsequent Financing; PROVIDED, HOWEVER, that this Section
4(d)(v) shall not apply with respect to (a) an Exempt Issuance or (b) a firm
commitment underwritten public offering of Common Stock with a reputable
national underwriter. The Company shall provide each Buyer with notice of any
such Subsequent Financing in the manner set forth in Section 4(d)(iv). Following
such an exchange, the Holder shall retain all of its unconverted Warrants and
shall receive any warrants, options or other ancillary securities that normally
accompany the securities being purchased and sold in the Subsequent Financing.
(vi) Injunctive Relief. The remedies provided in this Agreement shall be
cumulative and in addition to all other remedies available under this Agreement
and any of the other Transaction Documents at law or in equity (including a
decree of specific performance and/or other injunctive relief), and nothing
herein shall limit the Holder's right to pursue actual and consequential damages
for any failure by the Company to comply with the terms of this Agreement or any
of the Transaction Documents. The Company acknowledges that a breach by it of
its obligations under this Agreement or the other Transaction Documents,
including but not limited to a breach of its obligations under this subsection
4(d) or its obligations under Section 4(t) hereof, will cause irreparable harm
to Buyer, by vitiating the intent and purpose of the transactions contemplated
breach of its obligations under this Agreement or the other Transaction
Documents, including but not limited to a breach of its obligations under this
subsection 4(d) or a breach of its obligations under subsection 4(t) hereof,
will be inadequate and agrees, in the event of a breach or threatened breach by
the Company of the provisions of this Agreement or the other Transaction
Documents, that Buyer shall be entitled, in addition to all other available
remedies in law or in equity, to an injunction or injunctions to prevent or cure
any breaches of the provisions of this Agreement or the other Transaction
subsection 4(d) or of subsection 4(m) hereof, and to enforce specifically the
terms and provisions of this Agreement and the other Transaction Documents,
including but not limited to its obligations under this subsection 4(d) or of
subsection 4(m) hereof, without the necessity of showing economic loss and
without any bond or other security being required. Specifically, the Buyer shall
be entitled to injunctive relief to cause the court to rescind any financing or
financings or other transactions between the Company and a third party that are
in violation of subsection 4(d) or subsection 4(t).
(vii) Stockholder Approval. If at any time the number of shares of Common
Stock authorized and reserved for issuance is below 100% of the number of
28
Conversion Shares issued and issuable upon conversion of or otherwise pursuant
to the Debentures (based on the Conversion Price (as defined in the Debentures)
in effect from time to time) and Warrant Shares issued or issuable upon exercise
of or otherwise pursuant to the Warrants (based on the Exercise Price of the
Warrants in effect from time to time), together with the Payment Shares and any
other shares of Common Stock issued or issuable pursuant to the terms of the
Transaction Documents, the Company will promptly take all corporate action
necessary to authorize and reserve a sufficient number of shares, including,
without limitation, calling a special meeting of stockholders to authorize
additional shares to meet the Company's obligations under this Section 4(h), in
the case of an insufficient number of authorized shares, and using its best
efforts to obtain stockholder approval of an increase in such authorized number
of shares.
(e) Certain Trading Activities. For so long as such Buyer owns any
Debentures, such Buyer shall not maintain a Net Short Position. For purposes
hereof, a "Net Short Position" by a person means a position whereby such person
has executed one or more sales of Common Stock that is marked as a short sale
and that is executed at a time when such Buyer has no equivalent offsetting long
position in the Common Stock or contract for the foregoing. For purposes of
determining whether a Buyer has an equivalent offsetting long position in the
Common Stock, all Common Stock (i) that is owned by such Buyer, (ii) that may be
issued as Interest Shares pursuant to the terms of the Debentures to the Buyer,
(iii) that would be issuable upon conversion or exercise in full of all
Securities then held by such Buyer (assuming that such Securities were then
fully convertible or exercisable, notwithstanding any provisions to the
contrary, and giving effect to any conversion or exercise price adjustments that
would take effect given only the passage of time), or (iv) that would otherwise
be issuable to the Buyer as Payment Shares, shall be deemed to be held long by
such Buyer. Without limiting the foregoing, the Buyers may engage in hedging
activities at various times during the period following the Initial Effective
Date.
(f) Listing. The Company shall use its best efforts to promptly secure the
listing of the Conversion Shares and Warrant Shares upon each national
securities exchange or automated quotation system, if any, upon which shares of
Common Stock are then listed (subject to official notice of issuance) and, so
long as any Buyer owns any of the Securities, shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all Conversion
Shares from time to time issuable upon conversion of or otherwise pursuant to
the Debentures and all Warrant Shares from time to time issuable upon exercise
of or otherwise pursuant to the Warrants. The Company will use its best efforts
to obtain and, so long as any Buyer owns any of the Securities, maintain the
listing and trading of its Common Stock on an Eligible Market (whichever
Eligible Market is at the time the principal trading exchange or market for the
Common Stock is referred to herein as the "Principal Market"), and will comply
in all respects with the Company's reporting, filing and other obligations under
the bylaws or rules of the National Association of Securities Dealers, or any
successor entity ("NASD") and such exchanges, as applicable. The Company shall
promptly provide to Buyer copies of any notices it receives from the Principal
Market and any other exchanges or quotation systems on which the Common Stock is
then listed regarding the continued eligibility of the Common Stock for listing
on such exchanges and quotation systems.
29
(g) Corporate Existence. So long as a Buyer beneficially owns any portion
of the Debentures or Warrants, the Company shall maintain its corporate
existence in good standing and remain a “Reporting Issuer” (defined as a Company
which files periodic reports under the 1934 Act).
(h) No Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
of the Securities to the Buyers in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Buyers or that
would be integrated with the offer or sale of the Securities for purposes of the
rules and regulations of any Trading Market.
(i) Limitation On Sale Or Disposition Of Intellectual Property. So long as
any portion of the Debentures remain outstanding, so long as the Company shall
have any obligation under the Debentures or so long as any of the Warrants
remain outstanding, the Corporation shall not sell, convey, dispose of, spin off
or assign any or all of its Intellectual Property (including but not limited to
the Intellectual Property set forth in Schedules 3(j)(1) and (2) hereof), or any
of the Intellectual Property Rights, in each case without Buyer’s written
consent, provided that the Company may, without the Buyer’s written consent,
enter into one or more licensing agreements with respect to its Intellectual
Property so long as such licensing agreements exceed $5 million per calendar
year and so long as such agreements are not with any affiliate (as such term is
defined in Rule 501(b) of Regulation D) of the Company or with any relative of,
or entity controlled by, or any entity 10% or more of which is owned by, any
officer, director, employee or former employee of the Company, provided,
further, that the Company shall not be subject to the restrictions of this
Section 4(i) if the cash consideration received by the Company in exchange for
such Intellectual Property Rights exceeds $50 million.
(j) Limitation On Rate Of Issuance Of Shares. The parties agree that, if by
virtue of this AGREEMENT, or by virtue of any other agreement between the
parties, Holder becomes entitled to receive from the Company a number of shares
of Common Stock of the Company (collectively, “Issuable Securities”), such that
the sum of (1) the number of shares of Common Stock of the Company beneficially
owned by HOLDER and any applicable affiliates (other than shares of Common Stock
which may be deemed beneficially owned through the ownership of the unconverted
portion of the Debenture, the unexercised Warrants or the unexercised or
unconverted portion of any other security of HOLDER subject to a limitation on
conversion or exercise analogous to the limitations contained
herein)(collectively, the “Beneficially Owned Shares”) and (2) the number
Issuable Securities described above, with respect to which the determination of
this proviso is being made, would result in beneficial ownership by the Holder
and its affiliates of more than 4.99% of the outstanding shares of Common Stock
(the “Beneficial Ownership Limitation”), then the Company shall immediately
deliver to Holder the number of shares of Common Stock of the Company, that can
be issued without exceeding the Beneficial Ownership Limitation, and the Company
shall not issue shares of Common Stock to the Buyer in excess of the Beneficial
Ownership Limitation.
For purposes of the proviso to the immediately preceding sentence, (i)
beneficial ownership shall be determined by the Holder in accordance with
Section 13(d) of the 1934 Act
30
and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of
such proviso to the immediately preceding sentence, and PROVIDED THAT the
Beneficial Ownership Limitation shall be conclusively satisfied if the
applicable notice from Holder includes a signed representation by the Holder
that the issuance of the shares in such notice will not violate the Beneficial
Ownership Limitation, and the Company shall not be entitled to require
additional documentation of such satisfaction.
The parties agree that, in the event that the Company receives any tender
offer or any offer to enter into a merger with another entity whereby the
Company shall not be the surviving entity (an “Offer”), or in the event the
Company is issuing Default Shares (as defined in the Debenture) to the Buyer,
then “4.99%” shall be automatically revised immediately after such offer to read
“9.99%” each place it occurs in the first two paragraphs of this Section 4(j)
above. Notwithstanding the above, Holder shall retain the option to either
exercise or not exercise its option(s) to acquire Common Stock pursuant to the
terms hereof after an Offer. In addition, the Beneficial Ownership Limitation
provisions of this Section 4(j) may be waived by such Holder, at the election of
such Holder, upon not less than 61 days’ prior notice to the Company, to change
the Beneficial Ownership Limitation to any other percentage not less than 4.99%
and not in excess of 9.99% of the number of shares of the Common Stock
Stock upon conversion of the Debenture held by the Holder or upon exercise of a
Warrant held by the Holder, as applicable, and the provisions of this Section
4(j) shall continue to apply. The limitations on conversion set forth in this
subsection are referred to as the “Beneficial Ownership Limitation.” Upon such a
change by a Holder of the Beneficial Ownership Limitation from such 4.99%
Beneficial Ownership Limitation to such 9.99% limitation, the Beneficial
Ownership Limitation may not be further waived by such Holder.
The provisions of this paragraph shall be construed and implemented in a
manner otherwise than in strict conformity with the terms of this Section 4(j)
inconsistent with the intended Beneficial Ownership Limitation herein contained
to such limitation.
In the event the Buyer notifies the Company that the exercise of the rights
described herein or in the Warrants, or the issuance of Payment Shares or other
shares of Common Stock issuable to the Holder under the terms of the Transaction
Documents (collectively, “Issuable Shares”) would result in the issuance of an
amount of Common Stock of the Company that would exceed the maximum amount that
may be issued to a Buyer calculated in the manner described in this Section 4(j)
of this Agreement, then the issuance of such additional shares of Common Stock
of the Company to such Buyer will be deferred in whole or in part until such
time as such Buyer is able to beneficially own such Common Stock without
exceeding the maximum amount set forth calculated in the manner described in
herein. The determination of when such Common Stock may be issued shall be made
by each Buyer as to only such Buyer.
(k) Equal Treatment Of Buyers. The terms of Securities issued to Buyers per
the terms of this Agreement and the Transaction Documents shall be identical in
all material
31
respects. In addition, neither the Company nor any of its affiliates shall,
directly or indirectly, pay or cause to be paid any consideration (immediate or
contingent), whether by way of interest, fee, payment for the redemption,
conversion of the Debentures or exercise of the Warrants, or otherwise, to any
Buyer or holder of Securities, for or as an inducement to, or in connection with
the solicitation of, any consent, waiver or amendment. of any terms or
provisions of the Transaction Documents, unless such consideration is required
to be paid to all Buyers or holders of Securities bound by such consent, waiver
or amendment. The Company shall not, directly or indirectly, redeem any
Securities unless such offer of redemption is made pro rata to all Buyers or
holders of Securities, as the case may be, on identical terms. For clarification
purposes, this provision constitutes a separate right granted by the Company to
each Buyer of Securities and negotiated separately by each Buyer, is intended
for the Company to treat the Buyers as a class, and shall not in any way be
construed as the Buyers acting in concert or as a group with respect to the
purchase, disposition or voting of Securities or otherwise.
(l) Omitted. (m) Limited Standstill. The Company will deliver to the
Buyers on or before the
Closing Date and enforce the provisions of irrevocable standstill agreements
("Limited Standstill Agreements") in the form annexed hereto as Exhibit G with
the Insiders and other shareholders that are identified on Schedule 4(m) hereto
(collectively, the “Designated Insiders”).
(n) Non-Public Information. The Company covenants and agrees that from and
after the date hereof, neither it nor any other Person acting on its behalf will
provide any Buyer or its agents or counsel with any information that constitutes
material non-public information, unless prior thereto such Buyer shall have
executed a written agreement regarding the confidentiality and use of such
information. The Company understands and confirms that each Buyer shall be
relying on the foregoing representations in effecting transactions in securities
of the Company. In the event of a breach of the foregoing covenant by the
Company, or any of its Subsidiaries, or any of its or their respective officers,
directors, employees and agents, in addition to any other remedy provided herein
or in the Transaction Documents, the Company shall publicly disclose any
material, non-public information in a Form 8-K within five (5) Business Days of
the date that it discloses such information to the Buyer. In the event that the
Company discloses any material, non-public information to the Buyer and fails to
publicly file a Form 8-K in accordance with the above, a Buyer shall have the
right to make a public disclosure, in the form of a press release, public
advertisement or otherwise, of such material, nonpublic information without the
prior approval by the Company, its Subsidiaries, or any of its or their
respective officers, directors, employees or agents. No Buyer shall have any
liability to the Company, its Subsidiaries, or any of its or their respective
officers, directors, employees, stockholders or agents, for any such disclosure.
The Company understands and confirms that each Buyer shall be relying on the
foregoing representations in effecting transactions in securities of the
Company.
(o) Omitted.
32
(p) Transactions With Affiliates. So long as any Debenture or Warrant is
outstanding, the Company shall not, and shall cause each of its Subsidiaries not
to, enter into, amend, modify or supplement, or permit any Subsidiary to enter
into, amend, modify or supplement any agreement, transaction, commitment, or
arrangement with any of its or any Subsidiary’s officers, directors, employees,
persons who were officers or directors at any time during the previous two (2)
years, stockholders who beneficially own five percent (5%) or more of the Common
Stock, or Affiliates (as defined below) of any thereof, or with any individual
related by blood, marriage, or adoption to any such individual or with any
entity in which any such entity or individual owns a five percent (5%) or more
beneficial interest (each a “Related Party”), except for customary employment
arrangements and benefit programs on reasonable terms. “Affiliate” for purposes
hereof means, with respect to any person or entity, another person or entity
that, directly or indirectly, (i) has a ten percent (10%) or more equity
interest in that person or entity, (ii) has ten percent (10%) or more common
ownership with that person or entity, (iii) controls that person or entity, or
(iv) shares common control with that person or entity. “Control” or “Controls”
for purposes hereof means that a person or entity has the power, direct or
indirect, to conduct or govern the policies of another person or entity.
(q) Pledge Of Securities. The Company acknowledges and agrees that the
Securities may be pledged by an Investor (as defined in the Registration Rights
Agreement) in connection with a bona fide margin agreement or other loan or
financing arrangement that is secured by the Securities. The pledge of
Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and no Investor effecting a pledge of Securities shall be
required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction
Document, including, without limitation, Section 2(e) hereof; provided that an
Investor and its pledgee shall be required to comply with the provisions of
Section 2(e) hereof in order to effect a sale, transfer or assignment of
Securities to such pledgee. The Company hereby agrees to execute and deliver
such documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by an Investor.
(r) Additional Registration Statements. Except for the filing of a
registration statement on Form S-8 for Approved Stock Plans (as defined in the
Debentures) and as required in order to satisfy the Company’s obligations in
connection with the September 2007 Financing and November 2007 Financing, until
such time that all of the Conversion Shares and Warrant Shares can be sold under
a registration statement declared effective by the SEC, the Company will not
file a registration statement under the 1933 Act relating to securities that are
not the Securities without the prior written consent of the Buyers.
5. Omitted. 6. LEGENDS. (a) The Conversion Shares and the
Warrant Shares, together with any other
shares of Common Stock that are issued or issuable pursuant to the Transaction
Documents shall be referred to herein as the “Issued Common Shares.”
Certificates evidencing the Issued Common Shares shall not contain any legend
restricting the transfer thereof (including the legend set forth in Section 2(e)
of the Debentures): (i) while a registration statement (including
33
the Registration Statement) covering the resale of such security is effective
under the Securities Act, or (ii) following any sale of such Issued Common
Shares pursuant to Rule 144, or (iii) if such Issued Common Shares are eligible
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the
Commission)(collectively, the “Unrestricted Conditions”). The Company shall
promptly after the Effective Date if required by the Company’s transfer agent to
effect the issuance of Issued Common Shares without a restrictive legend or
removal of the legend hereunder. If the Unrestricted Conditions are met at the
time of issuance of Issued Common Shares, then such Issued Common Shares shall
be issued free of all legends. The Company agrees that following the Effective
Date or at such time as the Unrestricted Conditions are met or such legend is
otherwise no longer required under this Section 6(a), it will, no later than
three (3) Trading Days following the delivery by a Buyer to the Company or the
Company’s transfer agent of a certificate representing Issued Common Shares, as
applicable, issued with a restrictive legend (such third Trading Day, the
“Legend Removal Date”), deliver or cause to be delivered to such Buyer a
legends.
(b) Each Buyer, severally and not jointly with the other Buyers, agrees
Securities as set forth in this Section 6 is predicated upon the Company’s
reliance that each Buyer will sell any Securities pursuant to either the
Securities are sold pursuant to a Registration Statement, they will be sold in
compliance with the plan of distribution set forth therein.
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of the
Company hereunder to issue and sell the Debentures and Warrants to a Buyer at
the Closing is subject to the satisfaction, at or before the Closing Date, of
each of the following conditions thereto, provided that these conditions are for
the Company's sole benefit and may be waived by the Company at any time in its
sole discretion:
(a) The Buyer shall have executed each of the Transaction Documents which
requires Buyer’s signature, and delivered the same to the Company.
(b) The Buyer shall have delivered the applicable Purchase Price in
accordance with Section 1(b) above.
(c) The representations and warranties of the Buyer shall be true and
correct in all material respects as of the date when made and as of the
applicable Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date, which representations and
warranties shall be true and correct as of such date), and the Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Buyer at or prior to the Closing Date.
34
(d) No litigation, statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by or in any court or governmental authority of competent jurisdiction or any
by this Agreement.
8. CONDITIONS TO BUYER'S OBLIGATION TO PURCHASE. The obligation of each
Buyer hereunder to purchase the Debenture and Warrants at each Closing is
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for such Buyer's sole
benefit and may be waived by such Buyer at any time in its sole discretion:
(a) The Company shall have executed this Agreement, and the Registration
Rights Agreement, and delivered the same to the Buyer.
(b) The Company shall have delivered to such Buyer the duly executed
Debenture and Warrants in accordance with Section 1 above.
(c) The representations and warranties of the Company contained in this
Agreement, as modified by the Exhibits and Schedules hereto, shall be true and
Date as though made at such time (except for representations and warranties that
speak as of a specific date, which representations and warranties shall be true
and correct as of such date) and the Company shall have performed, satisfied and
certificate or certificates (the “Officer’s Certificate”), executed by the
President and Chief Executive Officer of the Company, dated as of the applicable
Closing Date, to the foregoing effect and as to such other matters as may be
reasonably requested by such Buyer including, but not limited to certificates
with respect to the Company's Certificate of Incorporation, By-laws and Board of
Directors' resolutions relating to the transactions contemplated hereby.
by this Agreement.
(e) Trading in the Common Stock on the Principal Market shall not have been
suspended by the SEC or the Nasdaq and, within two (2) business days of the
Closing, the Company will make application to the Principal Market, if legally
required by Nasdaq, to have the Conversion Shares and the Warrant Shares
authorized for quotation.
(f) The Buyer shall have received a Closing Legal Opinion as further described
in
Section 1(b)(v)(C) hereof.
35
(g) The Buyer shall have received a Closing Certificate described in
Section 1(b)(v)(B) above, dated as of the Closing Date.
(h) The Company shall have delivered to the Buyer executed Accountant and
Lawyer Letters, as described in Section 3(w) hereof.
(i) The Company shall have received funds from Buyers representing their
respective Purchase Prices in an amount not exceeding the Maximum Amount, in the
aggregate.
(j) No Material Adverse Changes have occurred since the date that the Buyer
executed this Agreement.
9. GOVERNING LAW; MISCELLANEOUS. (a) Governing Law. All questions
concerning the construction, validity,
enforcement and interpretation of this Agreement and the other Transaction
Documents shall be governed by and construed and enforced in accordance with the
internal laws of the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether
brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in the City of New York. Each party hereby
courts sitting in the City of New York, borough of Manhattan for the
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or is an inconvenient venue for such
proceeding. If either party shall commence an action or proceeding to enforce
any provisions of the Transaction Documents, then the prevailing party in such
action or proceeding shall be reimbursed by the other party for its reasonable
attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding. THE PARTIES HEREBY
WAIVE ALL RIGHTS TO, AND AGREES NOT TO REQUEST, A TRIAL BY JURY FOR ADJUDICATION
OR ANY TRANSACTION CONTEMPLATED HEREBY OR BY ANY OF THE TRANSACTION DOCUMENTS.
(b) Counterparts; Signatures By Facsimile. This Agreement may be executed
in one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
Agreement.
36
(c) Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
(d) Severability. If any provision of this Agreement shall be invalid or
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
(e) Entire Agreement; Amendments. This Agreement and the instruments
to the matters covered herein and therein and supersede all previous
communication, representation, or Agreements whether oral or written, between
the parties with respect to the matters covered herein. Except as specifically
set forth herein or therein, neither the Company nor the Buyer makes any
representation, warranty, covenant or undertaking with respect to such matters.
The Agreement may not be orally modified. Only a modification in writing, signed
authorized representatives of both parties will be enforceable. The parties
waive the right to rely on any oral representations made by the other party,
whether in the past or in the future, regarding the subject matter of the
Agreement, the instruments referenced herein or any other dealings between the
parties related to investments or potential investments into the Company or any
securities transactions or potential securities transactions with the Company.
(f) Independent Nature Of Buyers’ Obligations And Rights. The obligations
of each Buyer under any Transaction Document are several and not joint with the
obligations of any other Buyer, and no Buyer shall be responsible in any way for
the performance of the obligations of any other Buyer under any Transaction
Document. Nothing contained herein or in any Transaction Document, and no action
taken by any Buyer pursuant thereto, shall be deemed to constitute the Buyers as
a partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Buyers are in any way acting in concert or as a
group with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Buyer shall be entitled to independently protect and
enforce its rights, including without limitation, the rights arising out of this
necessary for any other Buyer to be joined as an additional party in any
proceeding for such purpose. Each Buyer has been represented by its own separate
legal counsel in its review and negotiation of the Transaction Documents.
(g) Notices. Any notices required or permitted to be given under the terms
of this Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and shall be effective five days
after being placed in the mail, if mailed by regular United States mail, or upon
receipt, if delivered personally or by courier (including a recognized overnight
delivery service) or by facsimile, in each case addressed to a party. The
addresses for such communications shall be:
Attn: Dyron M. Watford, CFO
37
Universal Energy Corp.
30 Skyline Drive
Lake Mary, FL 32746
Office: 800-975-2076
Local: 407-771-0312
Cell: 407-694-3714
Fax: 800-805-4561
With copy to:
Joseph Sierchio, Esq.
Sierchio Greco & Greco, LLP
110 East 59th Street, 29th Floor
Tel. (212) 246-3030
Fax (212) 486-0208
If to a Buyer: To the address set forth immediately below such Buyer's name on
the signature pages hereto.
(h) Successors And Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and assigns. Neither the
Company nor any Buyer shall assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other. Notwithstanding the
foregoing, subject to Section 2(f), Buyer may assign its rights hereunder to any
person that purchases Securities in a private transaction from a Buyer or to any
of its "Affiliates," as that term is defined under the 1934 Act, without the
(i) Third Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns, and
is not for the benefit of, nor may any provision hereof be enforced by, any
other person.
(j) Survival. The representations and warranties of the parties hereto
contained in this Agreement shall survive the closing hereunder for the maximum
period permitted by applicable law notwithstanding any due diligence
investigation conducted by or on behalf of the Buyer.
(k) Indemnification. The Company (the “Indemnifying Party”) agrees to
indemnify and hold harmless the Buyer and all its officers, directors,
employees, agents, members and managers (the “Indemnified Party”) for loss or
damage arising as a result of or related to any breach or alleged breach by the
Company of any of its representations, warranties and covenants set forth in
Sections 3 and 4 hereof or any of its covenants and obligations under this
Agreement or the Registration Rights Agreement, including advancement of
expenses as they are incurred with respect to claims by third parties.
38
Promptly after receipt of notice of the commencement of any action against
an Indemnified Party, such Indemnified Party shall notify the Indemnifying Party
in writing of the commencement thereof and the basis hereunder upon which a
claim for indemnification is asserted, but the failure to do so shall not
relieve the Indemnifying Party of its obligations hereunder except to the extent
the Indemnifying Party is materially prejudiced by such failure. In the event of
the commencement of any such action, the Indemnifying Party shall be entitled to
participate therein and to assume the defense thereof with counsel satisfactory
to the Indemnified Party, and, after notice from the Indemnifying Party to the
Indemnified Party of its election so to assume the defense thereof, the
Indemnifying Party shall not be liable to the Indemnified Party hereunder for
any legal expenses (including attorneys' fees) subsequently incurred by such
Indemnified Party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected, PROVIDED,
HOWEVER, that, if the defendants in any such action include both the Indemnified
Party and the Indemnifying Party and the Indemnified Party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the Indemnifying Party or if
the interests of the Indemnified Party reasonably may be deemed to conflict with
the interests of the Indemnifying Party, the Indemnified Party shall have the
right to select one separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the reasonable
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the Indemnifying Party as incurred.
As to cases in which the Indemnifying Party has assumed and is providing
the defense for the Indemnified Party, the control of such defense shall be
vested in the Indemnifying Party; provided that the consent of the Indemnified
Party shall be required prior to any settlement of such case or action, which
consent shall not be unreasonably withheld. As to any action, the party which is
controlling such action shall provide to the other party reasonable information
(including reasonable advance notice of all proceedings and depositions in
respect thereto) regarding the conduct of the action and the right to attend all
proceedings and depositions in respect thereto through its agents and attorneys,
and the right to discuss the action with counsel for the party controlling such
action.
(l) Publicity. The Company and the Buyer shall have the right to review a
reasonable period of time before issuance of any press releases, filings with
the SEC, NASD or any stock exchange or interdealer quotation system, or any
other public statements with respect to the transactions contemplated hereby;
PROVIDED, HOWEVER, that the Company shall be entitled, without the prior
approval of the Buyer, to make any press release or public filings with respect
to such transactions as is required by applicable law and regulations (although
the Buyer shall be consulted by the Company in connection with any such press
given an opportunity to comment thereon). The Company agrees that it will not
disclose, and will not include in any public announcement, the name of the
Buyers without the consent of the Buyers unless and until such disclosure is
required by law or applicable regulation, and then only to the extent of such
requirement.
(m) Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request
39
in order to carry out the intent and accomplish the purposes of this Agreement
and the consummation of the transactions contemplated hereby.
(n) No Strict Construction. The language used in this Agreement will be
and no rules of strict construction will be applied against any party.
(p) Remedies. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to Buyer, by vitiating the
intent and purpose of the transactions contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Agreement will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Agreement, that Buyer
shall be entitled, in addition to all other available remedies in law or in
equity, to an injunction or injunctions to prevent or cure any breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions of this Agreement, without the necessity of showing economic loss and
without any bond or other security being required.
10. NUMBER OF SHARES AND PURCHASE PRICE. Buyer subscribes for a Debenture
in the Original Principal Amount equal to the Original Principal Amount set
forth on the Schedule of Buyers against payment by wire transfer in the amount
of the Purchase Price (taking into account the Original Issue Discount) (the
“Subscription Amount”) set forth opposite such Buyer’s name on the Schedule of
Buyers (less any offset of expenses as permitted hereunder.
The undersigned acknowledges that this Agreement and the subscription
represented hereby shall not be effective unless accepted by the Company as
indicated below.
40
IN WITNESS WHEREOF, the undersigned Buyer does represent and certify under
penalty of perjury that the foregoing statements are true and correct and that
Buyer by the following signature(s) executed this Agreement.
Dated this day of
_____________
, 2008. Your Signature PRINT EXACT NAME IN WHICH YOU
WANT THE SECURITIES TO BE REGISTERED
Buyer’s Subscription Amout: $
__________________
.
Buyer’s Entity Type and Residency:
______________________
.
____________________________________
Name: Please Print
DELIVERY INSTRUCTIONS:
Please type or print address where your security is to be delivered
____________________________________
Title/Representative Capacity (if applicable)
ATTN.:
___________________________________________
____________________________________
Name of Company You Represent (if applicable)
__________________________________________________
Street Address
____________________________________
Place of Execution of this Agreement
__________________________________________________
City, State or Province, Country, Offshore Postal Code
__________________________________________________
Phone Number (For Federal Express) and Fax Number (re: Notice)
THIS AGREEMENT IS ACCEPTED BY THE COMPANY IN THE AMOUNT OF $
_________________
(“SUBSCRIPTION AMOUNT”) ON THE _____ DAY OF MAY, 2008.
UNIVERSAL ENERGY CORP.
By:
________________________________
Name: Dyron M. Watford
41
SCHEDULE OF BUYERS
42
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Name: Commission Regulation (EEC) No 518/88 of 26 February 1988 fixing the export refunds on rice and broken rice
Type: Regulation
Date Published: nan
27. 2. 88 Official Journal of the European Communities No L 53/17 COMMISSION REGULATION (EEC) No 518/88 of 26 February 1988 fixing the export refunds on rice and broken rice THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Economic Community, Having regard to the Act of Accession of Spain and Portugal, Having regard to Council Regulation (EEC) No 1418/76 of 21 June 1976 on the common organization of the market in rice ('), as last amended by Regulation (EEC) No 3990/87 (2), and in particular the first sentence of the fourth subparagraph of Article 17 (2) thereof, Having regard to the opinion of the Monetary Committee, Whereas Article 17 of Regulation (EEC) No 1418/76 provides that the difference between quotations or prices oii the world market for the products listed in Article 1 of that Regulation and prices for those products within the Community may be covered by an export refund ; Whereas Article 2 of Council Regulation (EEC) No 1431 /76 of 21 June 1976 laying down general rules for granting export refunds on rice and criteria for fixing the amount of such refunds (3), provides that when refunds are being fixed account must be taken of the existing situa tion and the future trend with regard to prices and availa bilities of rice and broken rice on the Community market on the one hand and prices for rice and broken rice on the world market on the other ; whereas the same Article provides that it is also important to ensure equilibrium and the natural development of prices and trade on the rice market and, furthermore, to take into account the economic aspect of the proposed exports and the need to avoid disturbances of the Community market ; Whereas to Commission Regulation (EEC) No 1361 /76 (4) lays down the maximum percentage of broken rice allowed in rice for which an export refund is fixed and specifies the percentage by which that refund is to be reduced where the proportion of broken rice in the rice exported exceeds that maximum ; Whereas Article 3 of Regulation (EEC) No 1431 /76 defines the specific criteria to be taken into account when the export refund on rice and broken rice is being calcu lated : Whereas the world market situation or the specific requi rements of certain markets may make it necessary to vary the refund for certain products according to destination ; Whereas a separate refund should be fixed for packaged long grain rice to accommodate current demand for the product on certain markets ; Whereas the refund must be fixed at least once a month ; whereas it may be altered in the intervening period ; Whereas, following the introduction of the combined nomenclature by Council Regulation (EEC) No 2658/87 0, the nomenclature applicable from 1 January 1988 to export refunds on agricultural products was esta blished by Regulation (EEC) No 3846/87 ( ®) ; Whereas, if the refund system is to operate normally, refunds should be calculated on the following basis : in the case of currencies which are maintained in rela tion to feach other at any given moment within a band of 2,25 %, a rate of exchange based on their central rate, multiplied by the corrective factor provided for in the last paragraph of Article 3 (1 ) of Council Regula tion (EEC) No 1676/85 (*), as last amended by Regula tion (EEC) No 1636/87 ( «); for other currencies, an exchange rate based on the arithmetic mean of the spot market rates of each of these currencies recorded for a given period in rela tion to the Community currencies referred to in the previous indent, and the aforesaid coefficient ; Whereas it follows from applying these rules and criteria to the present situation on the market in rice and in particular to quotations or prices for rice and broken rice within the Community and on the world market, that the refund should be fixed as set out in the Annex hereto ; Whereas, pursuant to Article 275 of the Act of Accession of Spain and Portugal, refunds may be granted in the case of exports to Portugal ; whereas, in the light of the situa tion and the level of prices no refund should be fixed in the case of exports to Portugal ; Whereas the measures provided for , in this Regulation are in accordance with the opinion of the Management Committee for Cereals, 0 OJ No L 166, 25. 6. 1976, p. 1 . 0 OJ No L 377, 31 . 12. 1987, p. 15. 0 OJ No L 166, 25. 6. 1976, p. 36. O OJ No L 154, 15. 6. 1976, p. 11 . 0 OJ No L 256, 7. 9. 1987, p. 1 . 0 OJ No L 366, 24. 12. 1987, p . 1 . 0 OJ No L 164, 24. 6. 1985, p. 1 . 0 OJ No L 153, 13 . 6. 1987, p. 1 . No L 53/18 Official Journal of the European Communities 27. 2. 88 HAS ADOPTED THIS REGULATION Article 1 listed in paragraph 1 (c) of that Article, exported in the natural state, shall be as set out in the Annex hereto. The refund on export to Portugal has not been fixed. Article 2 This Regulation shall enter into force on 1 March 198$ . The export refunds on the products listed in Article 1 of Regulation (EEC) No 1418/76 with the exception of those This Regulation shall be binding in its entirety and directly applicable in all Member States." Done at Brussels, 26 February 1988. For the Commission Frans ANDR1ESSEN Vice-President 27. 2. 88 Official Journal of the European Communities No L 53/19 ANNEX to die Commission Regulation of 26 February 1988 fixing the export refunds on rice and broken rice i (ECU/tonne) Product code Destination (') Amountof refund 1006 20 10 000 , 1006 20 90 000 01 216,00 l 02 1006 3011 000 1006 30 19 000 . 1006 30 91 000 1006 30 99 100 01 270,00 03 296,00 05 296,00 I 06 301,00 07 301,00 08 296,00 09 296,00 10 301,00 I 11 301,00 12 301,00 13 270,00 I 14 301,00 1006 30 99 900 01 270,00 \ 13 270,00 100640 00 000 (') The destinations are identified as follows : 01 Austria, Liechtenstein, Switzerland, the communes of Livigno and Campione d'ltalia 02 Third countries other than Austria, Liechtenstein, Switzerland and the communes of Livigno and Campione d'ltalie 03 Zone I 04 Third countries other than Austria, Liechtenstein, Switzerland, the communes of Livigno and Campione d'ltalie and countries of Zone I 05 Zone II b) 06 Zone IV a) . 07 Zone IV b) 08 Zone VI 09 Canary Islands, Ceuta and hfelilla 10 Zone V a) 11 Zone VII c) 12 Canada 13 Destinations mentioned in Article 5 of Commission Regulation (EEC) No 2730/79 (OJ No L 317, 12. 12. 1979, p. 1 ) 14 Zone VIII, except Surinam, Guyana and Madagascar. NB : The zones are those defined in the Annex to Regulation (EEC) No 1124/77 (OJ No L 134, 28. 5. 1977), as last amended by Regulation (EEC) No 1548/87 (OJ No L 144, 4. 6. 1987). The export refunds are to be converted into national currencies using the specific agricultural conversion rates fixed in amended Regulation (EEC) No 3294/86 (OJ No L 304, 30. 11 . 1986). |
Exhibit 99.1 FOR IMMEDIATE RELEASE For company inquiries please contact: Michael Salaman, Chief Executive Officer Skinny Nutritional Corp. 1100 Hector Street, Suite 210 Conshohocken, Pa. 19428 (610) 784-2000 [email protected] SKINNY NUTRITIONAL CORP. PROVIDES UPDATE ON DISCUSSIONS WITH TRIM CAPITAL Conshohocken, PA, October 22, 2012 – Skinny Nutritional Corp. (OTCBB: SKNY), (“Skinny” or the “Company”)the maker of Skinny Water® and a leader in the zero-calorie enhanced water category, today announced that it has entered into a Standstill Agreement with Trim Capital LLC, under which they will continue discussions regarding the status of, and obligations under, the Securities Purchase Agreement dated June 28, 2012 (the “Purchase Agreement”). Under the Purchase Agreement, Trim Capital agreed to purchase an aggregate of $9.0 million of equity securities of the Company in a private placement transaction, subject to certain conditions.At the first closing, which was completed on June 28, 2012, the Company sold a $1,000,000 senior secured note (the “Initial Note”) to Trim Capital and subsequently on August 14, 2012, the Company sold an additional initial senior secured note in the aggregate principal amount of $270,000 which was deemed part of the “Initial Note”.The Purchase Agreement provided for a second closing, subject to certain conditions, to be held on or prior to August 28, 2012, which has not occurred. Following the parties’ discussions subsequent to August 28, 2012, they have agreed to enter into the Standstill Agreement under which they will have a 60-day period to discuss a plan with respect to the obligations under the Purchase Agreement and the Initial Note. The agreement terminates the prohibition against the Company soliciting alternative transactions and enables the Company to pursue various strategic and/or financing alternatives in order to address its obligations and to provide for additional working capital. In addition, the Standstill Agreement provides that the parties will refrain from commencing or prosecuting any claims against the other or their respective affiliates during the standstill period. Michael Salaman, Chief Executive Officer of Skinny Nutritional stated “while we are disappointed with the developments with Trim Capital, we are diligently working on alternative plans to address our Company’s capital requirements.The Standstill Agreement provides additional time to develop a plan to finance the Company and revitalize our marketing and distribution efforts.” ABOUT SKINNY NUTRITIONAL CORP. Headquartered in Conshohocken, PA., Skinny Nutritional Corp., the creators of Skinny Water®, a zero-calorie, zero-sugar, zero-sodium and zero-preservative enhanced water with key electrolytes, antioxidants, and vitamins. Skinny Water comes in six great-tasting flavors that include Acai Grape Blueberry, Raspberry Pomegranate, Orange Cranberry Tangerine, Lemonade Passionfruit, Pink Citrus and Goji Black Cherry. Skinny Nutritional Corp. also expects to launch additional Skinny-branded beverages and products.For more information, visit www.SkinnyWater.com and www.facebook.com/skinnywater. SAFE HARBOR STATEMENT This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements, which are other than statements of historical facts. When used in this release, the words "believe," "anticipate," "think," "intend," "plan," "will be," "expect," and similar expressions identify such forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, risks set forth in documents filed by the Company from time to time with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by, or on behalf of, the Company, are expressly qualified by these cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of Earliest Event Reported):June 7, 2012 (May 31, 2012) PZENA INVESTMENT MANAGEMENT, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 001-33761 20-8999751 (State or Other Jurisdiction of Incorporation) (Commission File Number) (IRS Employer Identification Number) 120 West 45th Street, New York, New York (Address of Principal Executive Offices) Zip Code Registrant’s Telephone Number, Including Area Code:(212) 355-1600 (Former Name or Former Address, If Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: o Written communications pursuant to Rule 425 under the Securities Act. o Soliciting material pursuant to Rule 14a-12 under the Exchange Act. o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act. o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act. ITEM 8.01 OTHER EVENTS. OnJune 7,2012, Pzena Investment Management, Inc. issued a press release in which it reported its preliminary assets under management as ofMay 31, 2012.A copy of the press release is attached to this Form 8-K. ITEM 9.01FINANCIAL STATEMENTS AND EXHIBITS. 99.1Press release, datedJune 7, 2012, of Pzena Investment Management, Inc. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Pzena Investment Management, Inc. Dated:June 7, 2012 By: /s/Gregory S. Martin Name: Gregory S. Martin Title: Chief Financial Officer EXHIBIT INDEX Exhibit No. Document Press release, datedJune 7, 2012, of Pzena Investment Management, Inc. reporting preliminary assets under management as ofMay 31, 2012.
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Exhibit 10.15
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release (this “Agreement") is made and entered
into as of the 16th day of June 2004, between Michael Keough (“Employee”) and
ClearOne Communications Corporation (“ClearOne”), who shall be referred to as
the “Parties”, or individually as a “Party”.
DEFINITIONS
1. The term “Employee” shall mean Employee and his or her heirs, assigns, and
legal representatives.
2. The phrase "ClearOne Released Parties" shall mean ClearOne and any and all
business units, committees, groups, and their present, former or future parents,
affiliates, subsidiaries, employees, agents, directors, owners, officers,
attorneys, successors, predecessors, and assigns.
3. The "Released Claims" shall mean any type or manner of suits, claims,
demands, allegations, charges, damages, or causes of action whatsoever in law or
in equity under federal, state, municipal or local statute, law, ordinance,
regulation, constitution, or common law, whether known or unknown, which
Employee has ever had or now has against the ClearOne Released Parties. This
includes but is not limited to any action for costs, interest or attorney's
fees, which arise in whole or in part from Employee's employment relationship
with ClearOne, from the ending of that relationship, and from any other conduct
by or dealings of any kind between Employee and the ClearOne Released Parties,
which occurred prior to the execution of this Agreement. This also includes but
is not limited to any and all claims, rights, demands, allegations and causes of
action for alleged wrongful discharge, breach of alleged employment contract,
breach of the covenant of good faith and fair dealing, termination in violation
of public policy, intentional or negligent infliction of emotional distress,
fraud, misrepresentation, defamation, interference with prospective economic
advantage, failure to pay wages due or other monies owed, failure to pay pension
benefits, conversion, breach of duty, interference with existing economic
relations, punitive damages, retaliation, discrimination on the basis of age in
violation of the Age Discrimination and Employment Act of 1967, as amended
("ADEA"), negligent employment, negligent supervision, claims under Title VII of
the Civil Rights Act of 1964, harassment or discrimination on the basis of sex,
race, color, citizenship, religion, age, national origin, or disability, or
other protected classification under the federal, state, municipal or local laws
of employment, including those arising under the common law, and any alleged
violation of the Employee Retirement Income Security Act of 1974 ("ERISA"), the
Fair Labor Standards Act ("FLSA"), the Occupational Safety and Health Act
("OSHA"), and any other law.
RECITALS
A. WHEREAS, the Parties desire to settle and compromise the Released Claims and
to enter into this Agreement.
437423v1
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COVENANTS
of which are hereby acknowledged, and in consideration of the mutual covenants
set forth in this Agreement, the Parties agree as follows:
1. Employee’s employment with ClearOne shall end effective June 16, 2004.
Employee is not entitled to receive any further compensation or benefits from
ClearOne after this date.
2. Notwithstanding the provisions of section 1, above, after his or her
execution of this Agreement and in accordance with the terms of this Agreement,
beginning after the effective date of termination of Employee’s employment,
ClearOne will make total payment to Employee in the amount of $46,154.00 paid in
increments according to the normal payroll schedule. Regular payroll and tax
withholdings and deductions shall be applied and shall reduce this gross amount
accordingly. Employee acknowledges that this sum constitutes consideration for
Employee’s execution and adherence to the provisions of this Agreement. Employee
understands and agrees that he or she would not receive the amounts specified
herein except for his or her execution of this Agreement and the fulfillment of
the promises contained herein. The ClearOne Released Parties make no
representations whatsoever to Employee concerning the taxable status of the
payment of the settlement amount. Employee assumes full and sole responsibility
for any tax consequences related to the settlement amount. Employee understands
and agrees to indemnify and hold harmless the ClearOne Released Parties from any
taxes, assessments, withholding obligations, penalties or interest payments that
they may incur at any time by reason of demand, suit or proceeding brought
against them for any taxes or assessments or withholdings arising out of the
payment of the settlement amount. Employee acknowledges he or she has been fully
compensated by the terms of this Agreement for releasing the Released Claims.
3. Employee shall not pursue, or authorize anyone on his or her behalf to
pursue, the Released Claims in any way in any court. Employee represents that he
or she has not filed and there is not pending with any governmental agency or
any state or federal court, any other claims, complaints, charges, or lawsuits
of any kind against the ClearOne Released Parties. Employee agrees that he or
she will not make any filings with any court at any time hereafter for any
matter, claim or incident, known or unknown, which occurred or arose out of
occurrences on or prior to the date of this Agreement; provided, however, this
shall not limit the Parties from filing a lawsuit for the sole purpose of
enforcing their rights under this Agreement. Each of the Parties shall bear
their own costs and attorneys' fees in this dispute.
437423v1
2
4. Employee hereby waives, releases, remises and discharges each and every one
of the ClearOne Released Parties from liability with respect to the Released
Claims. Employee acknowledges that he or she understands he or she is prohibited
from any further relief on the Released Claims. Employee hereby promises and
covenants never to institute any suit or action at law or in equity against the
ClearOne Released Parties regarding or relating to the Released Claims.
Specifically and without limitation, Employee understands and agrees that he or
she is waiving and forever discharging the ClearOne Released Parties from any
and all claims, causes of action or complaints he or she may have or have ever
had, which have or may have arisen prior to the execution of this Agreement.
5. Employee represents and warrants that he or she is the sole owner of the
Released Claims, that the Released Claims have not been assigned, transferred,
or disposed of in fact, by operation of law or in any manner whatsoever, and
that he or she has the full right and power to grant, execute and deliver the
full and complete releases, undertakings, and agreements herein contained.
6. Employee agrees that the existence and terms of this Agreement shall be and
remain confidential. Employee acknowledges that this confidentiality provision
is an essential element of the consideration he provides to ClearOne for
entering into this Agreement. Therefore, Employee agrees not to discuss or
describe any information concerning ClearOne, the circumstances of the ending of
Employee's employment with ClearOne or the existence of the terms of this
Agreement to anyone, except as required by law or permitted herein.
7. Employee reaffirms and agrees to observe and abide by the terms of the
Confidentiality and Invention Assignment Agreement (“Confidentiality Agreement”)
he or she signed with ClearOne. Employee certifies and represents that he or she
has fully complied with all terms of the Confidentiality Agreement to date and
has returned to ClearOne all records or documents or other property of ClearOne
within his or her possession. Employee understands that his or her receipt of
the consideration provided under this Agreement is expressly conditioned on
Employee’s compliance with the obligations in this paragraph.
8. Employee agrees not to disparage, orally or in writing, ClearOne, its
officers, employees, management, operations, products, designs, or any other
aspects of ClearOne’s affairs to any third person or entity.
9. Employee agrees that for one year following Employee’s separation from
employment with ClearOne, Employee shall not, directly or indirectly, in any
capacity (including but not limited to, as an individual, a sole proprietor, a
member of a partnership, a stockholder, investor, officer, or director of a
corporation, an employee, agent, associate, or consultant of any person, firm or
corporation or other entity) hire any person from, attempt to hire any person
from, or solicit, induce, persuade, or otherwise cause any person to leave his
or her employment with ClearOne.
437423v1
3
10. Employee agrees that for one year following Employee’s separation from
capacity, solicit the business of any customer of ClearOne except on behalf of
ClearOne, or attempt to induce any customer of ClearOne to cease or reduce its
business with ClearOne; provided that following Employee’s separation from
employment with Company he or she may solicit a customer of ClearOne to purchase
goods or services that do not compete directly or indirectly with those then
offered by ClearOne.
11. Any breach of Employee’s obligations under this Agreement shall, in addition
to all other remedies available to ClearOne, result in the immediate release of
ClearOne from any obligations it has to provide further payments under this
Agreement. In addition, ClearOne may pursue such additional legal or equitable
remedies as may be available to it.
12. This Agreement does not constitute and shall not be construed as an
admission by ClearOne of any breach of any alleged agreements or duties, or of
any wrongdoing toward Employee or any other person, including any alleged breach
of contract or violation of any federal, state, or local law, regulation, or
ordinance. ClearOne specifically disclaims any liability to Employee for
wrongdoing of any kind.
13. The Parties agree that this Agreement may be used in evidence in a
subsequent proceeding in which any of the Parties alleges a breach of this
Agreement.
14. The parties shall attempt in good faith to resolve any dispute arising out
of or relating to this Agreement by negotiation. The parties recognize that
irreparable injury to ClearOne will result from a material breach of this
Agreement, and that monetary damages will be inadequate to rectify such injury.
Accordingly, notwithstanding anything to the contrary, ClearOne shall be
entitled to one or more preliminary or permanent orders: (i) restraining or
enjoining any act which would constitute a material breach of this Agreement,
and (ii) compelling the performance of any obligation which, if not performed,
would constitute a material breach of this Agreement, and to attorney’s fees in
connection with any such action
15. Employee affirms he or she is not relying on any representations or
statements made by the ClearOne Released Parties which are not specifically
included in this Agreement. Employee acknowledges he or she has been informed in
writing by this Agreement that he or she has the right to consult with legal
counsel regarding this release and confirms Employee has consulted with counsel
to the extent desired concerning the meaning and consequences of this Agreement.
16. This Agreement constitutes the entire agreement between the Parties with
relation to the subject matter hereof. Any prior negotiations or correspondence
relating to the subject matter hereof shall be deemed to have merged into this
Agreement and to the extent inconsistent herewith shall be deemed to be of no
force or effect.
17. This Agreement may be executed in any number of counterparts, each of which
when executed and delivered shall be an original, but all of such counterparts
437423v1
4
18. This Agreement shall be interpreted and enforced in accordance with the laws
of the State of Utah, and/or when applicable, of the United States. By entering
into this Agreement, the Parties submit themselves and their principals
individually to personal jurisdiction in the courts in the State of Utah and
agree that Utah is the only appropriate venue for any action brought to
interpret or enforce any provision of this Agreement, or which may otherwise
arise under or relate to the subject matter of this Agreement.
19. The provisions of this Agreement are severable, and if any part of it is
found to be unenforceable, the other parts and/or paragraphs shall remain fully
valid and enforceable. Should any provisions of this Agreement be determined by
any court or administrative body to be invalid, the validity of the remaining
provisions is not affected thereby and the invalidated part shall be deemed not
a part of this Agreement. Any court or administrative body shall construe and
interpret this Agreement as enforceable to the full extent available under
applicable law. This Agreement shall survive the termination of any arrangements
contained in it.
20. Employee acknowledges and understands this is a legal contract and that he
or she signs this Agreement knowingly, freely and voluntarily and has not been
threatened, coerced or intimidated into making the same. Employee acknowledges
that he or she has had ample and reasonable time to consider this Agreement and
the effects and import of it and that he or she has fully dwelt on it in his or
her mind and has had such counsel and advice, legal or otherwise, as Employee
desires in order to make this Agreement. EMPLOYEE, BY SIGNING THIS AGREEMENT,
ACKNOWLEDGES IT CONTAINS A RELEASE OF KNOWN AND UNKNOWN CLAIMS. Employee has
read and fully considered this Agreement and understands and desires to enter
into it. The terms of this agreement were derived through mutual compromise and
are fully understood. Employee acknowledges that he or she has been offered at
least twenty one (21) days to consider the impact of this Agreement and its
release of his or her rights to bring suit against the ClearOne Released Parties
and after due consideration has decided to enter into this Agreement at this
time. Employee further understands that he or she may revoke this Agreement for
a period of up to seven (7) days following signature and execution of the same.
This Agreement shall not become effective or enforceable until the revocation
period has expired. Any revocation within this period must be signed and
submitted in writing to the undersigned representative of ClearOne and must
state, "I hereby revoke my acceptance of the Agreement." Employee understands
that if he or she revokes this Agreement, he or she is not entitled to receive
the consideration provided by this Agreement.
437423v1
5
Employee has until Thursday, July 8, 2004 to accept terms and conditions by
signing below. If Employee does not accept such terms and conditions by such
date, this offer shall expire at that time.
EMPLOYEE
/s/ Michael Keough______________________
CLEARONE COMMUNICATIONS CORP.
/s/ DeLonie N. Call _________________
DeLonie N. Call
Vice President, Human Resources
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-D ASSET-BACKED ISSUER DISTRIBUTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the monthly distribution period from June 1, 2014 to June 30, 2014 Commission File Number of issuing entity:333-165171-05 Nissan Auto Receivables 2012-B Owner Trust (Exact name of issuing entity as specified in its charter) Commission File Number of depositor:333-165171 Nissan Auto Receivables Corporation II (Exact name of depositor as specified in its charter) Nissan Motor Acceptance Corporation (Exact name of sponsor as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization of the issuing entity) 38-7041764 (I.R.S. Employer Identification No.) c/o Wilmington Trust, National Association, Rodney Square North, 1100 North Market Street, Wilmington, Delaware (Address of principal executive offices of the issuing entity)19890 (Zip Code) (302) 636-6194 (Telephone number, including area code) N/A (Former name, former address, if changed since last report) Registered/reporting pursuant to (check one) Title of class Section 12(b) Section 12(g) Section 15(d) Name of exchange (If Section 12(b)) Asset Backed Notes, Class A-1 [] [] [_X_] Asset Backed Notes, Class A-2 [] [] [_X_] Asset Backed Notes, Class A-3 [] [] [_X_] Asset Backed Notes, Class A-4 [] [] [_X_] Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Page 1 of 8 PART I – DISTRIBUTION INFORMATION Item 1.Distribution and Pool Performance Information. Distribution and pool performance information with respect to the receivables that comprise the assets of Nissan Auto Receivables 2012-B Owner Trust are set forth in the attached Monthly Servicer’s Certificate. No assets securitized by Nissan Motor Acceptance Corporation (the “Securitizer”) and held by Nissan Auto Receivables 2012-B Owner Trust were the subject of a demand to repurchase or replace for breach of the representations and warranties during the distribution period from June 1, 2014 to June 30, 2014.The Securitizer filed a Form ABS-15G on February 6, 2014.The CIK number of the Securitizer is 0001540639. PART II – OTHER INFORMATION Item 2.Legal Proceedings. The Indenture Trustee, Citibank, N.A., has provided the information contained in the following two paragraphs for purposes of compliance with Regulation AB. Citibank, N.A. (“Citibank”) is acting as Indenture Trustee of this ABS transaction.In the ordinary course of business, Citibank is involved in a number of legal proceedings.In connection with its role as trustee of certain RMBS transactions, Citibank has been named as a defendant in civil litigation.A group of investors in 48 private-label RMBS trusts for which Citibank serves as trustee filed a civil action on June 18, 2014 against Citibank in the Supreme Court of the State of New York asserting claims and alleged violations of the Trust Indenture Action of 1939, breach of contract, breach of fiduciary duty and negligence based on Citibank’s alleged failure to perform its duties as trustee for the RMBS trusts.Neither the above-disclosed litigation nor any other pending legal proceedings involving Citibank will materially affect Citibank’s ability to perform its duties as Indenture Trustee under the Indenture for this ABS transaction. There can be no assurances as to the outcome of the litigation or the possible impact of the litigation on the trustee or the RMBS trusts.However, Citibank denies liability and intends to vigorously defend the litigation. Item 9.Exhibits. (a) Monthly Servicer’s Certificate for the month of June 2014 – Nissan Auto Receivables 2012-B Owner Trust. (b) Exhibits: 99.1Monthly Servicer’s Certificate for the month of June 2014 – Nissan Auto Receivables 2012-B Owner Trust. Page 2 of8 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NISSAN AUTO RECEIVABLES 2012-B OWNER TRUST By: Nissan Motor Acceptance Corporation, as administrator Date:July 29, 2014 By:/s/Shishir Bhushan Shishir Bhushan, Treasurer Page 3 of8 EXHIBIT INDEX Exhibit No. Description 99.1 Monthly Servicer’s Certificate for the month of June 2014 – Nissan Auto Receivables 2012-B Owner Trust. Page 4 of 8
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Exhibit 99.1 (An Exploration Stage Company) CONSOLIDATED FINANCIAL STATEMENTS Years ended March 31, 2010, 2009 and 2008 MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING The accompanying consolidated financial statements have been prepared by management and are in accordance with Canadian generally accepted accounting principles and reconciled to accounting principles generally accepted in the United States as set out in Note 15, and contain estimates based on management’s judgment. Other information contained in this document has also been prepared by management and is consistent with the data contained in the consolidated financial statements. A system of internal control is maintained by management to provide reasonable assurance that assets are safeguarded and financial information is accurate and reliable. The Board of Directors approves the financial statements and ensures that management discharges its financial responsibilities. The Board’s review is accomplished principally through the audit committee, which is composed of non-executive directors. The audit committee meets periodically with management and the auditors to review financial reporting and control matters. The Company’s independent auditors, BDO Canada LLP, are appointed by the shareholders to conduct an audit in accordance with generally accepted auditing standards in Canada and in accordance with the standards of the Public Company Accounting Oversight Board (United States). MANAGEMENT’S REPORT ON INTERNAL CONTROLS OVER FINANCIAL REPORTING Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.The Company’s management has employed a framework consistent with Exchange Act Rule 13a-15(c), to evaluate the Company’s internal control over financial reporting as described below. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management has assessed the effectiveness of our internal control over financial reporting as of March 31, 2010 using criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of March 31, 2010. BDO Canada LLP, our auditors, have audited the effectiveness of our internal control over financial reporting as of March 31, 2010, as stated in their report which appears herein. “Maurice Tagami” Maurice Tagami P.Eng. President and Chief Executive Officer “Tony Ricci” Tony Ricci, CA Chief Financial Officer Vancouver, Canada June 25, 2010 Tel: 604688 5421 Fax: 604688 5132 www.bdo.ca BDO Canada LLP 600 Cathedral Place 925 West Georgia Street Vancouver BCV6C 3L2Canada REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders of Keegan Resources Inc. We have completed the integrated audits of Keegan Resources Inc.’s (the “Company’s”) 2010, 2009 and 2008 consolidated financial statements and of its internal control over financial reporting as at March 31, 2010. Our opinions, based on our audits, are presented below. CONSOLIDATED FINANCIAL STATEMENTS We have audited the consolidated balance sheets of Keegan Resources Inc. (the “Company”) as at March 31, 2010 and 2009 and the consolidated statements of operations, comprehensive loss and deficit and cash flows for each of the years in the three-year period ended March 31, 2010.These financial statements are the responsibility of the Company's management.Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at March 31, 2010 and 2009 and the results of its operations and its cash flows for each of the years in the three-year period ended March 31, 2010, in accordance with Canadian generally accepted accounting principles. INTERNAL CONTROLS OVER FINANCIAL REPORTING We have also audited Keegan Resources Inc.’s internal control over financial reporting as at March 31, 2010, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Controls over Financial Reporting. Our responsibility is to express an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit. BDO Canada LLP, a Canadian limited liability partnership,is a member of BDO International Limited, aUK company limited by guarantee, and forms part of the international BDO network ofindependent member firms. - 2 - We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as at March 31, 2010 based on criteria established in Internal Control — Integrated Framework issued by the COSO. (signed) “BDO Canada LLP” Chartered Accountants Vancouver, Canada June 23, 2010 KEEGAN RESOURCES INC. (An Exploration Stage Company) Consolidated Balance Sheets As at March 31, 2010 and 2009 Expressed in Canadian Dollars Assets Current assets: Cash and cash equivalents $ $ Short-term investments (note 3) Receivables Prepaid expenses and deposits Furniture, equipment and leasehold improvements (note 4) Resource properties and deferred exploration costs (note 5) $ $ Liabilities Current liabilities: Accounts payable and accrued liabilities (note 7) $ $ Shareholders’ Equity Share capital (note 6) Contributed surplus (note 6(e)) Deficit accumulated (23,583,842 ) $ $ Commitments (note 8) Contingencies (note 10) Subsequent events (notes 8 and 14) Approved by the Board of Directors: “Shawn Wallace” Director “Marcel de Groot” Director SEE ACCOMPANYING NOTES KEEGAN RESOURCES INC. (An Exploration Stage Company) Consolidated Statements of Operations, Comprehensive Loss and Deficit Years ended March 31, 2010, 2009 and 2008 Expressed in Canadian Dollars Expenses: Amortization $ $ $ Bank charges and interest Consulting fees, directors’ fees and wages and benefits (note 7) Donation expense (note 6(b)) - - Office, rent and administration Professional fees (note 7) Regulatory, transfer agent and shareholder information Stock-based compensation (note 6(c)) Travel, promotion and investor relations Other expenses (income): Interest and other income (114,994 ) (222,703 ) Write-off of equipment - Write-off of interest in resource properties (note 5(b)) - - Foreign exchange loss Loss and comprehensive loss for the year Deficit accumulated, beginning of year Deficit accumulated, end of year $ $ $ Loss per share - basic and diluted $ $ $ Weighted average number of shares outstanding SEE ACCOMPANYING NOTES KEEGAN RESOURCES INC. (An Exploration Stage Company) Consolidated Statements of Cash Flows Years ended March 31, 2010, 2009 and 2008 Expressed in Canadian Dollars Cash provided by (used in): Operations: Loss for the year $ ) $ ) $ ) Items not involving cash: Amortization Stock based compensation Stock-based donations - - Unrealized foreign exchange - Write-off of equipment - Write-off of interest in resource properties - - Changes in non-cash working capital: Accounts payable and accrued liabilities Prepaid expenses and deposits (168,798 ) (33,905 ) (17,993 ) Receivables (73,628 ) (79,157 ) (4,271,600 ) (3,070,907 ) (2,382,527 ) Investing: Purchase of furniture, equipment and leasehold improvements (214,751 ) (119,631 ) (110,459 ) Acquisition of interest in resource properties - (237,161 ) (1,515,725 ) Short-term investments (21,000,000 ) (1,000,000 ) - Deferred exploration (9,368,875 ) (10,901,528 ) (9,861,207 ) (30,583,626 ) (12,258,320 ) (11,487,391 ) Financing: Shares issued for cash, net of share issue costs Impact of foreign exchange on cash and cash Equivalents (302,940 ) (136,201 ) - Increase (decrease)in cash and cash equivalents (13,239,935 ) Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year $ $ $ Supplemental disclosure of cash flow information: Cash paid for: Interest $
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): November 24, 2015 INVESTORS BANCORP, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 001-36441 46-4702118 (State or Other Jurisdiction) (Commission File No.) (I.R.S. Employer of Incorporation) Identification No.) arkway, Short Hills, New Jersey (Address of Principal Executive Offices) (Zip Code) Registrant’s telephone number, including area code:(973) 924-5100 Not Applicable (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) {Clients/1007/00263853.DOCX/ } Item 8.01Other Events The Board Directors of Investors Bancorp, Inc. (the “Company”) has adopted a change regarding the election of directors.Any nominee for director in an uncontested election who receives a greater number of votes “withheld” from his or her election than votes “for” such election shall tender his or her resignation for consideration by the Nominating and Corporate Governance Committee of the Company.The Committee shall recommend to the Board the action to be taken with respect to the resignation.Any Director who tenders his or her resignation pursuant to this provision shall not participate in the Committee’s or the Board’s deliberations as to whether to accept the resignation.The Board will publicly disclose its decision within 90 days of the certification of the election results. Item 9.01.Financial Statements and Exhibits. (a) Financial Statements of Businesses Acquired. Not Applicable. (b) Pro Forma Financial Information. Not Applicable. (c) Shell Company Transactions. Not Applicable. (d) Exhibits Not Applicable. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. INVESTORS BANCORP, INC. DATE:December 1, 2015 By: /s/ Kevin Cummings Kevin Cummings President and Chief Executive Officer
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ABRAXAS PETROLEUM CORPORATION NEWS RELEASE Abraxas Announces Acceleration in 2014 Eagle Ford Activity; Provides Financial and Guidance Update Exhibit 99.1 SAN ANTONIO (June 11, 2014) – Abraxas Petroleum Corporation (NASDAQ:AXAS) is pleased to announce an acceleration in 2014 Eagle Ford activity and provide the following guidance update. Eagle Ford Activity Abraxas’ board of directors recently approved an increase in the company’s 2014 capital budget to $190 million, an additional $25 million above the amount previously announced.The total $65 million increase since the start of this year will go directly to maintaining a one rig program for the remainder of 2014 in the Eagle Ford and for additional Eagle Ford acreage acquisitions.The current plan includes drilling the remaining two wells on the company’s Cave prospect, drilling one additional well on the company’s Dilworth East prospect and drilling three additional wells on the company’s Jourdanton prospect. Financial Update Abraxas’ lenders today increased the borrowing base of Abraxas’ credit facility to $162.5 million from $130 million.In connection with this redetermination, the existing credit facility terms were modified to extend the maturity to June 30, 2018, reduce interest by 50 basis points across the grid and reduce the commitment fees to 37.5 basis points when utilization is less than 50%. Guidance Update With the increase in the Abraxas’ 2014 capital budget, the company is updating its 2014 guidance as well as providing a targeted exit rate. Original 2014E Revised 2014E Low High Low High Production Total (Boepd) % Oil 70% 70% % NGL 7% 7% % Natural Gas 23% 23% Targeted Exit Rate (Boepd) NA Operating Costs LOE ($/Boe) Production Tax (% Rev) 9.0% 9.5% 9.0% 9.5% Cash G&A ($mm) (3) CAPEX ($mm) Bob Watson, President and CEO of Abraxas commented, “Our recent Eagle Ford performance has meaningfully surpassed our initial expectations.On the back of this success, we are electing to maintain a one rig program in the Eagle Ford for the remainder of 2014.This will not only bring forward the net present value of the assets, but also set the company up for a step change in production growth as evidenced by our targeted exit rate.We look forward to updating the market as we continue to execute on our stated business plan.” Abraxas Petroleum Corporation is a San Antonio based crude oil and natural gas exploration and production company with operations across the Rocky Mountain, Permian Basin and onshore Gulf Coast regions of the United States and in the province of Alberta, Canada. Safe Harbor for forward-looking statements:Statements in this release looking forward in time involve known and unknown risks and uncertainties, which may cause Abraxas’ actual results in future periods to be materially different from any future performance suggested in this release.Such factors may include, but may not be necessarily limited to, changes in the prices received by Abraxas for crude oil and natural gas.In addition, Abraxas’ future crude oil and natural gas production is highly dependent upon Abraxas’ level of success in acquiring or finding additional reserves.Further, Abraxas operates in an industry sector where the value of securities is highly volatile and may be influenced by economic and other factors beyond Abraxas’ control.In the context of forward-looking information provided for in this release, reference is made to the discussion of risk factors detailed in Abraxas’ filings with the Securities and Exchange Commission during the past 12 months. FOR MORE INFORMATION CONTACT: Geoffrey King/Vice President – Chief Financial Officer Telephone 210.490.4788 [email protected] www.abraxaspetroleum.com
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Exhibit 10.10
FIRST AMENDMENT LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT (this “Amendment”) is made and entered
into as of March 10, 2016 (the “Effective Date”), by and between EDUCATIONAL
DEVELOPMENT CORPORATION, a Delaware corporation (“Borrower”), and MIDFIRST BANK,
a federally charted savings association (“Lender”).
BACKGROUND RECITALS
A. Borrower and Lender are parties to that certain Loan Agreement dated as
of December 1, 2015 (the “Loan Agreement”). Unless the context otherwise
requires, capitalized terms used in this Amendment (including the Guarantor
Acknowledgement and Ratification attached hereto) and not otherwise defined
herein have the respective meanings assigned to them in the Loan Agreement.
B. Borrower has requested that Lender increase the Maximum Revolving
Principal Amount from $4,000,000 to $6,000,000, and Lender has agreed to such
request, but only upon the terms and conditions set forth in this Amendment.
agreements contained herein, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties agree as
follows:
1.
INCREASE OF REVOLVING LOAN.
1.1 Maximum Revolving Principal Amount. Subject to the terms and conditions
set forth in this Amendment, Lender hereby agrees to increase the Maximum
Revolving Principal Amount from $4,000,000 to $6,000,000. Accordingly, the
definition of Maximum Revolving Principal Amount appearing in Exhibit A of the
Loan Agreement is hereby amended in its entirety to read as follows:
“Maximum Revolving Principal Amount” means $6,000,000.00, or if the Termination
Date has occurred (and has not been extended by Lender in writing in its sole
discretion), $0.
1.2 Replacement Revolving Note. Borrower shall make, execute and deliver a
replacement Promissory Note (Revolving Loan) in the form of Exhibit A attached
hereto (the “Replacement Revolving Note”) payable to Lender in the principal
amount of $6,000,000. From and after the Effective Date, all references in the
Loan Agreement or any other Loan Documents to the Promissory Note evidencing the
Revolving Loan or the Revolving Note shall be deemed references to the
Replacement Revolving Note, together with any and all renewals, extensions or
replacements thereof, amendments or modifications thereto or substitutions
therefor.
2.
MODIFICATIONS TO LOAN AGREEMENT.
2.1 Borrowing Base. The definition of Borrowing Base appearing in Exhibit A
of the Loan Agreement is hereby amended in its entirety to read as follows:
“Borrowing Base” means, as of any calculation date, the sum of (i) 80% of
Eligible Accounts and (ii) 25% of Eligible Inventory; provided, however,
Eligible Inventory shall not be more than 75% of the Borrowing Base.
2.2 Borrowing Base Certificate Due Date. The definition of Borrowing Base
Certificate Due Date appearing in Exhibit A of the Loan Agreement is hereby
“Borrowing Base Certificate Due Date” means the 30th calendar day following the
end of each calendar month. If the Borrowing Base Certificate Due Date is on a
day which is not a Business Day, then the Borrowing Base Certificate Due Date
will be the next Business Day.
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2.3 Replacement Borrowing Base Certificate. The form of Borrowing Base
Certificate set forth in Exhibit D of Loan Agreement is hereby replaced with
Exhibit D-1 attached to this Amendment.
3.
CONDITIONS TO EFFECTIVENESS. This Amendment will be effective as of the
Effective Date, but subject to satisfaction of each of the following conditions
precedent:
3.1 Execution of Amendment Documents. The following documents (collectively,
the “Amendment Documents”) shall have been executed by the applicable parties
and delivered to Lender, each in form and substance satisfactory to Lender:
(a)
this Amendment (including the Guarantor Acknowledgement and Ratification
attached hereto);
(b)
the Replacement Revolving Note; and
(c)
an amendment to the Security Instrument (mortgage) covering the Property to
update the description of the indebtedness secured thereby.
3.2 Flood Hazard Determination. Lender shall have received evidence
satisfactory to it that the Property is not located in an area designated by the
Secretary of Housing and Urban Development as an area having special flood or
mudslide hazards, and that flood hazard insurance is not required for any credit
to be extended hereunder pursuant to any Applicable Law.
3.3 Legal Matters. All legal matters incident to this Amendment shall be
4.
REPRESENTATIONS AND WARRANTIES.
4.1 Reaffirmation. Borrower confirms that all representations and warranties
made by it in the Loan Agreement and the other Loan Documents are, and as of the
Effective Date will be, true and correct in all material respects, and all of
such representations and warranties are hereby remade and restated as of the
Effective Date and shall survive the execution and delivery of this Amendment
4.2 Additional Representations and Warranties.
4.2.1 Power; Transactional Authority; Enforceability. Each Borrower Party
has the requisite power and authority to execute, deliver and carry out the
terms and provisions of the Amendment Documents to which it is a party, and has
taken all necessary actions to authorize its execution, delivery and performance
of the Amendment Documents. Each Borrower Party has duly executed and delivered
the Amendment Documents. The Amendment Documents each Borrower Party executes or
under which such Borrower Party is obligated constitute such Borrower Party's
legal, valid and binding obligations, enforceable in accordance with the terms
of the Loan Documents, as amended by the Amendment Documents, subject to (i) the
effect of any Applicable Bankruptcy Law, or (ii) general principles of equity.
4.2.2 No Violation; No Consent. Each Borrower Party's execution, delivery
and performance of the Amendment Documents, and compliance with the terms and
provisions of the Loan Documents, as amended by the Amendment Documents, will
not (i) contravene any Applicable Law, (ii) conflict or be inconsistent with or
result in any breach of any term, covenant, condition or provision of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose} any lien upon any of the Property or such
Borrower Party's other assets pursuant to the terms of any indenture, mortgage,
deed of trust, agreement or other instrument to which such Borrower Party is a
party or by which such Borrower Party or any of the Property or such Borrower
Party's other assets is bound or may be subject, or (iii) violate any term of
any Borrower Party's certificate of incorporation or other documents and
agreements governing such Borrower Party's existence, management or operation.
No Borrower Party is required to obtain the consent of any other party,
including any Governmental Authority, in connection with the execution,
delivery,
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performance, validity or enforceability of the Loan Documents, as amended by the
Amendment Documents.
4.2.3 Financial Matters. Each Borrower Party financial statement previously
delivered to Lender was prepared in accordance with GAAP and completely,
correctly and fairly present the financial condition and the results of
operations of each Borrower Party on the date and for the period covered by the
financial statements. All other reports, statements and other data that any
Borrower Party furnished to Lender in connection with the Loan are true and
correct in all material respects and do not omit any fact or circumstance
necessary to ensure that the statements are not misleading. Each Borrower Party
(i) is solvent, (ii) is not bankrupt, and (iii) has no outstanding liens, suits,
garnishments, bankruptcies or court actions which may render such Borrower Party
insolvent or bankrupt. Since the date of the last financial statements each
Borrower Party delivered to Lender, no event, act, condition or liability has
occurred or exists, which has had, or may reasonably be expected to have, a
material adverse effect upon (A) such Borrower Party's business, condition
(financial or otherwise) or operations, or (B) such Borrower Party's ability to
perform or satisfy, or Lender's ability to enforce, any of the Indebtedness.
4.2.4 Litigation. There are no suits or proceedings (including condemnation)
pending or (to Borrower's knowledge, after reasonable inquiry) threatened
against or affecting any Borrower Party or the Property or involving the
validity, enforceability or priority of any of the Loan Documents. Borrower has
not received notice from any Governmental Authority alleging that any Borrower
Party or the Property is violating any Applicable Law.
4.2.5 No Default. No Event of Default currently exists or would exist after
giving effect to the transactions contemplated by this Amendment.
5.
MISCELLANEOUS.
5.1 Effect of Amendment. The terms of this Amendment shall be incorporated
into and form a part of the Loan Agreement Except as expressly amended, modified
and supplemented by this Amendment, the Loan Agreement shall continue in full
force and effect in accordance with its original stated terms, all of which are
hereby reaffirmed in every respect as of the Effective Date. In the event of any
irreconcilable inconsistency between the terms of this Amendment and the terms
of the Loan Agreement, the terms of this Amendment shall control and govern, and
the agreements shall be interpreted so as to carry out and give full effect to
the intent of this Amendment. All references to the Loan Agreement appearing in
any of the Loan Documents shall hereafter be deemed references to the Loan
Agreement as amended, modified and supplemented by this Amendment.
5.2 No Course of Dealing. This Amendment shall not establish a course of
dealing or be construed or relied upon as evidence of any willingness on
Lender's part to grant any future consent or amendment, should any be requested.
5.3 Release. Borrower hereby forever releases Lender from any and all liens,
claims, interests and causes of action of any kind or nature (each, a “Claim”)
that it now has or may hereafter have against Lender, and hereby agrees to
indemnify and hold harmless Lender for all Claims that any Person may bring
against Lender that arise under or in connection with the Loan Agreement based
on facts existing on or before the Effective Date.
5.4 Ratification and Affirmation. Borrower hereby acknowledges the terms of
this Amendment and ratifies and affirms its obligations under, and acknowledges,
renews and extends its continued liability under, each Loan Document to which it
is a party and agrees that each Loan Document to which it is a party remains in
5.5 Headings. The headings of the sections and subsections of this Amendment
are for convenience of reference only and will not affect the scope or meaning
of the sections of this Amendment
3
5.6 Applicable Law. The Amendment Documents and the rights and obligations
of Borrower and Lender are in all respects governed by, and construed and
enforced in accordance with the Governing Law (without giving effect to its
principles of conflicts of law), except for those terms of the Security
Instruments pertaining to the creation, perfections, validity, priority or
foreclosure of the liens or security interests on the Property located within
the State, which terms will be governed by, and construed and enforced in
accordance with the laws of the State (without giving effect to its principles
of conflicts of law).
5.7 Counterparts. This Amendment may be executed in any number of
counterparts with the same effect as if all signers executed the same
instrument. All counterparts of this Amendment must be construed together and
will constitute one instrument.
5.8 Reimbursement of Expenses. Borrower agrees to pay or reimburse Lender for
all reasonable out-of-pocket expenses, including Attorneys’ Fees, incurred by
Lender in connection with the negotiation, preparation, execution and delivery
of this Amendment and the other Amendment Documents and the consummation of the
transactions contemplated hereby.
4
Borrower:
EDUCATIONAL DEVELOPMENT CORPORATION
a Delaware corporation
By:
/s/ Randall W. White
Name:
Randall W. White
Title:
Chairman, President and CEO
BORROWER'S SIGNATURE PAGE
TO
FIRST AMENDMENT TO LOAN AGREEMENT
Lender:
MIDFIRST BANK, a federally chartered savings association
By:
/s/ Marc Short
Name:
Marc Short
Title:
Senior Vice President
LENDER'S SIGNATURE PAGE
TO
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SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (AMENDMENT NO. 1)1 NOTIFY TECHNOLOGY CORPORATION (Name of Issuer) Common Stock, $0.01 par value per share (Title of Class of Securities) (CUSIP Number) Strategic Turnaround Equity Partners, L.P. (Cayman) c/o Galloway Capital Management, LLC 720 Fifth Avenue, 10th Floor New York, New York 10019 (212)247-0581 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) November 3, 2010 (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent. 1 The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). (Continued on following pages) 1 CUSIP No. 669956104 13D 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY) Strategic Turnaround Equity Partners, L.P.(Cayman)98-0498777 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*(a)o (b) x 3 SEC USE ONLY 4 SOURCE OF FUNDS *WC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2 (e) o 6 CITIZENSHIP OR PLACE OF ORGANIZATIONCayman Islands NUMBER OF 7 SOLE VOTING POWER1,153,572 SHARES BENEFICIALLY OWNED BY 8 SHARED VOTING POWER0 EACH REPORTING PERSON WITH 9 SOLE DISPOSITIVE POWER1,153,572 10 SHARED DISPOSITIVE POWER0 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,153,572 (1) 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*o 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 8.19% (1) 14 TYPE OF REPORTING PERSONPN On the basis of 14,090,106 shares of Common Stock reported by the Company to be issued and outstanding as of August 13, 2010 in the Company’s latest Quarterly report on Form 10-Q, as filed with Securities and Exchange Commission on August 13, 2010. *SEE INSTRUCTIONS BEFORE FILLING OUT! 2 CUSIP No. 669956104 13D 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY) Galloway Capital Management LLC90-0000838 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)o (b)x 3 SEC USE ONLY 4 SOURCE OF FUNDS *N/A 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2o 6 CITIZENSHIP OR PLACE OF ORGANIZATIONDelaware NUMBER OF 7 SOLE VOTING POWER1,153,572 SHARES BENEFICIALLY OWNED BY 8 SHARED VOTING POWER0 EACH REPORTING PERSON WITH 9 SOLE DISPOSITIVE POWER1,153,572 10 SHARED DISPOSITIVE POWER0 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDESCERTAIN SHARES*o 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 8.19% (1) 14 TYPE OF REPORTING PERSONPN On the basis of 14,090,106 shares of Common Stock reported by the Company to be issued and outstanding as of August 13, 2010 in the Company’s latest Quarterly report on Form 10-Q, as filed with Securities and Exchange Commission on August 13, 2010. *SEE INSTRUCTIONS BEFORE FILLING OUT! 3 CUSIP No.669956104 13D 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY) Gary L. HermanN/A 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)o (b) x 3 SEC USE ONLY 4 SOURCE OF FUNDS *N/A 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2 (e) o 6 CITIZENSHIP OR PLACE OF ORGANIZATIONUnited States NUMBER OF 7 SOLE VOTING POWER2,600 (1) SHARES BENEFICIALLY OWNED BY 8 SHARED VOTING POWER1,153,572 EACH REPORTING PERSON WITH 9 SOLE DISPOSITIVE POWER2,600 (1) 10 SHARED DISPOSITIVE POWER1,153,572 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*o 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 8.21% (2) 14 TYPE OF REPORTING PERSONIN Of the total of 1,156,172shares of common stock, 2,500 shares are held by FBR, Inc. (“FBR”) for which Mr. Herman is sole owner and serves as an officer, 100 shares are held by Mr. Herman and 1,153,572 are held by Strategic Turnaround Investment Partners, LP (Cayman) (“STEP”) for which Mr. Herman has the shared power to vote and dispose.Mr. Herman is a managing member of Galloway Capital Management, LLC the general partner of STEP. Mr. Herman disclaims beneficial ownership of the shares directly beneficially owned by STEP, except to: (i) the indirect interests by virtue of Mr. Herman being a managing member of Galloway Capital Management, LLC the general partner to STEP; and (ii) the indirect interests of Mr. Herman by virtue of being a limited partner in STEP. On the basis of 14,090,106 shares of Common Stock reported by the Company to be issued and outstanding as of August 13, 2010 in the Company’s latest Quarterly report on Form 10-Q, as filed with Securities and Exchange Commission on August 13, 2010. *SEE INSTRUCTIONS BEFORE FILLING OUT! 4 CUSIP No. 669956104 13D 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY) Bruce GallowayN/A 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)o (b) x 3 SEC USE ONLY 4 SOURCE OF FUNDS *PF 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2 (e)o 6 CITIZENSHIP OR PLACE OF ORGANIZATIONUnited States NUMBER OF 7 SOLE VOTING POWER 424,337 (1) SHARES BENEFICIALLY OWNED BY 8 SHARED VOTING POWER1,153,572 EACH REPORTING PERSON WITH 9 SOLE DISPOSITIVE POWER 424,337 (1) 10 SHARED DISPOSITIVE POWER1,153,572 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,577,909 (1) 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*o 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 1111.20% (2) 14 TYPE OF REPORTING PERSONIN Of the total of 1,577,909 shares of common stock, 291,671 shares held by Mr. Galloway’s Individual Retirement Account for which Mr. Galloway has sole power to vote and dispose, 47,666 shares are held by Mr. Galloway’s children for which he has the sole power to vote and dispose, 85,000 shares are held by RexonGalloway Capital Growth LLC (“RexonGalloway”) an investment company in which Mr. Galloway is an owner and retains investment and voting discretion, and 1,153,572 are held by Strategic Turnaround Investment Partners, LP (Cayman) (“STEP”) for which Mr. Galloway has the shared power to vote and dispose.Mr. Galloway is a managing member of Galloway Capital Management, LLC the general partner of STEP. Mr. Galloway disclaims beneficial ownership of the shares directly beneficially owned by STEP, except to: (i) the indirect interests by virtue of Mr. Galloway being a managing member of Galloway Capital Management, LLC the general partner to STEP; and (ii) the indirect interests of Mr. Galloway by virtue of being a limited partner in STEP. On the basis of 14,090,106 shares of Common Stock reported by the Company to be issued and outstanding as of August 13, 2010 in the Company’s latest Quarterly report on Form 10-Q, as filed with Securities and Exchange Commission on August 13, 2010. .*SEE INSTRUCTIONS BEFORE FILLING OUT! 5 Item 1.Security and Issuer. The class of equity securities to which this statement relates is the Common Stock, $.01 par value, (the “Common Stock”) of Notify Technology Corporation, a California corporation, (the “Company”). The principal executive offices of the Company are located at 1054 South Se Anza Blvd., San Jose, CA 95129. Item 2. Identity and Background. This statement is being filed jointly by Strategic Turnaround Equity Partners, L.P. (Cayman), Galloway Capital Management LLC, Bruce Galloway and Gary L. Herman (collectively, the “Reporting Persons”). Strategic Turnaround Equity Partners, L.P. (Cayman), is a partnership organized under the laws of the Cayman Islands and is focused on investing primarily in undervalued publicly traded securities.Galloway Capital Management LLC is a Delaware limited liability company principally engaged in serving as the general partner of Strategic Turnaround Equity Partners, L.P. (Cayman). Gary L. Herman and Bruce Galloway are citizens of the United States, and managing members of Galloway Capital Management LLC. The name and positions of the executive officers and directors of each of the Reporting Persons are set forth below.Other than as listed in Item 5 of this Report, each executive officer and director listed below disclaims beneficial ownership of the shares of Common Stock beneficially owned by the Reporting Persons. Strategic Turnaround Equity Partners, L.P. (Cayman) CaymanIslands limited partnership General Partner – Galloway Capital Management LLC Galloway Capital Management LLC Delaware limited liability company Managing Member – Gary L. Herman Managing Member – Bruce Galloway Bruce Galloway Citizenship - United States Managing Member - Galloway Capital Management LLC Managing Member of the general partner and holder of majority membership interests ofthe general partner of Strategic Turnaround Equity Partners, L.P. (Cayman) Gary L. Herman Citizenship - United States Managing Member - Galloway Capital Management LLC Managing Member of Strategic Turnaround Equity Partners, L.P. (Cayman) The address for Strategic Turnaround Equity Partners, L.P. (Cayman), Galloway Capital Management LLC, Bruce Galloway and Gary Herman is c/o Galloway Capital Management, LLC, 720 Fifth Avenue, 10th Floor, New York, New York 10019. During the last five years, none ofthe Reporting Persons nor any executive officer or director of the Reporting Persons have (i) been convicted in any criminal proceeding or (ii) been a party to any civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which he was subject to any judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. 6 Item 3. Source and Amount of Funds or Other Consideration. The shares of Common Stock listed below owned directly and indirectly by the Reporting Persons were purchased with working capital of Strategic Turnaround Equity Partners, L.P. (Cayman) and the shares purchased by Mr. Galloway and Mr. Herman were purchased with their respective personal investment capital. Item 4. Purpose of Transaction. All of the shares of Common Stock reported herein were acquired for investment purposes. On each of the following dates and at the following prices per share, Strategic Turnaround Equity Partners, L.P. (Cayman) purchased Common Stock: Date Number of Shares Purchased Number of Shares Sold Price Per Share 08/18/2010 08/31/2010 09/14/2010 09/24/2010 09/27/2010 On each of the following dates and at the following prices per share, Bruce Galloway and his affiliates made purchases and sales of Common Stock, on the open market, which purchases were made with his personal funds: Date Number of Shares Purchased Number of Shares Sold Price Per Share 08/18/2010 9,000 08/24/2010 6,600 08/30/2010 9,500 09/13/2010 5,000 On November 3, 2010, the Reporting Persons sent a letter to the Independent Committee of the Issuer. The Reporting Persons expressed their opposition to the Company’s plans to consider ceasing its reporting obligations with the Securities and Exchange Commission. The Reporting Persons purchased the shares of common stock (the “Shares”) based on the Reporting Persons' belief that the Shares, when purchased, were undervalued and represented an attractive investment opportunity. Depending upon overall market conditions, other investment opportunities available to the Reporting Persons, and the availability of Shares at prices that would make the purchase of additional Shares desirable, the Reporting Persons may endeavor to increase their position in the Company through, among other things, the purchase of Shares on the open market or in private transactions or otherwise, on such terms and at such times as the Reporting Persons may deem advisable. No Reporting Person has any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) - (j) of Item 4 of Schedule 13D except as set forth herein or such as would occur upon completion of any of the actions discussed above. The Reporting Persons intend to review their investment in the Company on a continuing basis and engage in discussions with management and the Board of Directors of the Company concerning the business, operations and future plans of the Company. Depending on various factors including, without limitation, the Company’s financial position and investment strategy, the price levels of the Shares, conditions in the securities markets and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Company as they deem appropriate including, without limitation, seeking Board representation, making proposals to the Company concerning changes to the capitalization, ownership structure or operations of the Company, purchasing additional Shares, selling some or all of its Shares, engaging in short selling of or any hedging or similar transaction with respect to the Shares or changing its intention with respect to any and all matters referred to in Item 4. 7 Item 5. Interest in Securities of the Issuer. (a) and (b) Strategic Turnaround Equity Partners, L.P. (Cayman) is deemed to be the direct beneficial owner of 1,153,572 shares of Common Stock, which represents approximately 8.19% of the number of shares of Common Stock stated to be outstanding by the Company in its Quarterly Report on Form 10-Q, as filed with the Securities and Exchange Commission on August 13, 2010.Strategic Turnaround Equity Partners, L.P. (Cayman) has shared voting and disposition power with respect to all of such shares. Galloway Capital Management LLC is deemed to be the indirect beneficial owner of 1,153,572 shares of Common Stock which represents approximately 8.19% of the number of shares of Common Stock stated to be outstanding by the Company in its Quarterly Report on Form 10-Q, as filed with the Securities and Exchange Commission on August 13, 2010. Galloway Capital Management LLC has shared voting and disposition power with respect to all of such shares. Bruce Galloway is deemed to be the beneficial owner of 1,577,909 shares of Common Stock which represents approximately 11.20% of the number of shares of Common Stock stated to be outstanding by the Company in its Quarterly Report on Form 10-Q, as filed with the Securities and Exchange Commission on August 13, 2010.Mr. Galloway is deemed to be the indirect beneficial owner of 1,153,572 shares of Common Stock owned directly by Strategic Turnaround Equity Partners, L.P. (Cayman), which he has shared voting and disposition power. In addition, Mr. Galloway has sole voting and disposition power with respect to 424,337 shares of Common Stock.Of the total 424,337 shares of common stock directly reported by Mr. Galloway, 291,671 shares of Common Stock are held in Mr. Galloway’s retirement account, 47,666 shares of Common Stock are owned by Mr. Galloway’s children for which Mr. Galloway has the sole power to vote and dispose, and 85,000 shares of Common Stock are held by Rexon Galloway Capital Growth LLC, an investment company in which Mr. Galloway is a member and for which Mr. Galloway retains investment and voting discretion. Gary Hermanis deemed to be the beneficial owner of 1,156,172 shares of Common Stock which represents approximately 8.21% of the number of shares of Common Stock stated to be outstanding by the Company in its Quarterly Report on Form 10-Q, as filed with the Securities and Exchange Commission on August 13, 2010.Mr. Hermanis deemed to be the indirect beneficial owner of 1,153,572 shares of Common Stock owned directly by Strategic Turnaround Equity Partners, L.P. (Cayman), which he has shared voting and disposition power. In addition, Mr. Herman has sole voting and disposition power with respect to 2,600 shares of Common Stock.Of the total of 2,600 shares of common stock directly reported by Mr. Herman, 2,500 shares are held by FBR, Inc., all of which Mr. Herman has investment and voting discretion. Each of Galloway Capital Management, LLC, Bruce Galloway and Gary L. Herman disclaim beneficial ownership of the shares of Common Stock directly beneficially owned by Strategic Turnaround Equity Partners, L.P. (Cayman) (except for (i) the indirect interest of Galloway Capital Management LLC by virtue of being the general partner of Strategic Turnaround Equity Partners, L.P. (Cayman), (ii) the indirect interests of Bruce Galloway and Gary L. Herman by virtue of being members of Galloway Capital Management LLC, and (iii) the indirect interests of Bruce Galloway and Gary L. Herman by virtue of being limited partners of Strategic Turnaround Equity Partners, L.P. (Cayman).Galloway Capital Management LLC, Gary L. Herman and Bruce Galloway have shared power to direct the vote and shared power to direct the disposition of these shares of Common Stock. (c) Not applicable. (d) Not applicable. (e) Not applicable. 8 Item 6. Contracts, Arrangements, Understandings or Relationships With the Issuer. Except for the joint filing agreement attached hereto, there are no contracts, arrangements, understandings or relationships (legal or otherwise) between the Reporting Persons named in Item 2 hereof and any person with respect to any securities of the Company, including but not limited to transfer or voting of any other securities, finder’s fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, divisions of profits or loss, or the giving or withholding of proxies. Item 7. Material to be Filed as Exhibits. Exhibit A:Joint Filing Agreement Exhibit B:Letter to the Company 9 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Strategic Turnaround Equity Partners, L.P. (Cayman) November 3, 2010 By: /s/Gary Herman Name: Gary Herman Title: Managing Member of Galloway Capital Management LLC, the General Partner of Strategic Turnaround Equity Partners, L.P. (Cayman) Galloway Capital Management, LLC November 3, 2010 By: /s/Bruce Galloway Name: Bruce Galloway Title: Managing Member Gary L. Herman November 3, 2010 /s/Gary L. Herman Bruce Galloway November 3, 2010 By: /s/Bruce Galloway The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of the filing person), evidence of the representative’s authority to sign on behalf of such person shall be filed with the statement, provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name and any title of each person who signs the statement shall be typed or printed beneath his signature. Attention.Intentional misstatements or omissions of fact constitute Federal criminal violations (See 18 U.S.C. 1001). 10 EXHIBITA JOINT FILING AGREEMENT In accordance with Rule13d-1(k)(1)under the Securities Exchange Act of 1934, as amended, each of the undersigned parties hereby agree to file jointly this Schedule13D (including any amendments thereto) with respect to the Common Stock ofNotify Technology Corporation. It is understood and agreed that each of the parties hereto is responsible for the timely filing of this Schedule13D and any amendments thereto, and for the completeness and accuracy of information concerning another party unless such party knows or has reason to believe that such information is inaccurate. It is understood and agreed that a copy of this agreement shall be attached as an exhibit to Schedule13D, and any amendments thereto, filed on behalf of the parties hereto. November 3, 2010 Strategic Turnaround Equity Partners, L.P.(Cayman) By:/s/ Gary Herman Name: Gary Herman Title: Managing Member of Galloway Capital Management, LLC, the General Partner of Strategic Turnaround Equity Partners, L.P. (Cayman) Galloway Capital Management, LLC By:/s/ Bruce Galloway Title: Managing Member of Galloway Capital Management, LLC Gary L. Herman /s/ Gary L. Herman Bruce Galloway /s/ Bruce Galloway A-1 EXHIBIT B Galloway Capital Management, LLC 720 Fifth Avenue, 10th Floor New York, NY 10019 November 3, 2010 Notify Technology Corporation 1054 South De Anza Blvd., Suite 202 San Jose, CA95129 Attn: Independent Committee Dear Sir/Madam: As you may know, Strategic Turnaround Equity Partners, LP (Cayman) and its affiliates (collectively “Strategic”) have been shareholders since 2006 and very supportive of the Company’s management team while it has been growing the business. We were very surprised to read the recent news release that the Company has established an Independent Committee to explore the possibility of ceasing its reporting obligations with the Securities & Exchange Commission which would result in the delisting of the Company’s common shares from trading on the OTC Bulletin Board. We believe that the costs of remaining a public company are minimal in relation to the significant potential upside in the Company’s share price. I have had numerous meetings and telephone conversations with Paul DePond over the past few years and none of my suggestions have ever been pursued to attempt to improve the liquidity of the shares. The best interests of shareholders will not be achieved by allowing the Company’s shares to “go dark.”While we do agree that the trading market for the stock is lackluster, we also know that the Company has done very little in the way of a executing a meaningful investor relations program to increase the awareness and visibility of the Company. The Company should first engage in a meaningful investor relationship program with a recognizable firm.I have given Mr. DePond names of these firms in the past. I will supply you with a list under separate cover. The Company should explore the possibility of a merger with another company to create value for the shareholders and consolidate public company expenses, announce a $1,000,000 share buyback program as well as consider dividending all or a significant portion of the cash to shareholders. The bottom line is that the Board has an obligation to explore and exhaust all options to create shareholder value prior to such a drastic consideration of “going dark.” I look forward to discussing this letter and other ideas with you at your earliest convenience. Very truly yours, Bruce Galloway cc:Paul F. DePond, Chairman, President and CEO B-1
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuantto Section 13 OR 15(d)of The Securities Exchange Actof 1934 Date of report (Date of earliest event reported): July 28, 2011 INVACARE CORPORATION (Exact name of registrant as specified in its charter) Ohio 001-15103 95-2680965 (State or other jurisdiction of incorporation or organization) (Commission File Number) (IRS Employer Identification No) One Invacare Way, P.O. Box 4028, Elyria, Ohio 44036 (Address of principal executive offices, including zip code) (440) 329-6000 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02Results of Operations and Financial Condition. OnJuly 28, 2011, Invacare Corporation (the “Company”) issued a press release regarding its financial results for the three and six months endedJune 30, 2011.The press release is furnished herewith as Exhibit 99.1. The attached press release contains non-GAAP financial measures.In the press release, the Company has provided a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measure. Item 9.01Financial Statements and Exhibits. (d) Exhibits. Exhibit Number Description of Exhibit Press Release, datedJuly 28, 2011. SIGNATURE Pursuant to therequirementsof the SecuritiesExchange Act of 1934, the registranthas dulycausedthisreportto besignedon itsbehalf by the undersigned hereunto duly authorized. Invacare Corporation (Registrant) Date:July 28, 2011 /s/ Robert K. Gudbranson Robert K. Gudbranson Senior Vice President and Chief Financial Officer Exhibit Index Exhibit Number Description Press Release, datedJuly 28, 2011.
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Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1 SECTION -OXLEY ACT OF 2002 In connection with the quarterly report of San Joaquin Bancorp (the Company) on Form 10-Q for the period ended March 31, 2009, as filed with the Securities and Exchange
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Name: 2011/127/EU: Commission Decision of 24Ã February 2011 amending Decision 2007/697/EC granting a derogation requested by Ireland pursuant to Council Directive 91/676/EEC concerning the protection of waters against pollution caused by nitrates from agricultural sources (notified under document C(2011) 1032)
Type: Decision_ENTSCHEID
Subject Matter: deterioration of the environment; European Union law; environmental policy; chemistry; Europe
Date Published: 2011-02-25
25.2.2011 EN Official Journal of the European Union L 51/19 COMMISSION DECISION of 24 February 2011 amending Decision 2007/697/EC granting a derogation requested by Ireland pursuant to Council Directive 91/676/EEC concerning the protection of waters against pollution caused by nitrates from agricultural sources (notified under document C(2011) 1032) (Only the English text is authentic) (2011/127/EU) THE EUROPEAN COMMISSION, Having regard to the Treaty on the Functioning of the European Union, Having regard to Council Directive 91/676/EEC of 12 December 1991 concerning the protection of waters against pollution caused by nitrates from agricultural sources (1), and in particular the third subparagraph of paragraph 2 of Annex III thereto, Whereas: (1) If the amount of manure that a Member State intends to apply per hectare each year is different from those specified in the first sentence of the second subparagraph of paragraph 2 of Annex III to Directive 91/676/EEC and in point (a) of that subparagraph, that amount is to be fixed so as not to prejudice the achievement of the objectives specified in Article 1 of that Directive and it has to be justified on the basis of objective criteria, such as long growing seasons and crops with high nitrogen uptake. (2) On 22 October 2007, the Commission adopted Decision 2007/697/EC granting a derogation requested by Ireland pursuant to Council Directive 91/676/EEC concerning the protection of waters against pollution caused by nitrates from agricultural sources (2), allowing Ireland the application of 250 kg nitrogen per hectare per year from livestock manure on farms with at least 80 % grassland. (3) The derogation granted by Decision 2007/697/EC concerned approximately 5 000 farms in Ireland corresponding to approximately 2,7 % of total number of holdings with cattle or sheep, 10 % of total grazing livestock numbers and 4,2 % of the total net agricultural area. Decision 2007/697/EC expires on 17 July 2010. (4) On 12 May 2010 Ireland submitted to the Commission a request for an extension of the derogation. The request contained a justification on the basis of the objective criteria specified in the third subparagraph of paragraph 2 of Annex III to Directive 91/676/EEC. (5) Ireland has adopted a new action programme for the period July 2010 to December 2013, which mainly maintains the measures of the action programme for the period until 30 June 2010 and applies to the whole territory of Ireland. (6) The fourth report on implementation of Directive 91/676/EEC in Ireland for the period 2004-2007 shows in general stable or improving water quality. For groundwater, 2 % of sites showed average nitrate values above 50 mg/l and 74 % of sites values below 25 mg/l. For surface river waters, 97 % of monitoring sites showed average nitrate values below 25 mg/l, and no sites showed average values above 50 mg/l. 93 % of lakes were classified as either oligotrophic or mesotrophic and 7 % of lakes were classified as eutrophic or hypertrophic. (7) Livestock numbers decreased further during the period 2004-2007, by about 4 % for cattle, 19 % for sheep, 4 % for pigs and 7 % for poultry (3). The annual use of organic nitrogen from livestock manure and of mineral nitrogen decreased by 5 % and 17 % respectively. The total farmed area decreased by 3 % to 4,28 million hectares and grassland still accounts for over 90 % of the agricultural area. (8) In the light of the scientific information referred to in the request for extension of the derogation and the measures which Ireland has committed itself to in the action programme for the period July 2010 to December 2013, it can be concluded that the conditions for obtaining the derogation as specified in Directive 91/676/EEC, such as long growing seasons and crops with high nitrogen uptake, are still fulfilled, and that the derogation does not prejudice the achievement of the objectives of that Directive. (9) For the purpose of ensuring that the grassland farms concerned may continue to benefit from a derogation, it is appropriate to extend the period of application of Decision 2007/697/EC to 31 December 2013. (10) The deadlines for reporting to the Commission set out in Decision 2007/697/EC should however be adapted in order to simplify the administrative burden by allowing Ireland to establish only one deadline for all reporting obligations. (11) The measures provided for in this Decision are in accordance with the opinion of the Nitrates Committee set up pursuant to Article 9 of Directive 91/676/EEC, HAS ADOPTED THIS DECISION: Article 1 Decision 2007/697/EC is amended as follows: 1. Article 1 is replaced by the following: Article 1 The derogation requested by Ireland by letter of 18 October 2006 and the extension requested by letter of 12 May 2010, for the purpose of allowing a higher amount of livestock manure than that provided for in the first sentence of the second subparagraph of paragraph 2 of Annex III to Directive 91/676/EEC and in point (a) of that subparagraph, is granted, subject to conditions laid down in this Decision.. 2. The second subparagraph of Article 8(1) is replaced by the following: Those maps shall be submitted to the Commission annually by June.. 3. Article 11 is replaced by the following: Article 11 Application This Decision shall apply in the context of the Irish Action Programme as implemented by the European Communities (Good Agricultural Practice for Protection of Waters) Regulations 2010 (Statutory Instrument No 610 of 2010). It shall expire on 31 December 2013.. Article 2 This Decision is addressed to Ireland. Done at Brussels, 24 February 2011. For the Commission Janez POTOÃ NIK Member of the Commission (1) OJ L 375, 31.12.1991, p. 1. (2) OJ L 284, 30.10.2007, p. 27. (3) Reference period for poultry: 2003-2005. |
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Exhibit 10.8
QUICKSILVER RESOURCES INC.
NONQUALIFIED STOCK OPTION AGREEMENT
Director:
Number of Shares:
Date of Grant:
Exercise Price:
Expiration Date:
Type of Option: Nonqualified stock option
1. Under the terms and conditions of the Quicksilver Resources Inc. 2006 Equity
Plan (the “Plan”), a copy of which is attached hereto and incorporated herein by
reference, Quicksilver Resources Inc., a Delaware corporation (the “Company”),
grants to the individual whose name is set forth above (the “Director”) an
option to purchase the number of shares of the Company’s Common Stock, par value
$0.01 per share (“Common Stock”), set forth above at the price per share set
forth above (the “Option”). Terms not defined in this Agreement have the
meanings set forth in the Plan.
2. The Option will be for a term commencing on the Date of Grant set forth above
and ending at 5:00 p.m. Central Time on the Expiration Date set forth above.
During the term hereof, the Option will become vested and exercisable in
accordance with the schedule set forth below.
The Option will become vested and exercisable as to 1/12th of the total number
of shares (rounded up to the nearest whole share) on the last day of the first
full calendar month following the Date of Grant, as to 1/12th of the total
number or shares (rounded up to the nearest whole share) on the last day of each
of the 10 succeeding calendar months, and as to the balance of the shares on the
last day of the calendar month preceding the first anniversary of the Date of
Grant; provided, in each case, that the Director has remained a member of the
Board through the respective vesting date. Notwithstanding the vesting dates set
forth above, in the event of a Change in Control while the Director is a member
of the Board, the nonvested portion of the Option will become 100% vested and
exercisable.
In the event that the Director ceases to be a member of the Board by reason of
retirement at or after the age of 55 and completion of five years of service on
the Board, disability (as determined by the Committee in good faith) or death,
the nonvested portion of the Option will be forfeited immediately and the vested
portion of the Option will expire one day prior to the fifth anniversary of such
retirement, disability or death.
If the Director’s service on the Board is terminated for cause pursuant to
Section 141(k) of the Delaware General Corporation Law (or any successor
provision), the right to exercise this Option will terminate immediately.
If the Director ceases to be a member of the Board for any reason other than
such retirement, disability, death or termination for cause, the nonvested
portion of the Option will be
forfeited immediately and the vested portion of the Option will expire on the
date that is three months after the date that Director ceases to be a member of
the Board.
Notwithstanding any other provision of the Plan or this Agreement to the
contrary, the Option will expire and may not be exercised after the Expiration
Date set forth above.
3. The exercise price for shares purchased by the Director may be paid (i) in
cash or personal check acceptable to the Company, (ii) by the transfer to the
Company of shares of Common Stock having a value on the date of exercise equal
to the aggregate exercise price or (iii) by a combination of the foregoing
methods.
4. The Director will have none of the rights of a stockholder of the Company
with respect to any shares of Common Stock underlying the Option until such time
that the Director has been determined to be a stockholder of record by the
Company’s transfer agent or one or more certificates of shares of Common Stock
are delivered to the Director upon due exercise of the option. Further, nothing
herein will confer upon Director any right to remain in service on the Board.
5. The Director hereby accepts and agrees to be bound by all the terms and
conditions of the Plan and this Agreement. Any amendment to the Plan will be
deemed to be an amendment to this Agreement to the extent that the Plan
amendment is applicable hereto; provided, however, that no amendment will
adversely affect the rights of the Director under this Agreement without the
Director’s consent.
ACCEPTED:
Signature of Director
2 |
EXHIBIT 10.1
Pursuant to 17 CFR 240.24b-2, confidential information has been
omitted in places marked “[***]” and has been filed separately with the
Securities and Exchange Commission pursuant to a Confidential Treatment Request
Filed with the Commission.
LAUNCH SERVICES AGREEMENT
FOR THE LAUNCHING INTO
GEOSTATIONARY TRANSFER ORBIT
OF THE SPACEWAY-3 SATELLITE
BY AN ARIANE 5 LAUNCH VEHICLE
Commercial in Confidence
Page 2
LAUNCH SERVICES AGREEMENT
This Launch Services Agreement is entered into
BY AND BETWEEN
Hughes Networks Systems, LLC, hereinafter referred to as “CUSTOMER”, a company
duly organized and validly existing under the laws of the State of Maryland,
with principal offices located at 11717 Exploration Lane, Germantown, MD 20876
USA,
On the one hand
AND
ARIANESPACE, a company organized under the laws of France with principal offices
located at Boulevard de l’Europe, 91000 EVRY, France, hereinafter referred to as
“ARIANESPACE”,
On the other hand
Commercial in Confidence
Page 3
CONTENTS
PART I
TERMS AND CONDITIONS
Pages
RECITALS
6
ARTICLE 1 - DEFINITIONS
7
ARTICLE 2 - SUBJECT OF THE AGREEMENT
11
ARTICLE 3 - CONTRACTUAL DOCUMENTS
12
ARTICLE 4 - ARIANESPACE’S SERVICES
13
ARTICLE 5 - CUSTOMER'S TECHNICAL COMMITMENTS
16
ARTICLE 6 - LAUNCH SCHEDULE
17
ARTICLE 7 - COORDINATION BETWEEN ARIANESPACE AND CUSTOMER
18
ARTICLE 8 - REMUNERATION
19
ARTICLE 9 - PRICE ESCALATION FORMULA
20
ARTICLE 10 - PAYMENT FOR SERVICES
21
ARTICLE 11 - LAUNCH POSTPONEMENTS
23
ARTICLE 12 - RIGHT OF OWNERSHIP AND CUSTODY
26
ARTICLE 13 - REPLACEMENT LAUNCH
27
ARTICLE 14 - ALLOCATION OF POTENTIAL LIABILITIES AND RISKS
29
ARTICLE 15 - INSURANCE
33
ARTICLE 16 - OWNERSHIP OF DOCUMENTS AND WRITTEN INFORMATION
CONFIDENTIALITY/PUBLIC STATEMENTS
34
ARTICLE 17 - PERMITS AND AUTHORIZATIONS - GROUND STATIONS
36
ARTICLE 18 - TERMINATION BY CUSTOMER
37
ARTICLE 19 - TERMINATION BY ARIANESPACE
40
ARTICLE 20 - MISCELLANEOUS
41
ARTICLE 21 - APPLICABLE LAW
43
ARTICLE 22 - ARBITRATION
44
ARTICLE 23 - EFFECTIVE DATE
45
Commercial in Confidence
Page 4
PART II
A N N E X E S
ANNEX 1
Part 1
LAUNCH SPECIFICATIONS
Part 2
ARIANESPACE TECHNICAL COMMITMENTS
Part 3
CUSTOMER'S TECHNICAL COMMITMENTS
Part 4
DOCUMENTATION AND REVIEWS
Part 5
GENERAL RANGE SUPPORT (GRS) AND OPTIONAL SERVICES
ANNEX 2
ESA - ARIANESPACE CONVENTION (EXTRACT)
Commercial in Confidence
P A R T I
T E R M S A N D C O N D I T I O N S
Commercial in Confidence
Page 6
RECITALS
WHEREAS
CUSTOMER has approached ARIANESPACE with a view to launching the SPACEWAY-3
Satellite using an ARIANE Launch Vehicle, and
WHEREAS
ARIANESPACE has proposed to CUSTOMER either a Dedicated Launch or a Double
Launch, and
WHEREAS
CUSTOMER has selected a Double Launch, being aware of the particular constraints
involved in such a Launch, and
WHEREAS
CUSTOMER and ARIANESPACE, aware of the constraints and risks involved in any
Launch operation and of the complex nature of the technologies involved, have
reached an agreement in accordance with the terms and conditions set forth
herein,
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
Commercial in Confidence
Page 7
ARTICLE 1 - DEFINITIONS
In this Agreement capitalized terms shall have the meanings set forth in this
Article:
Affiliate means any entity Controlled by or under common Control with the
CUSTOMER
Agreement means this Agreement as defined in Article 3 hereof.
Associated Services means those supplementary launch services specified in
Sub-paragraphs 4.1.2. and 4.1.3. hereof.
Associates means any individual or legal entity, whether organized under public
or private law, who or which shall act, directly or indirectly, on behalf of or
at the direction of either Party to this Agreement or on behalf of the Third
Party Customer(s) of ARIANESPACE, to fulfill the obligation undertaken by such
Party pursuant to this Agreement or by the Third Party Customer(s) of
ARIANESPACE including without limitation, any employee, officer, agent of either
Party, and of the Third Party Customer(s) of ARIANESPACE, and their respective
contractors, subcontractors and suppliers at any tier.
For the purpose of the definition of Third Party and Article 14:
a)
any individual or legal entity governed by private or public law that has
directed ARIANESPACE to proceed with the Launch or has any interest in the
Launch, including without limitation, a legal interest in the Launch Vehicle
shall be deemed to be an Associate of ARIANESPACE
b)
directed CUSTOMER to proceed with the Launch, or has any interest in the
Satellite to be launched, including without limitation, insurers, any person or
entity to whom CUSTOMER has sold or leased , directly or indirectly, or
otherwise agreed to provide any portion of the Satellite or Satellite service
shall be deemed to be an Associate of CUSTOMER;
c)
any individual or legal entity governed by private or public law, that has
directed the Third Party Customer(s) of ARIANESPACE to proceed with the launch,
or has any interest in the satellite(s) of the Third Party Customer(s) to be
launched, including without limitation, insurers, any person or entity to whom
the Third Party Customer(s) has sold or leased , directly or indirectly, or
otherwise agreed to provide any portion of the satellite or satellite service
shall be deemed to be an Associate of Third Party Customer(s) of ARIANESPACE.
Base Rate means the Chase Manhattan Bank (N.Y.) prime rate plus [***] ([***])
[***]for any amount expressed in U.S. dollars, or the three (3) month EURIBOR
plus [***] ([***]) [***] for any amount expressed in Euros
Commercial Insurance Market means the providers of insurance or reinsurance for
first party space-related risks on a regular basis that are not affiliated with
or controlled directly or indirectly by CUSTOMER.
Control (or Controlling or Controlled by) means direct or indirect ownership of
over fifty percent (50%) of the issued shared capital of an entity.
Commercial in Confidence
Page 8
Dedicated Launch means a Launch the only payload of which is CUSTOMER's
Satellite.
Deviation means non-compliance with the specifications included in the D.C.I.
(Document de Contrôle des Interfaces / Interface Control Document, including its
reference documents, applicable documents and annexes) with respect to:
a)
the performance of the various systems of the Launch Vehicle; and/or the
environmental conditions to which the Satellite was subjected during the period
from the instant when the Launch occurred until the instant when the activation
of either the propulsion and/or orientation systems of the Satellite should have
occurred; and/or
b)
the behaviour of the satellite of a Third Party Customer(s) of ARIANESPACE from
the instant when the Launch occurred until the earlier of the following :
-
the instant when the propulsion and/or orientation systems of the satellite of
the Third Party Customer(s) of ARIANESPACE are activated, or
-
the instant when the activation of either the propulsion and/or orientation
systems of the Satellite should have occurred.
Double Launch means a Launch with two satellites including the Satellite
supplied by CUSTOMER.
Events of Force Majeure means events beyond the reasonable control of a Party or
its Associates that impede the execution of the obligations of such Party or its
Associates, provided such difficulties may not be overcome using efforts which
may reasonably be expected of the affected Party or its affected Associates
under the circumstances, such as but not limited to explosions, fires,
earthquakes, floods, bad weather and other Acts of God, wars, whether or not
declared, social uprisings, strikes, lock-outs and other labour problems,
governmental or administrative measures.
Guarantee Amount means [***]% of the Launch Services price established in
accordance with the Paragraph 8.1 of Article 8 of this Agreement, converted in
Euros (€) at the Euro exchange rate prevailing at the effective date of the
Agreement.
L means the first day of the most recently agreed Launch Period or Launch Slot
(except for the purpose of Article 10.1.1 of this Agreement where L shall mean
the Launch Day).
Launch or Launching means the order of ignition of solid propellant booster(s)
if such event follows ignition of the Vulcain engine of the Launch Vehicle that
has been integrated with the Satellite(s) supplied by CUSTOMER and with other
satellite(s) supplied by (a) Third Party Customer(s) of ARIANESPACE.
Launch Abort means the launch operations of the Launch Vehicle that has been
integrated with the Satellite supplied by CUSTOMER and with other satellite(s)
supplied by (a) Third Party Customer(s) of ARIANESPACE with subsequent ignition
Launch Base means the ARIANE launch base in Kourou, French Guiana, including all
its facilities and equipment.
Launch Day or Day means a calendar day (established for the Launch pursuant to
this Agreement) within the Launch Slot during which the Launch Window is open.
Launch Failure means:
a)
that the Satellite is destroyed or lost during the period extending from the
instant when the Launch occurred and the instant when the Satellite is separated
from the Launch Vehicle, or if such Satellite cannot be separated from the
Launch Vehicle; or
b)
the occurrence due to a Deviation of a reduction, expressed as a percentage, of
more than the Launch Failure Factor (“LFF”) of the operational capability of the
Satellite for CUSTOMER's intended communication purposes, using reasonable
business judgment.
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Where LFF is the percentage specified in the insurance policy procured by
CUSTOMER on the Commercial Insurance Market to define a constructive total loss
providing for the payment of the full amount of insurance with application of
the determination mode of the degradation factor as provided for in the second
section of the definition of the term “Loss Quantum”.
If CUSTOMER does not procure any insurance policy on the Commercial Insurance
Market, the constructive total loss percentage prevailing on the Commercial
Insurance Market at L minus (-) THREE (3) months based on ARIANESPACE insurance
Broker written statement shall apply.
Launch Opportunity means the availability to CUSTOMER of a Satellite position
within a Launch Period or Launch Slot for a Launch on a Launch Vehicle on which
the other allocated satellite(s) have a launch mission and a satellite mission
compatible with that of CUSTOMER('s) Satellite(s) in accordance with Part 1 of
Annex 1 to this Agreement. Such availability is linked to the time required to
complete the mission analysis studies and to select the Launch Vehicle/Satellite
configuration.
Launch Period or Period means [***].
Launch Risk Guarantee (LRG) means the guarantee available to CUSTOMER under
Paragraph 4.3 of Article 4 of this Agreement if CUSTOMER exercises the Reflight
Option.
Launch Services means the services to be provided by ARIANESPACE as specified in
(i) Part 2 and Sub-paragraph 1.1 of Part 4 of Annex 1 to this Agreement and
(ii) Paragraph 4.3.
Launch Slot or Slot means a period of ONE (1) calendar month within a Launch
Period with daily Launch Window possibilities.
Launch Time means the instant, within the Launch Window, that the ignition of
the first stage engine(s) is scheduled to take place, as defined in hours,
minutes and seconds (GMT Universal Time). The initial Launch Time shall commence
immediately upon the opening of the Launch Window.
Launch Vehicle means the ARIANE 5 vehicle belonging to the ARIANE family chosen
by ARIANESPACE to perform the Launch.
Launch Mission means the mission assigned to the ARIANE Launch Vehicle as
defined in Part 1 of Annex 1 to this Agreement.
Launch Window means a time period as defined in Sub-paragraph 2.3 of Part 1 of
Annex 1 to this Agreement.
Loss Quantum means the degradation factor of the Satellite resulting from the
application of determination mode as mutually agreed in good faith by the
Parties on or prior to L minus (-) THREE (3) months based on a CUSTOMER's
written proposal;
provided, that, if CUSTOMER has taken out, either in insurance or in
reinsurance, on the Commercial Insurance Market for at least EIGHTY PER CENT
(80%) of the amount insured, one or more policy(ies) of launch insurance, the
determination mode of the loss quantum provided for in the insurance policy with
the higher cover, as delivered by CUSTOMER to ARIANESPACE on or prior to L (-)
minus THREE (3) months, shall apply. If a different determination mode is
further agreed with the Commercial Insurance Market, for that policy with higher
cover, this new determination mode shall consequently apply; it being understood
that CUSTOMER shall promptly inform ARIANESPACE, and in any event before the
Launch has occurred of any change.
Partial Failure means the occurrence due to a Deviation of a reduction of more
than a percentage defined as the Partial Failure Factor (“PFF”) but not more
than LFF of the operational capability of the Satellite for CUSTOMER's intended
communication purposes, using reasonable business judgment.
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Where PFF is TWENTY PERCENT (20%), unless CUSTOMER procures on the Commercial
Insurance Market a policy of launch insurance with consequent application of the
determination mode of the degradation factor as provided for in the definition
of the term "Loss Quantum", in which case PFF shall mean the percentage
specified in that insurance policy to define a partial loss. Said reduction of
the operational capability shall be determined by using the Loss Quantum.
Party or Parties means CUSTOMER or ARIANESPACE or both according to the context
in which the term is used.
Postlaunch Services means (i) the reports and range services as specified in
Parts 2, 4 and 5 of Annex 1 to this Agreement that are to be provided to
CUSTOMER by ARIANESPACE after the Launch, and (ii) the services provided for in
Paragraph 4.3 hereof if the Reflight Option is exercised.
Reflight means a Replacement Launch under Paragraph 4.3 of Article 4 of this
Agreement.
Reflight Option means the option available to CUSTOMER for (i) a Reflight if the
Launch Mission results in a Launch Failure, or (ii) a payment if the Launch
Mission results in a Partial Failure, as determined under Paragraph 4.3.2 of
Article 4 to this Agreement subject to the conditions specified therein.
Replacement Launch means a Launch subject to Article 13 hereof, subsequent to a
previous Launch that, for any reason whatsoever, has not accomplished the Launch
Mission or the Satellite Mission.
Satellite (referred to as Spacecraft in Annex 1 to this Agreement) means a
spacecraft supplied by CUSTOMER that is compatible with the Launch Vehicle and
the Launch Mission, and that meets the specifications set forth in Part 1 of
Satellite Mission means the mission assigned to the Satellite by CUSTOMER after
separation from the Launch Vehicle.
Services means any and all services to be provided by ARIANESPACE under this
Agreement.
Third Party means any individual or legal entity other than the Parties, Third
Party Customer(s) of ARIANESPACE and the Associates of each of the foregoing.
Third Party Customer(s) of ARIANESPACE means other customer(s) of ARIANESPACE
that use(s) ARIANESPACE's launch services for the same Launch as CUSTOMER.
U.S. Export Authorization means the Technical Assistance Agreement issued by the
United States Department of State, Directorate of Defense Trade Controls, for
purposes of permitting exchanges of technical data and related defense services
between the Satellite manufacturer and ARIANESPACE with respect to the interface
design, development and integration of the Satellite to the Launch Vehicle.
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The subject of this Agreement is the Launch of a Satellite supplied by CUSTOMER
at the Launch Base for the purpose of accomplishing the Launch Mission in
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3.1 This Agreement consists of the following documents, which are contractually
binding between the Parties:
1) Terms and Conditions
2) Launch Specifications (Part 1 of Annex 1)
3) ARIANESPACE Technical Commitments (Part 2 of Annex 1)
4) CUSTOMER's Technical Commitments (Part 3 of Annex 1)
5) Documentation and reviews (Part 4 of Annex 1)
6) General Range Support (GRS) and Optional Services (Part 5 of Annex 1)
7) ESA-ARIANESPACE Convention (Extract) (Annex 2)
3.2
In the event of any conflict or inconsistency among the provisions of the
various parts of this Agreement, including the Annexes, such conflict or
inconsistency shall be resolved by giving precedence to the Terms and
Conditions, without consideration of the Annexes, then to the Annexes without
order of preference, and then to any documents referred to and thereby
incorporated into the said Annexes. All of the Agreement documents shall be read
so as to be consistent to the extent practicable.
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4.1
ARIANESPACE shall perform the Services under this Agreement including:
4.1.1
Launch Services.
4.1.2
Associated Services ordered by CUSTOMER as set forth in this Agreement, and as
defined in Paragraph 1 (“General Range Support”) and Paragraph 2 (“Options
Ordered by the CUSTOMER”) of Part 5 of Annex 1 to this Agreement, in accordance
with the conditions as specified therein.
4.1.3
Subject to any additional orders of CUSTOMER, one or more of the services as set
forth in (i) Paragraph 3 (“Additional Options Available to the CUSTOMER”) of
Part 5 of Annex 1 to this Agreement, (ii) the latest issue of the User’s Manual
(M.U.A.) in effect on the date of the corresponding order of CUSTOMER, in
accordance with the then applicable conditions and any other services ordered by
CUSTOMER and accepted by ARIANESPACE.
4.2
Launch Services, except for Postlaunch Services, shall be deemed to be completed
by ARIANESPACE when the Launch has taken place. In the event that, for any
reason whatsoever, a Launch Abort occurs, ARIANESPACE shall postpone the Launch
in accordance with the conditions set forth in Article 11 of this Agreement.
4.3
Reflight
4.3.1
CUSTOMER shall have the right to exercise the Reflight Option by written request
received by ARIANESPACE within SIXTY (60) days following the effective date of
this Agreement.
4.3.2
In the event CUSTOMER has elected the Reflight Option and the Launch Mission
results in a:
4.3.2.1
Launch Failure, ARIANESPACE shall perform a Reflight, in accordance with the
provisions of this Agreement, provided that no further payment by CUSTOMER to
ARIANESPACE shall be due for the provision of (i) Launch Services for the Launch
of a replacement Satellite on condition that the maximum mass of such Satellite
is equal to the mass of the initial Satellite, and (ii) such Associated Services
as are retained by CUSTOMER as of the date of execution of this Agreement,
except as provided for in Paragraph 8.2 of Article 8 of this Agreement, in case
of postponement.
4.3.2.2
Partial Failure, ARIANESPACE shall pay to CUSTOMER an amount as obtained by
multiplying the Guarantee Amount by the Loss Quantum. The resulting amount will
be subject to a deductible equal to PFF of the Guarantee Amount provided for the
launching, in accordance with the following formula :
(Guarantee Amount x Loss Quantum) minus deductible.
Notwithstanding the foregoing, if the insurance policy taken out by CUSTOMER
(i) provides for a deductible higher or lower than PFF, such deductible as
provided for in the said insurance policy shall apply, or (ii) does not provide
for a deductible, no deductible shall apply.
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4.3.3
Any amount due by ARIANESPACE to CUSTOMER under Sub-paragraph 4.3.2 above shall
be paid within the FORTY-FIVE (45) day period following the date when the
Parties have agreed on the occurrence of the Launch Failure or the Partial
Failure and the corresponding Loss Quantum, provided CUSTOMER has paid all
amounts due and payable by it under this Agreement. ARIANESPACE shall pay the
CUSTOMER interest on any late or delayed payment of the foregoing sum at the
Base Rate from and including the date due to but excluding the date made. The
computation of interest for late payments shall be based on a year of 360 days.
4.3.4
The implementation of Sub-paragraph 4.3.2 above shall not imply any transfer of
title to the Satellite to ARIANESPACE. In case of Launch Failure or Partial
Failure, the rights of ARIANESPACE shall be the same of those of any entity(ies)
who cover risks related to the launch of the Satellite. Specially and not
limitatively, in circumstances where salvage can be performed, ARIANESPACE will
be entitled to a share in any salvage value remaining in any portion of the
Satellite for which a Reflight has been performed or a cash payment has been due
and paid by ARIANESPACE to CUSTOMER and the Parties will negotiate the
disposition of the Satellite if, in connection with a Launch Failure, transfer
of title has been requested.
4.3.5
In the event that, after application of Sub-paragraph 4.3.2 above due to a
Launch Failure, the Satellite is placed into commercial operation and/or is
sold, leased or otherwise transferred, ARIANESPACE shall be entitled to a share
of any resulting revenues and/or payments, as shall be negotiated and agreed
upon promptly, taking into account the specific details and circumstances of
such commercial operation, but in no case shall any shared amount exceed the
Guarantee Amount.
4.3.6
There shall not be any cover for Launch Failure or Partial Failure and
consequently the provisions of Paragraph 4.3 above shall not apply, in any of
the following cases :
4.3.6.1
If CUSTOMER does not notify in writing ARIANESPACE of any event that would
entitle CUSTOMER to any right under Sub-paragraph 4.3.2 above before the first
to occur of any of the THREE (3) following events;
(i)
the day the Satellite is put into commercial operation,
(ii)
the SIXTIETH (60th) following the date of station acquisition of the Satellite,
(iii)
the ONE HUNDRETH (100th) day at zero hour following the date of the Launch.
Notwithstanding the foregoing, an extension of the periods hereabove can be
obtained upon request from CUSTOMER if both of the following conditions occur :
(a)
the launching does not conform to the specifications of the D.C.I. and the
Satellite reached its final positioning such that it cannot be determined that a
Launch Failure or Partial Failure has occurred and;
(b)
CUSTOMER’s request for extension is received before the first of the THREE
(3) events specified above.
In no event shall such extension extend beyond the ONE HUNDRED EIGHTIETH
(180th) day following the date of the Launch.
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and/or
4.3.6.2
if the Launch Failure or the Partial Failure is caused by, or results from one
or more of the following events:
A
war, hostile or warlike action in time of peace or war, including action in
hindering, combating or defending against an actual, impending or expected
attack by (a) any government or sovereign power (de jure or de facto), or
(b) any authority maintaining or using a military, naval or air force, or (c) a
military, naval or air force, or (d) any agent of any such government, power,
authority or force;
B
any anti-satellite device, or device employing atomic or nuclear fission and/or
fusion, or device employing laser or directed energy beams;
C
insurrection, strikes, riots, civil commotion, rebellion, revolution, civil war,
usurpation or action taken by a government authority in hindering, combating or
defending against such an occurrence whether there be a declaration of war or
not;
D
confiscation by order of any government or governmental authority or agent
(whether secret or otherwise), or public authority;
E
nuclear reaction, nuclear radiation, or radioactive contamination of any nature,
whether such loss or damage be direct or indirect, except for radiation
naturally occurring in the space environment;
F
willful or intentional acts of CUSTOMER designed to cause loss or failure of the
Satellite, provided that this exclusion shall not apply to actions of any
employees of the CUSTOMER while acting outside of their authorized
responsibilities, or without the knowledge of the CUSTOMER;
G
electromagnetic or radio frequency interference, except for physical damage to
the Satellite resulting from such interference and except for interference
H
any act of one or more persons, whether or not agents of a sovereign power, for
political or terrorist purposes and whether the loss or damage resulting
therefrom is accidental or intentional; or
I
any unlawful seizure or wrongful exercise of control of the Satellite made by
any person or persons acting for political or terrorist purposes whether the
loss or damage resulting therefrom is accidental or intentional.
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5.1
CUSTOMER, subject to applicable laws and the necessary U.S. Export
Authorization, shall fulfill or cause an Associate to fulfill, the Technical
Commitments set forth in Parts 1 and 3 of Annex 1 to this Agreement including,
without limitation, delivery of the Satellite to the Launch Base within the time
limits consistent with the launch schedule set forth herein.
5.2
CUSTOMER shall promptly notify ARIANESPACE in writing of any event that at the
time is reasonably likely to cause a delay in the launch schedule.
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6.1 The Launch of the Satellite shall take place during the following Launch
Period:
[***] 2007
6.2 The Launch of the Satellite shall take place during the following Launch
Slot:
6.3
ARIANESPACE hereby represents, warrants and confirms to CUSTOMER, as of the
effective date of the Agreement, and to the best its knowledge and information,
that the Launch Vehicle and the Third Party Customer satellite will be available
and transported to the Launch Base on a schedule consistent with the timely
performance of the Launch within the first week of the initial Launch Slot
indicated in Paragraph 6.2 above.
6.4
Based on a proposal made by ARIANESPACE, by mutual agreement of the Parties, the
Launch Day within the Launch Slot shall be determined, no later than THREE
(3) months prior to the first day of the Launch Slot. Without prejudice to the
foregoing, it is the objective of the Parties to Launch the Satellite on or
before [***].
6.5
Launch Window set forth in Sub-paragraph 2.3 of Part 1 to Annex 1 to this
Agreement shall be determined no later than the Final Mission Analysis Review.
6.6
In the event that, for any reason whatsoever, the Parties fail to agree upon the
Launch Slot within the applicable Launch Period, the Launch Day, or the Launch
Window, ARIANESPACE shall determine said Launch Slot, Launch Day, or Launch
Window taking into account the available Launch Opportunity(ies), and the
requirements and respective interests of CUSTOMER and any of the Third Party
Customer(s) of ARIANESPACE.
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7.1
CUSTOMER and ARIANESPACE each designate [***] and [***], respectively, as their
program director (hereinafter “Program Director”) for purposes of coordinating
the performance of each Parties’ obligations under this Agreement.
7.2
The Program Director shall supervise and coordinate the performance of the
Services and the Technical Commitments of the respective Parties within the
Launch schedule set forth herein.
7.3
Each Program Director shall have sufficient powers to be able to settle any
technical issues that may arise during the performance of this Agreement, as
well as any day-to-day management issues.
7.4
A Party may replace its Program Director by prior written notice to the other
Party, signed by an authorized official, indicating the effective date of
designation of the new Program Director.
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ARTICLE 8 - REMUNERATION
8.1
The remuneration of ARIANESPACE for the provision of Launch Services for the
Launch of the Satellite of a mass of 6100 kg (without adaptor) is a firm and
fixed price, as follows:
8.1.1
ONE HUNDRED FIFTEEN MILLION United States Dollars (US$ 115,000,000) (the “Firm
Fixed Price”).
8.1.2
The amount mentioned in the above Sub-paragraph 8.1.1 shall be increased by the
amount obtained by multiplying the price set forth in the above Sub-paragraph
8.1.1 by [***] ([***]%), if CUSTOMER exercises the Reflight Option.
8.1.3
Notwithstanding anything to the contrary, and provided that no postponement of
the Launch Period, Launch Slot or Launch Day shall have been requested by
CUSTOMER, should ARIANESPACE not perform the Launch on or prior to [***], for
any reason whatsoever, CUSTOMER shall be entitled to a refund of the Firm Fixed
Price computed as follows: [***].
The total refund granted by ARIANESPACE to CUSTOMER pursuant to the provisions
of this Subparagraph 8.1.3 of Article 8, once determined, shall be paid by
ARIANESPACE to CUSTOMER within [***] ([***]) days from ARIANESPACE receiving the
relevant notice from CUSTOMER. ARIANESPACE shall pay the CUSTOMER interest on
any late or delayed payment of the foregoing sum at the Base Rate from and
including the date due to but excluding the date made. The computation of
8.1.4
Notwithstanding Subparagraph 8.1.3 above, no discount shall be payable by
ARIANESPACE to CUSTOMER, should ARIANESPACE not be able to meet the [***] Launch
Date for any of the following reasons:
(a)
Any damage caused by CUSTOMER and/or its Associates to the physical property of
ARIANESPACE and/or the physical property its Associates, and/or
(ii)
any bodily injury (including death) caused by CUSTOMER and/or its Associates to
ARIANESPACE and/or its Associates.
8.2
The firm fixed price, if any, for Associated Services assumes, that the Launch
will be performed by [***]. Should the Launch Period or Launch Slot assigned to
CUSTOMER under Article 11 of this Agreement extend beyond [***], the then
catalogue price for the relevant year will apply to such Associated Services
that will not have been performed by the date of request for any postponement,
and that would have to be performed again as a consequence of any Launch
postponement. The same shall apply mutatis mutandis for a Reflight.
8.3
All prices, expenses, and charges set forth in this Agreement shall be inclusive
of all taxes and other duties of any French tax authority.
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(NOT APPLICABLE)
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10.1 Payment of the remuneration under Paragraph 8.1 of Article 8 of this
Agreement shall be made in accordance with the following payment schedule :
10.1.1
DATE
Percentage of the portion of the Launch
Services price referred to in Sub-
paragraph 8.1.1 of Article 8 of this
Agreement
[***]%
10.1.2
The price of the Reflight Option shall be paid in accordance with the following
payment schedule:
DATE
Percentage of the price of the Reflight
Option referred to in Sub-paragraph
8.1.2 of Article 8 of this Agreement
10.2 Payment for Associated Services
10.2.1
Payment for Associated Services ordered by CUSTOMER under Part 5 of Annex 1 to
this Agreement, for which a firm fixed price has been established, shall be due
as of the date set forth in said Paragraph.
10.2.2
this Agreement, for which no total firm fixed price can be determined in
advance, shall be due on the date on which CUSTOMER terminates use of the
relevant Associated Services.
10.3 Terms and Conditions of Payment/ARIANESPACE's Invoices
10.3.1
Where this Agreement determines a precise payment date, payment has to be made
at such date or within THIRTY (30) days from receipt of ARIANESPACE's
corresponding invoice, whichever is later, except for the first payment provided
in Sub-paragraph 10.1.1 of Article 10 of this Agreement, for which invoice will
be presented on the date of execution of this Agreement and paid within TEN
(10) days thereof.
10.3.2
Where the Agreement does not determine a precise payment date, payment has to be
made at the date when payment becomes due or within THIRTY (30) days of receipt
of ARIANESPACE corresponding invoice, whichever is later.
10.3.3
ARIANESPACE invoices shall be drawn up in THREE (3) copies (one original and two
copies) and sent to the same address as specified herein for notices to
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CUSTOMER under Section 20.2, or to such other address as CUSTOMER may notify
ARIANESPACE in writing.
The method for calculating the amount of each invoice shall be shown clearly.
10.3.4
Payments shall be made to the account(s) designated on the relevant invoice by
telegraphic bank transfer, without charge to ARIANESPACE, with telex notice from
the issuing bank to the receiving bank. ARIANESPACE shall be responsible for
telex expenses. The notice shall clearly state the value date to be applied and
the bank through which the funds will be made available to the receiving bank or
its correspondent.
Payment shall be effective as of the date on which the amount of the ARIANESPACE
invoice is credited for value to the designated account(s).
10.3.5
CUSTOMER's payment(s) shall be in the amount(s) invoiced by ARIANESPACE, and
shall be made net, free and clear of any and all taxes, duties, or withholdings
that may be imposed in the Country of CUSTOMER and the Country from which they
are paid so that ARIANESPACE receives each such payment in its entirety as if no
such tax, duty, or withholding had been made.
10.4 Late Payment
In the event of late payment, CUSTOMER whether or not due to a bona fide
dispute, CUSTOMER shall pay ARIANESPACE interest on such late payment at the
Base Rate per annum from and including the date due to but excluding the date
made. The computation of interest for late payments shall be based on a year of
360 days. In the event that a bona fide dispute between the Parties is resolved
in favor of the CUSTOMER, any interest paid by CUSTOMER to ARIANESPACE for late
payments during the period of such bona fide dispute shall, at CUSTOMER’s
discretion, be reimbursed to CUSTOMER within THIRTY (30) days from receipt by
ARIANESPACE of CUSTOMER’s notice to that effect, or alternatively, shall be
credited to CUSTOMER’s subsequent payment due to ARIANESPACE under this
Agreement.
In the event that such late payment has not been cured by CUSTOMER within SEVEN
(7) days after receipt of a written ARIANESPACE notice to such effect,
ARIANESPACE shall be entitled to suspend any and all of its activities in
preparation for the Launch and to reschedule the Launch under Sub-paragraph
11.3.4 of Article 11 of this Agreement.
10.5 Waiver of Deferral, Withholding or Set-off
CUSTOMER irrevocably waives any right to defer, withhold, or set-off by
counterclaim or other legal or equitable claim, all or any part of any payment
under this Agreement for any reason whatsoever. All payments due under this
Agreement shall be made in their entirety and on the dates specified in this
Agreement. Notwithstanding the foregoing, CUSTOMER may set-off any refund due to
it and not paid by ARIANESPACE pursuant to Sub-paragraph 8.1.3 of ARTICLE 8
herein against any termination fee owed by CUSTOMER and payable to ARIANESPACE
as provided for in Paragraph 18.2 of this Agreement.
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11.1 Each postponement of the Launch Period, the Launch Slot, the Launch Day or
the Launch Time, for whatever reason, shall, for each particular Launch under
this Agreement, be governed solely by the terms and conditions provided in this
Article 11. The Parties hereto expressly waive, renounce, and exclude any and
all rights and remedies that may arise at law or in equity with respect to
postponements that are not stated in this Article 11 or elsewhere in this
Agreement.
11.2 Postponements requested by CUSTOMER
11.2.1
CUSTOMER shall have the right for any reason whatsoever to postpone the Launch
Period and, once determined, the Launch Slot or the Launch Day. The CUSTOMER's
written notice for postponement shall indicate the new requested (i) Launch
Period, or (ii) Launch Slot, or (ii) Launch Day, as the case may be. For the
avoidance of any doubt, CUSTOMER’s existing Launch Period, Launch Slot or Launch
Day (as applicable) shall not be relinquished until CUSTOMER has agreed to the
new Launch Period, Launch Slot or Launch Day (as applicable) pursuant to the
provisions of this Paragraph 11.2.
11.2.1.1
If the CUSTOMER's written request relates to a Launch Period or a Launch Slot
postponement, within TWO (2) weeks of receipt of such request, ARIANESPACE shall
inform CUSTOMER whether a Launch Opportunity exists within the Launch Period, or
within the Launch Slot requested, or will propose a new Launch Period or Launch
Slot. CUSTOMER shall have THIRTY (30) days following receipt of ARIANESPACE's
proposal to consent thereto in writing.
11.2.1.2
If the CUSTOMER's written request relates to a Launch Day postponement, the
choice of a new Launch Day shall be made by mutual agreement of the Parties,
taking into account the technical needs and interests of CUSTOMER and any Third
Party Customer(s) of ARIANESPACE, the time necessary for the revalidation of the
launch assembly complex consisting of the ARIANE Launch Vehicle, the Launch Base
(ELA), and the payload preparation assembly (EPCU), and meteorological
forecasts.
11.2.1.3
Any postponements by CUSTOMER of the Launch Time within the Launch Window may
only be requested during the countdown period. In the event that CUSTOMER has
limitation, those relating to any Third Party Customer(s) of ARIANESPACE, or
meteorological reasons prevent ARIANESPACE from performing the Launch in the
Launch Window opening during the Launch Day, the postponement shall be
considered to be a postponement of the Launch Day.
11.2.1.4
In the event that the aggregate duration of all postponements requested by
CUSTOMER for the Launch exceeds [***] ([***]) months, the Launch Services price
shall be renegotiated by the Parties on a fair and reasonable basis, taking into
consideration current market conditions. The Parties acknowledge and agree that
for a Launch taking place within the next [***] ([***]) month period, any
increase in the Launch Services price shall not exceed [***]% of the Firm Fixed
Price.
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11.3 Launch postponement requested by ARIANESPACE
11.3.1
ARIANESPACE shall have the right to postpone a Launch, for the following
reasons:
11.3.1.1
Postponement of Launch Period and of Launch Slot and postponement of the Launch
Day within the Launch Slot and/or Launch Time within the Launch Window.
a)
ARIANESPACE or its Associates encounter adverse technical problems that prevent
the Launch from taking place under satisfactory conditions of safety or
reliability.
b)
ARIANESPACE cannot perform the Launch as a Double Launch.
c)
In the event that the Launch does not occur on or prior to [***], and
ARIANESPACE is requested to perform replacement launch(es), or to launch
scientific satellite(s) whose mission(s) may be degraded in the event of
postponement, where such launch(es) occur after [***].
d)
ARIANESPACE postpones the launch(es) due to postponement(s) by ARIANESPACE of
satellite(s) having an earlier Launch Period or Launch Slot than CUSTOMER's
Satellite(s).
11.3.2
In the case of a postponement pursuant to Sub paragraphs 11.3.1.1(a), (c) and/or
(d), the Parties shall determine by mutual agreement a new Launch Period and/or
a new Launch Slot as near as possible to the postponed one in accordance with
and maintaining the launch rank of Customer's Satellite;
The Launch Day and the Launch Window within the new Launch Slot shall be
determined by ARIANESPACE according to the technical constraints of ARIANESPACE,
CUSTOMER and the Third Party Customer(s) of ARIANESPACE, and their respective
interests.
11.3.3
In the case of a postponement pursuant to Sub paragraph 11.3.1.1(b), the Parties
shall determine by mutual agreement a new Launch Period and/or a new Launch Slot
as near as possible to the postponed one.
interests.
11.3.4
Any postponement by ARIANESPACE of the Launch Period, Launch Slot, Launch Day,
Launch Window, or Launch Time due to CUSTOMER's non-fulfillment of its
obligations under this Agreement making the Launch impossible within the Launch
Period, Launch Slot, or during Launch Window of the Launch Day, or at the Launch
Time shall be considered to be requested by CUSTOMER in accordance with
Paragraph 11.2 above as of the date of ARIANESPACE's decision to postpone the
Launch.
11.4
Any Launch postponement requested by ARIANESPACE pursuant to Paragraph 11.3 of
this Article 11 shall only occur as a last resort and following the reasonable
commercial efforts of ARIANESPACE to avoid and mitigate such postponement as may
be necessary for the reasons set forth in Sub-paragraph 11.3.1.1 of this Article
11.
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11.5
Except as provided in Paragraphs 10.1.1 and 10.1.2, any Launch postponement
provided for in this Article 11 shall not modify the progress payment schedule
set forth in Paragraph 10.1.
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12.1
The obligations of ARIANESPACE under this Agreement are strictly limited to the
Services, and CUSTOMER acknowledges and agrees that at no time shall it have any
right of ownership of, any other right in, or title to, the property that
ARIANESPACE shall use in connection with the Launch, or shall place at
CUSTOMER’s disposal for the purpose of this Agreement, including, without
limitation, the Launch Vehicle and the Launch Base of ARIANESPACE. Said property
shall at all times be considered to be the sole property of ARIANESPACE.
12.2
ARIANESPACE acknowledges and agrees that at no time shall it have any right of
ownership, or any other right in, or title to, the property that CUSTOMER shall
use for the Launch and the interface test(s), including, without limitation, the
Satellite and all equipment, devices and software to be provided by CUSTOMER on
the Launch Base in order to prepare the Satellite for Launch. Said property
shall at all times be considered to be the sole property of CUSTOMER.
12.3
At all times during the performance by the Parties of this Agreement, each Party
shall be deemed to have full custody and possession of its own property.
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13.1
Terms
13.1.1
CUSTOMER is entitled to request a Replacement Launch from ARIANESPACE in the
event that, following the Launch, either the Launch Mission or the Satellite
Mission has not been accomplished for any reason whatsoever. Replacement Launch
Services are subject to the conditions set forth in this Article 13. Any and all
other rights and remedies of CUSTOMER are excluded whatever their nature.
13.1.2
CUSTOMER shall be entitled to have a Launch Slot for a Replacement Launch
allocated to it by ARIANESPACE within TEN (10) months following the month
ARIANESPACE has received a written request for Replacement Launch. Should
CUSTOMER request a Launch Period beyond such TEN (10) month period, ARIANESPACE
shall allocate the nearest Launch Opportunity, provided however that in no way
shall the Launch Period requested by CUSTOMER extend beyond the THIRTY SIX
(36) month period following the date of request for a Replacement Launch.
13.1.3
The written request for a Replacement Launch shall be received by ARIANESPACE no
later than the last day of the second month following the month in which the
cause of the failure of either the Launch Mission or the Satellite Mission has
been established, but in no event later than, in the case of a Satellite Mission
failure, TWENTY SEVEN (27) months following the date of Launch.
Notwithstanding the foregoing, if CUSTOMER is entitled to a Reflight such
written request shall be received by ARIANESPACE within the NINETY (90) day
period following the date when the Parties have agreed that a Launch Failure has
occurred.
The written request for a Replacement Launch shall indicate the Launch Period
requested by CUSTOMER within one of the periods specified in Sub-paragraph
13.1.2 above. It is understood that the replacement Satellite and all equipment,
devices and software to be made available by CUSTOMER on the Launch Base in
order to make the replacement Satellite ready for Launch shall be made available
to ARIANESPACE pursuant to the schedule of Part 3 of Annex 1 to this Agreement.
13.1.4
ARIANESPACE shall inform CUSTOMER, within the month following receipt of
CUSTOMER's request for a Replacement Launch, whether or not a Launch Opportunity
exists within the requested Launch Period and, in any event, shall allocate a
Launch Slot to CUSTOMER, the first day of which shall be before the expiration
of the TEN (10) calendar month period specified in Sub-paragraph 13.1.2 of
Article 13 of this Agreement if the Launch Period requested by CUSTOMER is
within that TEN (10) month period; otherwise ARIANESPACE shall allocate to
CUSTOMER the nearest existing Launch Opportunity. The date allocated shall not
begin earlier than the first day of the Launch Period requested by CUSTOMER.
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13.1.5
The replacement Satellite shall be substantially in accordance with the
interface control document (DCI) governing CUSTOMER’s Satellite.
Notwithstanding the foregoing, if CUSTOMER is entitled to a Reflight, the
replacement Satellite may differ from the DCI. In such a case the Parties agree
to adjust accordingly this Agreement, including Annex 1 thereto and ARIANESPACE
shall allocate to CUSTOMER the nearest Launch Opportunity.
13.2
General Conditions
Except for a Reflight, the remuneration for the Replacement Launch Services
shall be the then applicable price pursuant to the ARIANESPACE pricing policy
for a Launch on the date of the Replacement Launch, adjusted for the costs of
refinancing resulting from the shorter payment schedule, and including any
charges incurred by ARIANESPACE for modification of equipment associated with
the Launch Vehicle designated for the Replacement Launch.
The remuneration for Associated Services associated with the Replacement Launch
shall be the applicable price for a Launch to take place within the calendar
year of the Replacement Launch.
The payment schedule shall provide for the payment of the entire price for
Replacement Launch Services prior to said Replacement Launch.
The Replacement Launch, other than a Reflight, shall form the subject of a
separate launch services agreement substantially in the form of this Agreement.
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14.1
Allocation of Risks for damage caused by one Party and/or its Associates to the
Other Party and/or its Associates:
14.1.1
Due to the particular nature of the Services, the Parties agree that any
liability of ARIANESPACE or of CUSTOMER arising from the defective, late, or
non-performance of ARIANESPACE’s Services and CUSTOMER’s technical obligations
under this Agreement is, in all circumstances, including termination of this
Agreement or a Launch under this Agreement, strictly limited to the liability
expressly provided for in this Agreement. Except as provided in this Agreement,
the Parties hereto expressly waive, renounce, and exclude any and all rights and
remedies that may arise at law or in equity with respect to the Services.
14.1.2
Each Party shall bear any and all loss of or damage to physical property and any
bodily injury (including death) and all consequences, whether direct or
indirect, of such loss, damage or bodily injury (including death), and/or of a
Launch Mission failure and/or of a Satellite Mission failure, which it or its
Associates may sustain, directly or indirectly, arising out of or relating to
this Agreement or the performance of this Agreement. Each Party irrevocably
agrees to a no-fault, no-subrogation, inter-party waiver of liability, and
waives the right to make any claims or to initiate any proceedings whether
judicial, arbitral, or administrative on account of any such loss, damage or
bodily injury (including death) and/or Launch Mission failure and/or Satellite
Mission failure against the other Party or that other Party’s Associates arising
out of or relating to this Agreement for any reason whatsoever.
For the avoidance of doubt, the provisions above exclude, without limitation,
any liability of ARIANESPACE or its Associates for any loss or damages to
CUSTOMER or its Associates, resulting from the intentional destruction of the
Launch Vehicle and the Satellite in furtherance of launch range safety measures.
Each Party agrees to bear the financial and any other consequences of such loss,
damage or bodily injury (including death) and/or of a Launch Mission failure
and/or a Satellite Mission failure which it or its Associates may sustain,
without recourse to the other Party or the other Party’s Associates.
14.1.3
In the event that one or more Associates of a Party shall proceed against the
other Party and/or that Party's Associates as a result of such loss, damage or
Mission failure, the first Party shall indemnify, hold harmless, dispose of any
claim, and defend, when not contrary to the governing rules of procedure, the
other Party and/or its Associates, as the case may be, from any liability, cost
or expense, including attorneys' fees, on account of such loss, damage or bodily
injury (including death) and/or Launch Mission failure and/or Satellite Mission
failure, and shall pay all costs and expenses and satisfy all judgments and
awards which may imposed on or rendered against that other Party and or its
Associates.
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14.2
Loss or Damage or Bodily Injury Caused or Sustained by any Third Party
Customer(s) of ARIANESPACE or its (their) Associates
14.2.1
indirect, of such loss, damage or bodily injury (including death) and/or Launch
Mission failure and/or Satellite Mission failure, which it or its Associates may
sustain, that is caused, in any way, by (a) Third Party Customer(s) of
ARIANESPACE or its (their) Associates, directly or indirectly, arising out of or
relating to the performance of this Agreement and/or the launch services
agreement signed by ARIANESPACE with such Third Party Customer(s) of
ARIANESPACE.
14.2.2
CUSTOMER hereby irrevocably agrees to a no-fault, no-subrogation, inter-party
waiver of liability and waives the right to make any claims or to initiate any
proceedings whether judicial, arbitral, administrative or otherwise on account
of any such loss, damage or bodily injury (including death) and/or Launch
Mission failure and/or Satellite Mission failure against Third Party Customer(s)
of ARIANESPACE, and/or ARIANESPACE and/or their respective Associates for any
reason whatsoever.
CUSTOMER agrees to bear the financial and any other consequences of such loss,
damage or bodily injury (including death) and/or Launch Mission failure and/or
Satellite Mission failure caused in any way by any Third Party Customer(s) of
ARIANESPACE or its (their) Associates without recourse against the Third Party
Customer(s) of ARIANESPACE and/or ARIANESPACE and/or their respective
Associates.
In the event that one or more of CUSTOMER’s Associate(s) proceed against the
Third Party Customer(s) of ARIANESPACE and/or ARIANESPACE and/or their
respective Associates as a result of any loss, damage or bodily injury
(including death) and/or Launch Mission failure and/or Satellite Mission failure
caused in any way to it by such Third Party Customer(s) of ARIANESPACE or its
(their) Associates, CUSTOMER shall indemnify, hold harmless, dispose of any
claim and defend, when not contrary to the governing rules of procedure, such
Third Party Customer(s) of ARIANESPACE, and/or ARIANESPACE and/or their
respective Associates from any liability, cost or expense, including attorneys'
fees, on account of such loss, damage or bodily injury (including death) and/or
Launch Mission failure and/or Satellite Mission failure, and shall pay all costs
and expenses and satisfy all judgments and awards which may be imposed on or
rendered against the Third Party Customer(s) of ARIANESPACE and/or ARIANESPACE,
and/or their respective Associates.
14.2.3
In the event that any Third Party Customer(s) of ARIANESPACE and/or its (their)
Associates proceed against CUSTOMER and/or its Associates as a result of any
loss, damage or bodily injury (including death) and/or launch mission failure
and/or satellite mission failure caused in any way by CUSTOMER and/or its
(their) Associates, directly or indirectly, arising out of or relating to the
performance of this Agreement and/or the agreement signed by ARIANESPACE with
such Third Party Customer(s) of ARIANESPACE, ARIANESPACE shall indemnify, hold
harmless, dispose of any claim and defend, when not contrary to the governing
rules of procedure, CUSTOMER and/or its Associates from any liability, cost or
expense, including attorney's fees, on account of such loss, damage or bodily
injury (including death), and/or Launch Mission failure and/or Satellite Mission
failure, and shall pay all costs and expenses and
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satisfy all judgments and awards which may be imposed or rendered against
CUSTOMER and/or its Associates.
14.3
Indemnification
Each Party shall take all necessary and reasonable steps to foreclose claims for
loss, damage or bodily injury (including death) by any participant involved in
Launch activities. Each Party shall require its Associate(s) to agree to a
no-fault, no-subrogation, inter-party waiver of liability and indemnity for
loss, damage or bodily injury (including death) its Associates sustain identical
to the Parties' respective undertakings under this Article 14. Furthermore,
ARIANESPACE shall require all Third Party Customer(s) of ARIANESPACE entering
into launch services agreements with ARIANESPACE to agree to the inter-party
waiver and indemnities set forth in this Article 14.
14.4
Liability for Damages Suffered by Third Parties
14.4.1
Each Party shall be solely and entirely liable for all loss, damage or bodily
injury (including death) sustained, whether directly or indirectly, by any Third
Party, which is caused by such Party or its Associates arising out of or
relating to the performance by such Party of this Agreement.
14.4.2
In the event of any proceeding, whether judicial, arbitral, administrative or
otherwise, by a Third Party against one of the Parties or its Associates on
account of any loss, damage or bodily injury (including death), caused by the
other Party, its physical property or its Associates or its (their) physical
property, whether directly or indirectly the latter Party shall indemnify and
hold harmless the former Party and/or the former Party's Associates, as the case
may be, and shall advance any funds necessary to defend their interests.
14.5
Infringement of Industrial Property Rights of Third Parties
14.5.1
ARIANESPACE shall indemnify and hold CUSTOMER harmless with respect to any cost,
and expense resulting from an infringement or claim of infringement of patent
rights or any other industrial or intellectual property rights of any third
party which may arise from CUSTOMER’s use of ARIANESPACE's Services, including,
without limitation, the use of any and all products, processes, articles of
manufacture, supporting equipment, facilities, and services by ARIANESPACE in
connection with said Services; provided however , that this indemnification
shall not apply to an infringement of rights as set forth above that have been
mainly caused by an infringement of a right of a third party for which CUSTOMER
is liable pursuant to Sub-paragraph 14.5.2 of Article 14 of this Agreement.
14.5.2
CUSTOMER shall indemnify and hold ARIANESPACE harmless with respect to any cost,
and expense resulting from an infringement or claim of infringement of the
patent rights or any other industrial or intellectual property rights of any
third party arising out of or relating to CUSTOMER with respect to the design or
manufacture of the Satellite, or ARIANESPACE’s compliance with specifications
furnished by CUSTOMER with respect to the Launch Mission and the Satellite
Mission.
14.5.3
The rights to indemnification provided hereunder shall be subject to the
following conditions :
14.5.3.1
The Party seeking indemnification shall promptly advise the other Party of the
filing of any suit, or of any written or oral claim against it, alleging
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an infringement of any third party's rights, which it may receive relating to
this Agreement, and upon the receipt thereof, shall provide the Party required
to indemnify, at such Party’s request and expense, with copies of all relevant
documentation
14.5.3.2
The Party seeking indemnification shall not make any admission, nor shall it
reach a compromise or settlement, without the prior written approval of the
other Party, which approval shall not be unreasonably withheld or delayed.
14.5.3.3
The Party required to indemnify, defend and hold the other harmless shall assist
in and shall have the right to assume, when not contrary to the governing rules
of procedure, the defense of any claim or suit or settlement thereof, and shall
pay all reasonable litigation and administrative costs and expenses, including
legal counsel fees and expenses, incurred in connection with the defense of any
such suit, shall satisfy any judgments rendered by a court of competent
jurisdiction in such suits, and shall make all settlement payments.
14.5.3.4.
The Party seeking indemnification may participate in any defense at its own
expense, using counsel reasonably acceptable to the Party required to indemnify,
provided that there is no conflict of interest and that such participation does
not otherwise adversely affect the conduct of the proceedings.
14.5.4
In the event that ARIANESPACE, with respect to the Launch, and CUSTOMER, with
respect to the Satellite, shall be the subject of the same court action or the
same proceedings based on alleged infringements of patent rights or any other
industrial or intellectual property rights of a third party pursuant to both
Sub-paragraphs 14.5.1. and 14.5.2. hereof, ARIANESPACE and CUSTOMER shall
jointly assume the defense and shall bear all damages, costs and expenses pro
rata according to their respective liability. In the event of any problems in
the implementing the pro rata allocation of the amounts referred to in the
immediately preceding sentence, the Parties shall undertake in good faith to
resolve such problems.
14.5.5
Neither Party’s execution or performance of this Agreement grants any rights to
or under any of either Party’s respective patents, proprietary information,
and/or data, to the other Party or to any third party, unless such grant is
expressly recited in a separate written document duly executed by or on behalf
of the granting Party.
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ARTICLE 15 - INSURANCE
15.1
ARIANESPACE shall, for any particular Launch under this Agreement, take out an
insurance policy at no cost to CUSTOMER, to protect itself and CUSTOMER against
liability for property loss or damage and bodily injury that Third Parties may
sustain and that is caused by the Launch Vehicle, and/or the Satellite, and/or
the satellite of any Third Party Customer(s) of ARIANESPACE, and/or their
components or any part thereof. Such insurance policy shall name as additional
insureds :
1)
The Government of France.
2)
The Centre National d’Etudes Spatiales “C.N.E.S.” and any launching state as
such term is defined in the Convention on International Liability for Damage
Caused by Space Objects of 1972.
3)
The auxiliaries of any kind, whom ARIANESPACE and/or the C.N.E.S. would call for
in view of the preparation and the execution of the launching operations.
4)
The European Space Agency “E.S.A.” but only in its capacity as owner of certain
facility and/or outfits located at the Centre Spatial Guyanais in Kourou and
made available to ARIANESPACE and/or to the C.N.E.S. for the purpose of the
preparation and the execution of the launches.
5)
The firms, who have participated in the design and/or in the execution and/or
who have provided the components of the Launch Vehicle, of its support equipment
including propellants and other products either liquid or gaseous necessary for
the functioning of the said Launch Vehicle, their contractors, sub-contractors
and suppliers.
6)
CUSTOMER, its contractors and subcontractors and each of their respective
officers, directors, legal representatives, managing director, employees, agents
and interim staff, and Third Party Customer(s) of ARIANESPACE on whose behalf
ARIANESPACE executes the launch services as well as their co-contractors and
sub-contractors.
7)
Provided they act within the scope of their duties, the officers and directors,
legal representatives, managing director, employees, agents and interim staff
employed by ARIANESPACE or by any of additional insured mentioned in the
preceding sub-paragraphs from 1 to 6 (included)
15.2
The insurance referred to in Paragraph 15.1 shall come into effect as of the day
of the Launch concerned, and shall be maintained for a period of the lesser of
TWELVE (12) months or so long as all or any part of the Launch Vehicle, and/or
the Satellite, and/or the satellite of any Third Party Customer(s) of
ARIANESPACE, and/or their components remain in orbit.
15.3
The insurance policy shall be in the amount of SIXTY MILLION NINE HUNDRED AND
EIGHTY THOUSAND EUROS (€ 60 980 000). ARIANESPACE shall settle all liabilities,
and shall indemnify and hold CUSTOMER and its contractors and subcontractors and
each of their respective officers, directors, legal representatives, managing
director, employees, agents and interim staff, harmless for property damage and
bodily injury arising from the Services when caused to Third Parties by the
Launch Vehicle, and/or the Satellite, and/or the satellite of any Third Party
Customer(s) of ARIANESPACE, and/or their components or any part thereof
including during the period provided for in Paragraph 15.2 above for any amount
in excess of the insured limits of said insurance policy. Upon expiration of the
insurance in accordance with Paragraph 15.2, CUSTOMER shall be responsible for
all liabilities for property damage and bodily injury
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caused to third parties by the Satellite or any part thereof.OWNERSHIP OF
DOCUMENTS AND WRITTEN INFORMATION CONFIDENTIALITY/PUBLIC STATEMENTS
16.1
Title to all documents, data, and written information furnished to CUSTOMER by
ARIANESPACE or its Associates during the performance of this Agreement shall
remain exclusively with ARIANESPACE.
16.2
Title to all documents, data, and written information furnished to ARIANESPACE
by CUSTOMER or its Associates during the performance of this Agreement shall
remain exclusively with CUSTOMER or with said Associates as to their respective
documents, data, and written information.
16.3
Each Party shall use the documents, data, and written information supplied to it
by the other Party or the other Party’s Associates solely for the performance of
this Agreement and any activities directly related thereto.
16.4
To the extent necessary for the performance of this Agreement, each Party shall
be entitled to divulge to its own Associates the documents, data, and written
information received from the other Party or from the other Party’s Associates
in connection herewith, provided that such receiving person shall have first
agreed to be bound by the nondisclosure and use restrictions of this Agreement.
16.5
Subject to the provisions of Paragraph 16.4, neither Party shall divulge any
documents, data, or written information that it receives from the other Party or
the other Party’s Associates, but shall protect all such documents and written
information that are marked with an appropriate and valid proprietary or
confidentiality legend from unauthorized disclosure except as provided herein,
in the same manner as the receiving Party protects its own confidential
information; provided, however, that each Party shall have the right to use and
duplicate such documents, data, and written information for any Party purpose
subject to the nondisclosure requirements and use restrictions provided herein.
If the information disclosed by one Party to the other Party or by or to their
respective Associates is deemed confidential by the disclosing Party or
Associate and is verbal, not written, such verbal confidential information shall
be identified prior to disclosure as confidential and, after acceptance by and
disclosure to the receiving Party, shall be reduced to writing promptly, labeled
confidential, but in no event later than TWENTY (20) days thereafter, and
delivered to the receiving Party in accordance with this Paragraph.
16.6
The obligation of the Parties to maintain the confidentiality of documents,
data, and written information shall not apply to documents, data, and written
information that :
-
are not properly marked as confidential;
-
are in the public domain;
-
shall come into public use, by publication or otherwise, and due to no fault of
the receiving Party;
-
the receiving Party can demonstrate were legally in its possession at the time
of receipt;
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-
are rightfully acquired by the receiving Party from third parties;
-
are commonly disclosed by ARIANESPACE or its Associates;
-
are inherently disclosed in any product or provision of any service marketed by
ARIANESPACE or its Associates;
-
are independently developed by the receiving Party;
-
are approved for release by written authorization of the disclosing Party; or
-
are required, but only to the extent necessary, to be disclosed pursuant to
governmental or judicial order, in which event the Party concerned shall notify
the other Party of any such requirement and the information required to be
disclosed prior to such disclosure.
16.7
The provisions of this Article 16 shall survive the completion of performance of
Services under this Agreement and shall remain in full force and effect until
said documents, data, and written information become part of the public domain;
provided, however that each Party shall be entitled to destroy documents, data,
and written information received from the other Party, or to return such
documents, data, or written information to the other Party, at any time after
Launch (or after Reflight, if any).
16.8
This Agreement and each part hereof shall be considered to be confidential by
both Parties. Any disclosure of the same by one Party shall require the prior
written approval of the other Party, which approval shall not be unreasonably
withheld or delayed.
Except for publication of the launch manifest, either Party shall obtain the
prior written approval of the other Party only through such Party’s authorized
representative concerning the content and timing of news releases, articles,
brochures, advertisements, speeches, and other information releases concerning
the work performed or to be performed hereunder by ARIANESPACE and its
Associates. Each Party agrees to give the other Party reasonable advance notice
for review of any material submitted to the other Party for approval under this
Paragraph.
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ARTICLE 16 - PERMITS AND AUTHORIZATIONS - GROUND STATIONS
17.1
ARIANESPACE shall be obligated to obtain all required licenses, permits,
authorizations, or notices of non-opposition from all national or international,
public or private authorities having jurisdiction over the Launch Vehicle and
Launch Mission.
17.2
CUSTOMER shall also be obligated to obtain, or cause an Associate to obtain, all
required licenses, government permits and authorizations, including the
necessary U.S. Export Authorization, for delivery of the Satellite and all
equipment, devices and software to be provided by CUSTOMER on the Launch Base in
order to prepare the Satellite for Launch, from its country of origin to the
Launch Base, and, the use of the Satellite’s ground stations.
17.3
ARIANESPACE agrees to assist and support CUSTOMER and its Associates, at no
expense, with any and all administrative matters related to the importation into
French Guiana of the Satellite and all equipment, devices and software to be
provided by CUSTOMER on the Launch Base in order to prepare the Satellite for
Launch, and their storage and possible return, as well as to the entry, stay,
and departure of CUSTOMER and its Associates.
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ARTICLE 17 - TERMINATION BY CUSTOMER
18.1
CUSTOMER shall be entitled to terminate any particular Launch under this
Agreement at any time prior to the Launch concerned. CUSTOMER’s right is not
subject to any condition, and shall cover termination situations for reasons of
convenience as well as those of delay or impossibility of performance in which
one of the Parties may find themselves. Notice of termination shall be given by
registered letter with acknowledgment of receipt, and termination shall
immediately upon receipt of such letter by ARIANESPACE.
18.2
In case of termination by CUSTOMER in accordance with Paragraph 18.1,
ARIANESPACE shall be entitled for the Launch terminated to the following
termination fees:
18.2.1
Basic termination fees depending of the date of termination as follows:
Effective date of termination
Percentage of P
Between [***] and [***]
After [***] (provided that C occurs before [***])
If C occurs on or after [***]
where
P
means (i) the Launch Services price of the Launch terminated other than a
Reflight, and (ii) the Guarantee Amount for a Reflight,
C
means the initial L of the Launch concerned if no postponement has been
requested by ARIANESPACE or otherwise the date obtained by adding to the first L
of the Launch concerned the aggregate duration of Launch Period or Launch Slot
postponement(s) requested by ARIANESPACE for such Launch pursuant to
Sub-paragraph 11.3.1.1 of Article 11 of this Agreement.
18.2.2
Plus (i) any other amount(s) paid or due including, without limitation,
postponement fees or late payment interest under the Agreement at the effective
date of termination, and (ii) the price of those Associated Services provided,
at CUSTOMER’s cost, which have actually been performed as of the date of
termination.
18.2.3
Termination fees are due by CUSTOMER to ARIANESPACE as of the effective date of
termination and payable within THIRTY (30) days of receipt by CUSTOMER of the
corresponding invoice from ARIANESPACE. Any amounts paid by CUSTOMER for the
Launch concerned in excess of the above termination fees shall be refunded
promptly by ARIANESPACE to CUSTOMER. For the purpose of this Sub-paragraph
18.2.3, in the case of a Reflight, the Guarantee Amount shall be deemed to have
been a payment by CUSTOMER.
18.3 In the event that:
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(i)
Any launch services performed by ARIANESPACE on an ARIANE 5 vehicle following
the execution of this Agreement result in a launch failure or significant launch
anomaly, for any reason whatsoever; or
(ii)
If ARIANESPACE becomes aware or should reasonably be aware of a delay or
anticipated delay, for any reason whatsoever (including, for example, a delay in
the delivery of the Launch Vehicle or the Third Party Customer satellite to the
Launch Base), that will or could be reasonably expected to delay CUSTOMER’s
Launch Day beyond [***],
then CUSTOMER shall be entitled to terminate the Launch concerned at any
time upon notice to ARIANESPACE. In the event that subsequent to the launch
failure, launch anomaly or expected delay of the Launch Day, CUSTOMER agrees to
a new Launch Day following [***] (any such new rescheduled Launch Day, the
“Rescheduled Launch Day”), such notice of termination must be delivered by
CUSTOMER to ARIANESPACE no later than THIRTY-SIX (36) days prior to the
Rescheduled Launch Day.
18.4
In addition to and not in derogation of CUSTOMER’s rights set forth in Paragraph
18.3 of this ARTICLE 18, in the event that the aggregate of all postponements
requested by ARIANESPACE under Sub-paragraph 11.3.1.1 of Article 11 of this
Agreement should, for any reason whatsoever, result in ARIANESPACE delaying a
CUSTOMER's Launch beyond [***], or should ARIANESPACE not be reasonably able to
perform the Launch on or before [***], then CUSTOMER shall be entitled to
terminate the Launch concerned at any time upon notice to ARIANESPACE.In the
event CUSTOMER agrees to a Rescheduled Launch Day following [***], such notice
of termination must be delivered by CUSTOMER to ARIANESPACE no later than
THIRTY-SIX (36) days prior to the Rescheduled Launch Day.
In the event that any additional postponements requested by ARIANESPACE under
Sub-paragraph 11.3.1.1 of Article 11 of this Agreement should, for any reason
whatsoever, result in ARIANESPACE delaying a CUSTOMER's Launch beyond the
applicable Rescheduled Launch Day, or should ARIANESPACE not be reasonably able
to perform the Launch on or before the applicable Rescheduled Launch Day,
CUSTOMER shall be entitled to terminate the Launch concerned at any time upon
notice to ARIANESPACE. In the event CUSTOMER agrees to a new Rescheduled Launch
Day, such notice of termination must be delivered by CUSTOMER to ARIANESPACE no
later than THIRTY-SIX (36) days prior to the applicable Rescheduled Launch Day.
18.5
In the event that CUSTOMER does not terminate this Agreement in accordance with
the provisions of Paragraphs 18.3, 18.4, or 18.5 of this ARTICLE 18 and CUSTOMER
shall have agreed to a new Launch Period, Launch Slot or Launch Day where L is
later than [***], then CUSTOMER shall be entitled to terminate the Launch
concerned in the event of further delays requested by ARIANESPACE in accordance
with Sub-paragraph 11.3.1.1 of Article 11 of this Agreement, or should
ARIANESPACE not be reasonably able to perform the Launch on the L designated
under this Paragraph 18.5.
18.6
CUSTOMER may terminate this Agreement at any time upon notice to ARIANESPACE
following the occurrence of one or more of the following events or conditions:
ARIANESPACE: (i) files a voluntary petition of bankruptcy; (ii) makes a general
assignment, arrangement or composition with or for the benefit of creditors;
(iii) suffers or permits the appointment of a receiver for its business assets;
(iv) becomes subject to involuntary proceedings under any bankruptcy or
insolvency law (which proceedings remain undismissed for NINETY (90) days);
(v) is liquidated or is delinquent on any material payment required pursuant to
this Agreement for greater
Commercial in Confidence
Page 39
than THIRTY (30) days after written notice from CUSTOMER, except if ARIANESPACE
is in good faith disputing the delinquency of the payment and the matter is
referred to arbitration in accordance with the terms of Article 22.
18.7
Within THIRTY (30) days following receipt of any notice under Sub-paragraphs
18.3, 18.4, 18.5 and 18.6, ARIANESPACE shall refund to CUSTOMER all payments
made by CUSTOMER for said Launch and CUSTOMER shall be liable only for the
payment of Associated Services performed, at CUSTOMER's cost, for the Launch
terminated prior to the date of termination as invoiced by ARIANESPACE via
submission of a certified accounting to CUSTOMER. For the purpose of
Sub-paragraphs 18.3, 18.4, 18.5 and 18.6, in the case of a Reflight, the
Guarantee Amount shall be deemed to have been a payment by CUSTOMER.
However, any postponements resulting from: (i) any damage caused by CUSTOMER
and/or its Associates to the physical property of ARIANESPACE and/or the
physical property of its Associates; and/or (ii) any bodily injury (including
death) caused by CUSTOMER and/or its Associates to ARIANESPACE and/or its
Associates shall result in extension of the [***] date or the [***] date, as the
case may be, set forth in Paragraphs 18.4 and 18.5, respectively, on day-by-day
basis commensurate with the duration of any postponements resulting from the
aforementioned actions of CUSTOMER and/or its Associates.
18.8
If at any time following the effective date of this Agreement, ARIANESPACE
becomes aware (including due to a notice or inquiry from CUSTOMER), to the best
of its knowledge, of any potential event or circumstance that could result in a
delay to the then-scheduled Launch Period, Launch Slot or Launch Day, then
ARIANESPACE shall within FIVE (5) days of becoming aware of such event or
circumstance, inform CUSTOMER in accordance with Paragraph 20.2 of this
Agreement, as to the potential or actual impact of such event or circumstance to
the then-scheduled Launch Period, Launch Slot or Launch Day (as applicable).
18.9
For any payments due to CUSTOMER pursuant to the terms of this Article 18,
ARIANESPACE shall pay interest on any late or delayed payment of the applicable
sum at the Base Rate from and including the date due to but excluding the date
360 days. Any refund required under this Article 18 shall be in United States
Dollars, paid by wire transfer of immediately available funds to an account
designated by CUSTOMER.
Commercial in Confidence
Page 40
ARTICLE 18 - TERMINATION BY ARIANESPACE
19.1
In the event that CUSTOMER fails to comply with its payment obligations pursuant
to the payment schedule and other payment dates set forth in this Agreement for
a Launch under this Agreement, and does not pay within THIRTY (30) days after
the date of receipt of a written notice to that effect ARIANESPACE shall be
entitled to terminate the Launch concerned by registered letter with
acknowledgment of receipt.
19.2
In the event of termination by ARIANESPACE pursuant to the provisions of this
Article 19, the provisions of Paragraph 18.2 of Article 18 of this Agreement
shall apply.
Commercial in Confidence
Page 41
ARTICLE 19 - MISCELLANEOUS
20.1 Working language
All communications between the Parties and between CUSTOMER and its
Associates on the Launch Base, and between ARIANESPACE and its Associates on the
Launch Base with CUSTOMER's personnel and that of its Associates, shall be made
in English.
20.2 Notices
Unless expressly provided otherwise under this Agreement, all communications
and notices to be given by one Party to the other in connection with this
Agreement shall be in writing and in the language of this Agreement and shall be
sent by registered mail or facsimile in a format acknowledging the receipt of
such communication or notice, to the following addresses (or to such address as
a Party may designate by written notice to the other Party) :
ARIANESPACE CUSTOMER
Immeuble Ariane
Boulevard de l’Europe, B.P. 177
91006 EVRY-COURCOURONNES Cedex
FRANCE
Hughes Networks Systems
11717 Exploration Lane
Germantown, MD 20876
USA
Attention : Directeur Commercial
Telephone : +33 1 6087 6232
Fax : +33 1 6087 6270
Attention : [***]
Telephone : +[***]
Fax : +[***]
with copy to:
General Counsel
Fax: +1 301 428 2818
For the avoidance of doubt, ordinary course communications under this
Agreement may occur by electronic mail, however formal notices shall be
delivered only by registered mail or facsimile as provided above.
20.3 Waiver
Waiver on the part of either ARIANESPACE or CUSTOMER of any term, provision,
or condition of this Agreement shall only be valid if made in writing and
accepted by the other Party. Said acceptance shall not obligate the Party in
question to waive its rights in connection with any other previous or subsequent
breaches of this Agreement.
20.4 Headings
The headings and sub-headings used in this Agreement are provided solely
for convenience of reference, and shall not prevail over the content of the
Articles of this Agreement.
20.5 Assignment
No Party shall be entitled to assign its rights and obligations under this
Agreement, in whole or in part, without the prior written consent of the other
Party, whose consent shall not be unreasonably withheld or delayed.
Commercial in Confidence
Page 42
Notwithstanding the foregoing, CUSTOMER shall be entitled to assign in whole and
not in part, its rights, title, interest and to delegate all of its obligations
under this Agreement to an Affiliate, as long as CUSTOMER can demonstrate to the
reasonable satisfaction of ARIANESPACE that such Affiliate is capable of
performing CUSTOMER’s obligations under the Agreement as assigned to it,
whereupon the assigning CUSTOMER shall be relieved of liability hereunder.
20.6
Entire Agreement and Modifications
This Agreement constitutes the entire understanding between the Parties, and
supersedes all prior and contemporaneous discussions between the Parties with
respect to the subject matter of this Agreement. Neither Party shall be bound by
the conditions, warranties, definitions, statements, or documents previous to
the execution of this Agreement, unless this Agreement makes express reference
thereto. Any actions subsequent to the execution of this Agreement undertaken
pursuant to an agreement shall be in writing and signed by duly authorized
representatives of each of the Parties, which agreement shall expressly state
that it is an amendment to this Agreement.
20.7
Registration of CUSTOMER’s Satellite
CUSTOMER shall be responsible to ensure that the Satellite is properly
registered by a state of registry in accordance with the Convention on
Registration of Objects Launched into Outer Space of 1974 either (i) directly,
if CUSTOMER is a state or the state designated by an international
intergovernmental organization for the purposes of registration, or (ii) if
CUSTOMER is not a state, through a state having jurisdiction and control over
CUSTOMER.
Commercial in Confidence
Page 43
ARTICLE 20 - APPLICABLE LAW
This Agreement shall be governed by and construed in accordance with French
laws, without giving effect to its conflict of law rules. The provisions of the
United Nations Convention for the International Sale of Goods shall not be
Commercial in Confidence
Page 44
ARTICLE 21 - ARBITRATION
In the event of any dispute arising out of or relating to this Agreement, the
Parties shall use their best efforts to reach an amicable settlement. If an
amicable settlement cannot be achieved, the dispute shall be referred to the
President of ARIANESPACE and of CUSTOMER, who will use their best efforts to
reach a settlement. Should an amicable settlement fail, the dispute shall be
finally settled under the rules of Conciliation and Arbitration of the
International Chamber of Commerce (“I.C.C.”) in New York, New York by THREE
(3) arbitrators appointed in accordance with the then existing rules of the
I.C.C. The arbitration shall be conducted in the English language. The award of
the arbitrators shall be final, conclusive and binding, and the execution
thereof may be entered in any court having jurisdiction.
Commercial in Confidence
Page 45
ARTICLE 22 - EFFECTIVE DATE
This Agreement shall take effect upon signature by the TWO Parties.
Executed in Paris,
On February 28, 2007
In two (2) originals
ARIANESPACE
CUSTOMER
Name: Jean-Yves Le Gall
Name: Bob Buschman
Title: Vice President
Date: February 28, 2007
Signature /s/ Jean-Yves Le Gall
Signature /s/ Bob D. Buschman
Commercial in Confidence
P A R T II
Commercial in Confidence
Page 1
ANNEX 2
E.S.A./ARIANESPACE Convention (Extract)
Certain European Governments, members of the European Space Agency, (hereinafter
referred to as “the Participants”) have committed themselves to using the Ariane
Launcher, developed within the framework of the European Space Agency
programmes. Arianespace must provide the European Space Agency and the
Participants, as a priority, with the services and launch slots necessary for
their programmes. Arianespace must also make sure that in the event of a shift
in the launch slots caused by the launcher system and/or any of the technical
equipment which has to be used for the launch, the payload concerned of the
Agency or Participant retains its position in the launch schedule. In addition,
in the event of the failure of an Agency or Participant mission, the Agency or
Participant may ask Arianespace to provide them, for a new launch, with the
first or failing that the second launch slot compatible with the availability of
the replacement payload if the failure was due to the launch system and/or any
of the technical equipment used for the launch, and the first compatible slot or
failing that the first slot scheduled at the latest 10 months after the written
relaunch request if the failure was due to the payload itself. Finally,
Arianespace has committed itself to the Agency and to the Participants to pay
particular attention to the specific requirements imposed by scientific
missions.
Commercial in Confidence
LOGO [g34001img001.jpg]
SPACEWAY-3
ARIANE 5
STATEMENT OF WORK
ANNEX 1
(Technical)
FEBRUARY 2007
Sales and Marketing Directorate - February 2007
Table of contents
Part 1
I
LAUNCH SPECIFICATION
I
1. General
1
2. Principal characteristics of the Launch
1
2.1 The Mission
1
2.2 Period, Slot, Day of the Launch
1
2.3 Launch Window
1
3. Main Interfaces
2
3.1 Mechanical Interfaces
2
3.2 Electrical and RF Interfaces
2
4. Environmental Conditions
3
5. Modification to the applicable documents
3 Part 2 II ARIANESPACE TECHNICAL COMMITMENTS II
1. Launch Service Management
1
2. Launch Vehicle hardware and software Supply
1
3. Systems Engineering
2
4. Operations
3
Part 3
III
CUSTOMER TECHNICAL COMMITMENTS
III
1. General
1
2. Hardware Supply
1
3. Schedule Obligations
1
4. Spacecraft Propellants and Hazardous Products
2
Part 4
IV
DOCUMENTATION AND REVIEWS
1
1. Documentation
2
2. Meetings
5
Part 5
V
V
1. General Range Support
1
1.1 Transport Services
1
1.2 Payload Preparation Facilities
2
1.3 Communication Links
4
1.4 Analyses
4
1.5 Operations
5
1.6 Fluid Deliveries
5
1.7 Additional Services
5
1.8 Miscellaneous
6
2. Options Price Catalogue
6
3. Options ordered by the Customer
10
- ARIANESPACE PROPRIETARY - i
Applicable documents
Applicable documents
The following documents form a part of this Statement of Work and are
applicable. In the event of a conflict with any of the documents listed, this
Statement of Work shall take precedence.
•
Ariane 5 User’s Manual (MUA 5), Issue 4, Revision 0 (November 2004)
•
CSG Safety Regulations, CSG-RS-22A-CN Issue 5 Revision 6 (November 2006)
•
General specification for payload dynamic models, A5-SG-0-01 Issue 4 (March
2001)
•
Format for Spacecraft Environmental Test Prediction and Test Report -
Documentation for Sine Test Support, LS-SG-1000000-X-001-ARIANESPACE Issue 0,
Revision 0 (July 2006)
•
Technical specification for the payload thermal model, A4-SG-1-26 Issue [3]
(October 1992)
•
BS-702/Ariane5 Compatibility Agreements, Boeing Ref. #TL-55-OC/00/RP/e026t Issue
2.1 (March 2001)
ARIANESPACE reserves the right to modify these documents. Copies of any revised
pages shall be forwarded to the CUSTOMER as soon as they have been approved for
implementation by the ARIANE Modification Review Board. In any case,
modification(s) to these documents, which are not part of this annex 1, and
which may affect the compatibility of the Spacecraft with the Launch System,
and/or impact the mission, will not be applicable without negotiation and prior
agreement between the Parties.
Reference documents
A reference document is part of the necessary data base used by the Client and
ARIANESPACE in the course of fulfilling the Launch Service Agreement. This list
of reference documents will be completed throughout the project.
•
EPCU Manual, Revision 8.0 (October 2002)
- ARIANESPACE PROPRIETARY - ii
Part 1
LAUNCH SPECIFICATION
February 2007
- ARIANESPACE PROPRIETARY - I
Part 1 – SPACEWAY-3
1. General
The standard characteristics of the Launch Vehicle, Launch Range, Launch
Operations, and of the Mission are described in the latest issue of the Ariane 5
User's Manual, "MUA 5".
The spacecraft platform is based on a Boeing 702 bus.
2.1 The Mission
ARIANE 5/ECA Type of Mission : Shared Type of
Orbit : Standard GTO Altitude of
Perigee : [***] True altitude @ 1st
Apogee : [***] Inclination : [***]
Argument of Perigee : [***] Separated
Mass :
As per Article 8 of the
Agreement
Mass @ Lift-Off : Idem Separated Mass S/C
Separation Conditions :
Optimised for the Mission
See MUA5 §2.9
If there is performance available after the pairing of the satellite, the
mission will be optimized.
The Period, Slot and Day of Launch are defined according to the provisions of
Article 6 of the Terms and Conditions of the Agreement.
2.3 Launch Window
The Spacecraft Launch Window shall contain, at least, the ARIANE 5 standard
window as specified in the following Table 1. The Launch must be possible any
day of the Period or of the Slot.
The final Launch Window, in terms of lift-off time, will be calculated by the
CUSTOMER and the Co-passenger, if any, respectively, based on orbit parameters
at separation taken from the Final Mission Analysis document.
The resulting combined Launch Window will then be computed by ARIANESPACE.
- ARIANESPACE PROPRIETARY - I-1
ARIANESPACE and the CUSTOMER will mutually agree on a combined Launch Window
that will satisfy the Customer, the Co-passenger, and Arianespace constraints.
The combined Launch Window will be agreed upon by the CUSTOMER, the
Co-passenger, if any, and ARIANESPACE before the Launch Vehicle Readiness Review
(RAV). Any further modification is subject to formal agreement between all
Parties. In case of launch postponement after filling operations, the CUSTOMER
shall do its best efforts to meet any new launch date set forth by ARIANESPACE.
3. Main Interfaces
All mechanical and electrical interfaces, i.e. physical dimensions, structural
stiffness, etc. shall be compatible with the ARIANE interfaces defined in the
MUA 5.
3.1 Mechanical Interfaces
3.1.1 Adapter Interface
Adapter (ACU) Interface:
1663 SP
Actuators Arrangement
Internal
S/C Separation Detection
2 microswitches (on adapter side)
The Payload Attach Fitting (PAF) to be used for SPACEWAY-3 mission is identical
to the one used in the Spaceway-2 Interface Control Document (DCI).
3.1.2 Spacecraft Volume
The Spacecraft is compatible with the following Volumes:
ü Long fairing
(All usable diameter volumes: 4.57m)
MS Standard Umbilical Connectors (provided by Customer):
Location Type
Spacecraft J1
MS 3424 E61 50S
Spacecraft J2
MS 3424 E61 50S
- ARIANESPACE PROPRIETARY - I-2
Adapter P1 or P5
MS 3446 E61 50P
Adapter P2 or P6
MS 3446 E61 50P
ARIANE optional services:
Service definition
Dry Loop command
NO
Electrical command
NO
Power supply
NO
Pyrotechnic command
NO
In case of RF interference with another spacecraft, the CUSTOMER accepts, at
ARIANESPACE request, to consider a 50/50 time sharing agreement.
4. Environmental Conditions
Environmental conditions are as described in the Ariane 5 User’s Manual (MUA 5)
with the exception of the maximum allowable shock specifications which are
defined in the following Table 2.
No modification has been brought to the applicable documents in the frame of
this Statement Of Work.
- ARIANESPACE PROPRIETARY - I-3
Table 1 - ARIANESPACE Reference Orbit, Time and Launch Window for a GTO Mission
with
ARIANE 5 ECA
Reference Time (UT): instant of the first passage at orbit perigee, the first
passage may be fictitious if injection occurs beyond perigee.
Reference Orbit (osculating elements at first perigee, except for apogee
altitude) :
Altitude of Perigee
:
Altitude @ 6th Apogee
:
Inclination
:
Argument of Perigee
:
Longitude of descending Node
:
Minimum Launch Window for shared GTO launches for the reference Orbit and First
Perigee passage in Universal Time [UT] is 45 min. Day 01 = 01 January
- ARIANESPACE PROPRIETARY - I-4
Table 2 - ARIANESPACE Reference Shock Spectrum applicable to the SPACEWAY-3
spacecraft
The compatibility of the Satellite with the Launch Vehicle will be established
taking into account the Ariane 5 User’s Manual MUA 5 except for the shock
environment for which a waiver will be granted to the levels defined in the
spectrum below:
TEST AXIS
FREQUENCY
(Hz)
SHOCK RESPONSE
SPECTRUM PROFILE
(g peak)
[***] [***] Xs, Ys, Zs axis [***] [***] [***] [***]
[***] [***]
- ARIANESPACE PROPRIETARY - I-5
Part 2
ARIANESPACE TECHNICAL
COMMITMENTS
February 2007
- ARIANESPACE PROPRIETARY - II
Part 2 – SPACEWAY-3
ARIANESPACE shall provide the following Launch services using the ARIANE 5
Launch vehicle as described in the latest issue of the Ariane 5 User's Manual,
"MUA 5".
v Overall Launch Service management
v Launch Vehicle hardware and software supply
v Mission analysis
v Launch Vehicle Operations
v Launch site CUSTOMER support as described in Part 5
v Documentation and meeting as described in Part 4
Additions to the deliverables in this annex 1 are possible, subject to
negotiations and additional order(s) from the CUSTOMER as listed in Part 5.
ARIANESPACE shall provide overall management for the Launch services as
described in MUA 5. The ARIANESPACE Program director will be the single point of
contact between the CUSTOMER and ARIANESPACE.
General Contract Management Contract amendments, payments, master schedule,
planning, configuration control, action items and milestone monitoring,
documentation, reviews, meetings, etc... Launch Vehicle Production including
quality plan Test, acceptance, etc… Mission Analyses Launch Base
Operations
Ground and Flight Safety
Interface with CSG for safety submissions
2. Launch Vehicle Hardware and Software Supply
ARIANESPACE shall supply the hardware and software to carry out the Mission,
complying with mission/launcher requirements as defined in part 1.
Launch Vehicle Hardware
Launch Vehicle Propellants
Payload Compartment
RF Window or Passive Repeater
One Flight Program
Spacecraft Adapter
As per chapt.3.1.1. of Part 1, including the
- ARIANESPACE PROPRIETARY - II-1
corresponding separation system
Umbilical Interface Connectors
As defined in chap. 3.2 of Part 1
Fairing or Dual Launch Support Structure
As defined in chapt.3.1.2 of Part 1
Access Doors
2 Check-Out Terminal Equipment [COTE] Racks
Compatible with the ARIANE 5 launch Table
1 Mission Logo
Artwork to be supplied at L-6 by customer
3. Systems Engineering
ARIANESPACE shall provide the systems engineering tasks as described hereunder.
INTERFACE MANAGEMENT
Interface Control Document (DCI) configuration control
MISSION ANALYSIS
Trajectory, Performance and Injection Accuracy Analysis Œ
Final 1
Separation Analysis (Clearance, Kinematics, Collision Avoidance)
Final 1
Dynamic Coupled Loads Analysis (CLA)
Final 1
Electromagnetic and Radio-Frequency Compatibility Analysis
Final 1
Thermal Analysis
Final 1
SPACECRAFT DESIGN COMPATIBILITY VERIFICATION SUPPORT
Support for S/C Environmental Tests
POST-LAUNCH ANALYSIS
S/C orbital parameters & attitude date from L/V telemetry (at S/C Separation)
- ARIANESPACE PROPRIETARY - II-2
Launch Evaluation Report [DEL]
ΠThe spacecraft orbital parameters at separation are provided as part of this
analysis.
The final analyses are carried out with the final flight configuration
ARIANESPACE will also provide technical support for real-time discussions during
the spacecraft sine and acoustic acceptance and/or qualification tests.
4. Operations
ARIANESPACE shall supply the following services during the launch campaign as
listed hereunder.
Launch Vehicle Operations
All operations without the S/C
Combined Operations (POC)
S/C - Launch Vehicle Integration
Countdown Rehearsal
Lift-Off - 3 days
Countdown Execution:
Up to Lift-Off
The ARIANESPACE Launch site CUSTOMER support for Spacecraft operations as well
as the ARIANESPACE optional services are described in Part 5.
The ARIANESPACE responsibility for documentation and meetings is described in
Part 4.
- ARIANESPACE PROPRIETARY - II-3
Part 3
CUSTOMER TECHNICAL
COMMITMENTS
February 2007
- ARIANESPACE PROPRIETARY - III
Part 3 – SPACEWAY-3
1. General
To allow ARIANESPACE to timely prepare the Launch, the CUSTOMER shall provide
all the necessary technical data and documentation, a comprehensive overview of
Spacecraft production planning, and the Spacecraft and associated means at the
launch site, as defined in the ARIANE 5 User's Manual (MUA 5).
CUSTOMER shall ensure that the Spacecraft meets the requirements expressed in
Part 1.
At the Launch site, CUSTOMER and its subcontractors shall manage and perform all
Spacecraft activities relative to the Spacecraft preparation for Launch.
The CUSTOMER responsibility for documentation and meetings is described in Part
4.
2 Hardware Supply
Spacecraft Hardware Spacecraft Propellants Spacecraft
Simulator
Representative of the Spacecraft electrical systems in interface with the Launch
System.
Used for electrical validations during fit-check, if any, and launch campaign.
Mechanical and Electrical Ground Support Equipment
As required to operate the Spacecraft on the launch site (with the exception of
those temporarily or permanently provided by ARIANESPACE as listed in the GRS -
see Part 5)
3. Schedule Obligations
The Spacecraft shall be made available to ARIANESPACE for the Combined
Operations with the Launch Vehicle 11 working days prior to the Launch, at the
latest. The applicable date will be defined in the Combined Operations Plan
(P.O.C.) approved by the CUSTOMER.
The Spacecraft check-out equipment and the ARIANE 5 specific COTE (Check Out
Terminal Equipment) necessary to support the Spacecraft/Launch Vehicle on-pad
operations shall be made available to ARIANESPACE, and validated, two days prior
to operational use according to the approved POC, at the latest.
- ARIANESPACE PROPRIETARY - III-1
All Spacecraft mechanical & electrical support equipment shall be removed from
the various EPCU buildings & A5 Launch Table within three working days after the
Launch, packed and made ready for return shipment.
Spacecraft propellants are provided by the CUSTOMER and his subcontractors. The
spacecraft propellants will be delivered to the CSG at the earliest two months
before and at the latest two weeks before the spacecraft launch campaign.
The CUSTOMER and its subcontractors are responsible for the transport of the
propellants to the CSG in compliance with the International Maritime Dangerous
Goods (IMDG) rules.
Disposal of hazardous products is not authorized and wastes must be repatriated
by the CUSTOMER after the launch campaign. In particular, the residual
propellants and hazardous products must be shipped back within one month after
the launch campaign.
- ARIANESPACE PROPRIETARY - III-2
Part 4
DOCUMENTATION AND
REVIEWS
February 2007
- ARIANESPACE PROPRIETARY - IV-1
1 Documentation
The description of the main documentation to be issued by CUSTOMER and
ARIANESPACE in order to prepare the mission can be found in the MUA 5.
1.1 DUA
In accordance with the MUA 5, the CUSTOMER will issue the Application to Use
Ariane (DUA), which contains the essential requirements and information for the
correct execution of the Launch Services.
1.2 DCI
ARIANESPACE will issue the Interface Control Document (DCI) between the
Spacecraft and the Launch System. The DCI will be maintained under formal
Configuration Control until the Launch, and will become the unique working
document for all technical interfaces between the Spacecraft and the Launch
System.
The DCI Issue 0, based on the DUA, will be prepared and released about one month
after the delivery of the Application to Use Ariane by CUSTOMER.
The DCI Issue 1 will be prepared and released at least one month prior to the
Final Mission Analysis Review (RAMF) to reflect the latest status of the
interfaces between the spacecraft and the Launch System.
The DCI Issue 2 will be prepared and released after the Final Mission Analysis
Review (RAMF).
1.3 Systems Engineering Documentation
The CUSTOMER and ARIANESPACE will issue input and output data related to the
mission, the qualification and acceptance process of the spacecraft, operations
and safety, respectively. These documents (as described in the tables hereunder)
are intended to:
•
Specify the mission Requirements
•
Demonstrate the compatibility of the ARIANE 5 mission with the CUSTOMER
requirements.
•
Demonstrate the compatibility of the Spacecraft with the ARIANE flight
environment and specifications.
The timely availability and validity of such documentation, especially Mission
Analysis inputs, are essential for the preparation of the Launch.
- ARIANESPACE PROPRIETARY - IV-2
The documentation deliverables between ARIANESPACE and CUSTOMER are summarized
in the following paragraphs. Except where otherwise specified, “L” (in months)
represents the first day of the latest agreed Launch Period, or Slot, as
applicable.
1.4 Documentation to be issued by CUSTOMER
CUSTOMER shall deliver to ARIANESPACE the documentation listed in the table
hereunder. Any changes to these requirements shall be agreed by the Parties,
shall be documented through the milestones list or meeting minutes and will not
require a change to this Statement Of work.
Ref.
Document Date Arianespace
ActionŒ
1
Application to use Ariane (DUA) or marked-up DCI
[***] R
Safety Submission Phase 1
[***] A
2
Safety Submission Phase 2
3
S/C mechanical environmental test plan
4
S/C Thermal Model according to SG-1-26
5
S/C Launch Operations Plan (POS)
6
S/C Dynamic Model (final) according to SG-0-01
7
S/C operations procedures applicable at CSG, including Safety Submission Phase 3
8
Environmental Testing : instrumentation plan, notching plan, test prediction for
sine test according to LS-SG-1000000-X-001-AE
- A
9
Environmental Testing : instrumentation plan, test plan for acoustic test
- A
10
S/C final Launch Window
11
S/C mechanical environment tests results according to LS-SG-1000000-X-001-AE
- Ž A
12
Final S/C mass
- R
13
Orbital Tracking Report (orbit parameters and attitude at separation)
[***] I
Œ A ð Approval; R ð Review; I ð Information
[***]
Ž [***]
Including S/C wet mass, S/C dry mass, propellant mass breakdown
[***]
- ARIANESPACE PROPRIETARY - IV-3
1.5 Documentation to be issued by ARIANESPACE
ARIANESPACE shall deliver to CUSTOMER the documentation listed in the table
Ref.
Document Date CUSTOMER
ActionΠRemarks
1
Interface Control Document (DCI) :
Issue 0
Issue 1, rev 0
Issue 2, rev 0
R
A
A
Before RAMF
After RAMF
2
Final Mission Analysis Documents (including final CLA and Thermal Analysis
Report)
3
Interleaved Operations Plan (POI)
[***] R At RAMF
4
Combined Operations Plan (POC)
5
Countdown sequence
6
Safety Statements :
Phase 1 reply
Phase 2 replies
Phase 3 reply
R
R
R
7
Injection Data (orbital parameters and attitude data prior to separation)
8
Launch Evaluation Document (DEL)
- ARIANESPACE PROPRIETARY - IV-4
2. Meetings
2.1 Interface Meetings
The CUSTOMER and ARIANESPACE agree to meet as often as necessary to allow for
good and timely execution of all activities related to the preparation of the
Launch. A guideline is presented in the following Table 1.
The program managers of the CUSTOMER and ARIANESPACE shall agree upon exact
dates, locations, agendas and participation sufficiently in advance, on a case
by case basis.
For all meetings taking place at the CUSTOMER’s or CUSTOMER’s contractor
premises, the CUSTOMER will obtain necessary clearance for ARIANESPACE and their
nominated contractor(s) personnel. Similarly, ARIANESPACE will obtain clearances
for CUSTOMER(s) and CUSTOMER Contractor(s) personnel for meetings/visits at
ARIANESPACE and its Contractor(s)’s premises.
It is understood that, during the interface meetings, a review of contractual
and general management items will be performed, i.e. schedule, milestones and
action items lists, contract or configuration changes, financial matters as
applicable. The CUSTOMER and ARIANESPACE will be free to invite their
contractors to the interface meetings.
2.2 Launch Vehicle Standard Reviews
The CUSTOMER will be invited to the following Launch Vehicle reviews:
•
Launch Vehicle Flight Readiness Review (RAV) prior to the start of the Launch
Vehicle campaign
•
POC Readiness Review (BT POC) prior to the start of the combined operations
•
RAF meeting prior to Launch Vehicle roll-out
•
Launch Readiness Review (RAL) two days before Launch
•
Immediate Post Flight Review (CRAL) one day after Launch
The review documentation will be handed out to the CUSTOMER at each of these
reviews.
- ARIANESPACE PROPRIETARY - IV-5
2.2.1 Launch Vehicle Flight Readiness Review (RAV)
This review is performed about 2 months before the Launch and allows ARIANESPACE
management to authorize the start of the Launch Vehicle campaign. CUSTOMER is
formally invited to attend.
The review is co-chaired by the ARIANE Production Project Manager (CPAP) and the
Launch Vehicle Quality Synthesis Manager (RSQL).
At that time, all flight hardware, stages, vehicle equipment bay, fairing,
SYLDA5 and spacecraft adapters, are reviewed, through a comprehensive
documentation process (available at ARIANESPACE). The documentation covers, but
is not limited to, hardware identification, performance test results, and major
waivers, anomalies and failures which occurred during production, acceptance
tests and storage, life limitations, on-going production status of the same
equipment, etc… The payload status is also presented (mission, flight program,
waivers, etc…).
The RAV documentation will be made available to CUSTOMER during the review.
2.2.2 POC Readiness Review (BT POC)
This review is performed before the start of the Combined Operations (POC). It
allows ARIANESPACE management to authorize the start of the combined operations
between the Launch Vehicle and the spacecraft. The CUSTOMER is required to
provide a Spacecraft Readiness status to start the POC activities.
The review is chaired by the Ariane Mission Director (CM) and it covers the
readiness status with respect to the POC activities for:
•
The Launch Vehicle, (including a debriefing of the launch vehicle Functional
Readiness Review - RAF),
•
The Ariane Launch Complex (ELA) and the EPCU (S5),
•
The Spacecraft and the co-passenger.
All participants to the Review receive a comprehensive set of summary documents
presenting the readiness status of all the parties.
The Launch Vehicle Functional Review (RAF) is an internal ARIANESPACE review of
the Launch Vehicle status before the transfer of the Launch Vehicle to the BAF.
2.2.3 Launch Readiness Review (RAL)
This review takes places at the launch site at D-2, i.e. two days before the
Launch Day. It allows ARIANESPACE management to authorize the start of the
Launch Vehicle filling operations and the final countdown. CUSTOMER is requested
to attend; in any case, the final Spacecraft flight readiness status is
required.
- ARIANESPACE PROPRIETARY - IV-6
A pre-RAL meeting will be organized by ARIANESPACE prior to the actual review in
order to:
•
Inform the CUSTOMER of the significant items that will be presented at the RAL
•
Provide any additional clarification that may result from previous written
questions raised by the CUSTOMER.
The review is co-chaired by the Ariane Production Project Manager (CPAP) and the
Launch Vehicle Quality Synthesis Manager (RSQL). It covers the launch readiness
of:
•
The Launch Vehicle
•
The Ariane Launch Complex (ELA),
•
The Launch Base (CSG)
•
The spacecraft, co-passenger and their associated ground support network.
All participants to the review receive a comprehensive set of summary documents
No further presentation meeting, dealing with the RAL content, will be organized
after the RAL has authorized to proceed with the Launch Vehicle filling
operations.
Nevertheless, in the event of significant anomalies occurring after the RAL,
necessary meetings may be organized.
2.2.4 Immediate Post Flight Review (CRAL)
This review is performed the day after the Launch. ARIANESPACE provides the
first flight data evaluation after the flight.
The CUSTOMER is invited to attend and is requested to provide the spacecraft
status after separation and acquisition by the ground stations.
2.3 Spacecraft Reviews
ARIANESPACE will be invited to attend the Spacecraft Qualification / Acceptance
/ Flight Readiness and/or Pre-shipment Review.
2.4 Launch Vehicle campaign meetings at the Launch Base
During the Launch Vehicle campaign, CUSTOMER is invited to attend the daily
Launch Vehicle BAF campaign meetings. These meetings are conducted in French.
- ARIANESPACE PROPRIETARY - IV-7
In case of an anomaly or incident, a specific dedicated meeting is organized
with the Launch Vehicle and Quality authorities to understand the anomaly or
incident, and to set up a corrective action plan where applicable.
2.5 Quality Reporting
Quality in production, operations and organization has been given a top
priority, directly driven and monitored by the General Management of
ARIANESPACE.
The ARIANESPACE Quality Manual translates this commitment in terms of operating
principles, method and functioning rules.
The information given to the CUSTOMER is subject to the confidentiality
provisions described in Article 16 of the Agreement.
2.5.1 Quality Meetings
2.5.2 Failure Reporting
All non conformances and incidents are processed in accordance with the
ARIANESPACE Quality Manual. Any incident during integration or test is
registered in the log book of the equipment concerned.
Assessment of incidents is performed systematically by reliability services of
the contractors and by the Prime Contractor.
In case of significant anomalies, visits to the main contractor’s facilities may
be organized, if necessary.
Significant incidents are also reported systematically during RAV and RAL
reviews.
2.5.3 Reliability
Reliability predictions are continuously updated, taking into account any new
data or configuration changes.
Reliability information is made available to CUSTOMER during reviews.
- ARIANESPACE PROPRIETARY - IV-8
Table 1– ARIANESPACE/CUSTOMER – Interface Meeting Schedule
A typical content of the different reviews is described below: this description
is not exhaustive and is subject to modification, after agreements between the
Parties. Any changes to the contents listed below will not require a change to
N° Title Date Objet ‚ Lieu ƒ
1
Contractual Kick-Off Meeting
Project management – project milestones – organization – security and
confidentiality aspects – communications protocol
[***] M-E C
2
DUA (or marked-up DCI) Review
Review of the Spacecraft characteristics and requirements
[***] M-E-O-S E
3
Mission Analysis Kick-Off
Presentation of the mission analysis inputs, computations and methods
Review of Safety Submission Phase 1
First review of the DCI Issue 0 Revision 0
[***] M-E-S X
4
DCI Signature Issue 1 / Revision 0 [***] M-E-O E or C
5
Review of S/C Operations Plan (POS)
Launch site visit – Description of transport and logistics – Description of the
telecommunications network – Satellite Operations Plan (POS)
Safety Submissions Phases 1 and 2
DCI review (Chapters 7 and 8)
[***] M-O-S K
6
Security Review [***] M-O-S K
7
Final Mission Analysis Review (RAMF)
Trajectory – performance –separation – thermal environment – dynamic environment
– EMC environment – authorization to start the flight program production –
spacecraft qualification status
DCI review
[***] M-E-S E
- ARIANESPACE PROPRIETARY - IV-9
8
Final Launch Campaign Preparation Meeting
Launch Campaign preparation status – Satellite Operations Plan (POS) –
Interleaved Operations Plan (POI) – Combined Operations Plan (POC)
Safety submission status
[***] M-O-S E
9
DCI Signature Issue 2 / Revision 0 [***] M-E-O
E, C or K
10
Range Configuration Review
Review of the range facilities used by the spacecraft at the start of the launch
campaign
M-O-S K
11
POC Readiness Review
Launch Vehicle and Launch System status Spacecraft status
M-O-S K
ΠMeeting target dates are given, taking into account the respective commitments
of both parties for the delivery of the documentation as described in this Annex
1, Parts 2, 3 and 4. Dates are given in months, relative to L, where L is the
first day of the latest agreed Launch Period or Slot, as applicable.
M ð Management; E ð Engineering; O ð Operations; S ð Safety
Ž E ð Evry ; K ð Kourou; C ð CUSTOMER HQ; X ð Contractor Plant
[***]
- ARIANESPACE PROPRIETARY - IV-10
Part 5
GENERAL RANGE SUPPORT
(GRS) AND OPTIONAL
SERVICES
February 2007
Part 5 – SPACEWAY-3
The General Range Support provides the CUSTOMER, on a lump sum basis, with a
number of standard services and standard quantities of fluids (see List
hereafter). Request(s) for additional services and/or supply of additional
fluids exceeding the scope of the GRS can be accommodated, subject to
negotiation between ARIANESPACE and the CUSTOMER.
Technical Definitions are in the MUA. Further technical details and data can be
found in the EPCU Manual.
Except where otherwise specified, “L” (in months) represents the first day of
the latest agreed Launch Period, or Slot, as applicable.
Campaign duration Œ Price (k€) Terms 35 Calendar Days [***]
Extension beyond 35 days
(if caused by CUSTOMER)
Due at launch
ΠFrom S/C and associated equipment arrival in French Guiana to actual departure
of associated equipment.
1.1 Transport Services
CUSTOMER Personnel & Luggage Transport from and to Rochambeau Airport and
Kourou at arrival and departure, as necessary. Spacecraft & Equipment Transport
ΠSubject to advanced notice and performed nominally within normal CSG
working hours (2 shifts of 8 hours per day, between 6 am and 10 pm from Monday
to Friday). Availability outside normal working hours, Saturdays, Sundays,
and public holidays subject to negotiation, to advance notice and to agreement
of local authorities. From Cayenne to CSG and return. Various freight
categories (standard, hazardous, fragile, oversized loads, low-speed drive,
etc…) Limited to 12 10-ft pallets (or equivalent) in 2 batches (plane or
vessel) Spacecraft Inter-Site Transport All CSG inter-site transports of
the Spacecraft either inside the S/C container, the ARIANE Payload Container
(CCU) or encapsulated inside the Launch Vehicle composite fairing. Inter-Site
Equipment Transport All CSG inter-site transports of CUSTOMER equipment.
Logistics Support Support for shipment and customs procedures for the
Spacecraft and its associated equipment, and for personal luggage and equipment
transported as accompanied luggage.
- ARIANESPACE PROPRIETARY - V-1
ΠThe following is included in the Transport Services : Co-ordination
of loading/unloading activities Transport from Rochambeau Airport and/or
Degrad-des-Cannes harbour to CSG Return to Airport/Harbour 3 working days
after Launch Depalletization of Spacecraft Ground Support Equipment on
arrival at CSG, and dispatching to the various working areas. Palletization
of Spacecraft Ground Support Equipment prior to departure from CSG to
Airport/Harbour, All work associated with the delivery of freight by the
Carrier at Airport/Harbour, CSG Support for the installation and removal of
the Spacecraft Check-Out Equipment. The following is NOT included in the
Transport Services : The “octroi de mer” tax on equipment permanently
imported to French Guiana, if any. Insurance for Spacecraft and its
associated equipment. The maximum temperature to which containers and
packing may be exposed during any transport is 35°C.
1.2 Payload Preparation Facilities
The payload preparation complex, with its personnel for support, may be used
simultaneously by several customers. Specific facilities are dedicated to the
CUSTOMER on the following basis:
Range Operations Normal working hours are based on 2 shifts of 8 hours
per day, between 6:00 am and 10:00 pm from Monday to Friday Work shifts
outside of normal working hours, Saturdays, Sundays or public holidays are
possible, but subject to negotiations and agreement of local authorities. (No
shift work on Sundays and public holidays in hazardous zone) EPCU Facilities
Spacecraft Preparation (Clean Room) 350 m2 Standard Conditions for Temp. and
relative Humidity do not exceed 24°C And 60%, respectively Filling Hall
Dedicated Lab for Check-out Stations (LBC) 110 m2 Offices and meeting
rooms 250 m2
- ARIANESPACE PROPRIETARY - V-2
Access to the EPCU
Area
Restricted to authorized personnel only, permanently controlled by Range
Security. Access to offices, check-out stations, and clean rooms, is
controlled through dedicated electronic card system and keypad locks. Clean
rooms are permanently monitored by a CCTV camera.
Access outside Normal Working Hours Access to offices and LBC outside of
normal working hours is authorized.
Access to the clean rooms outside of normal working hours is authorized with the
following restrictions :
- Advanced notice
- No Range Support provided
- No hazardous operations or external hazardous constraints
- Crane utilization only by certified personnel
- No changes to the facilities configuration
Schedule Restrictions Launch Campaign Duration Extension is possible, but is
subject to negotiations. Spacecraft ground equipment must be ready to leave
the range within 3 working days after the Launch. Transfer of S/C and its
associated equipment to the spacecraft filing facilities normally no earlier
than 2 weeks before start of POC. After S/C transfer to spacecraft filling
facilities, and upon request by ARIANESPACE, the Spacecraft Preparation Clean
room may be used by another S/C. Evacuation of Ground Support Equipment from
clean room 24H after departure of S/C Access to the EPCU area As
described in EPCU Manual. No Break Power Supply LBC. 30 kVA
Spacecraft Filling Building
(Hazardous Preparations Facilities or HPF)
20 kVa Launch Pad & BAF 20 kVA Standard MGSE As described in EPCU
Manual Calibration Equipment As described in EPCU Manual Storage Any
storage of equipment during the Campaign Propellant storage provided for a
duration starting two months before the launch campaign until one month after
Launch.
- ARIANESPACE PROPRIETARY - V-3
1.3 Communication Links
The following communication services between the different Spacecraft
preparation facilities will be provided for the duration of a standard campaign
(including technical assistance for connection, validation and permanent
monitoring):
Service Type Remarks
RF - Link
S/C/Ka band
1TM / 1TC through optical fiber
Baseband Link
2 TM / 2TC through optical fiber
Data Link
Romulus Network, V11 and V24
For COTE monitoring & remote control
Ethernet
Planet Network, 10 Mbits/sec
3 VLAN
Umbilical Link
Copper lines
2x37 Pins for S/C umbilical & 2x37 Pins for Auxiliary Equipment (as per MUA 5
§5.5)
Internet
ADSL
4 connections
Closed Circuit TV
As necessary
Intercom System
As necessary
Paging System
5 beepers
CSG Telephone
As necessary
International Telephone LinksŒ
With Access Code
As necessary
ISDN (RNIS) Links
Subscribed by CUSTOMER
Routed to dedicated CUSTOMER’s working zone
Facsimile in offices Œ
2
Video Conference Œ
Shared with other users
As necessary
ΠTraffic to be paid, at cost, on CSG invoice after the campaign.
To be shared between the CUSTOMER and its subcontractors
1.4 Analyses
Service Type Remarks
Chemical Analyses
Propellant except Xenon
Gas & fluids particles
Clean room organic deposit
Continuous, one weekly report
Particle Count
Clean room monitoring
- ARIANESPACE PROPRIETARY - V-4
Part 5 - SPACEWAY-3
1.5 Operations
Service Type Remarks
S/C Weighing
Weighing performed by CSG (equipment and personnel) Available as option
Calibrated weights Available as necessary
Spacecraft Adapter Fit-Check
Mechanical and / or electrical Performed in Kourou at the beginning of the
launch campaign
Spacecraft Additional Ventilation
Specific ventilation of the spacecraft batteries through two auxiliary
tooling doors in the fairing In the Final Assembly Building, from
encapsulation until the day before the Launch Vehicle transfer to the launch pad
1.6 Fluid Deliveries
Fluid Type Quantity
GN2
NSO dedicated local network) As necessary available at 190 bar
GHe
NSS dedicated local network As necessary available at 350 bar or 180 bar
LN2
As necessary
IPA
MOS-SELECTIPUR As necessary
Water
Demineralized As necessary
Any requirement different from the standard fluid delivery (different fluid
specification or specific use) is subject to negotiation.
1.7 Additional Services (included in price)
No-Break power
10 UPS 1.4 kVA at S1 or S5 offices for CUSTOMER PCs
Campaign SecretaryŒ
Option selected
Copy machines
2 in S1 or S5 Area (1 for secretarial duties, 1 for extensive reproduction);
paper provided
Technical photos and film
processing
As required
Video transmission
Available as option
Launch Campaign DVD
Launch Campaign and launch coverage (NTSC)
ΠBilingual (English РFrench)
- ARIANESPACE PROPRIETARY - V-5
1.8 Miscellaneous
Room Reservation
Recommended in Kourou hotels at CUSTOMER’s request (cancellation charges, if
any, under CUSTOMER’s responsibility), through Free-Lance Service support.
CUSTOMER and S/C
Contractor Assistance
For other housing, rental cars, flight reservations, banking, off-duty &
leisure activities through Free-Lance Service support.
2 Options Price Catalogue
In addition, the following options may be ordered by the CUSTOMER:
Prices are given in thousands of Euro (k€), on a firm fixed price basis, for a
Launch in [***].
Optional Services Ref. # Price (k€) Latest date
for option
request (in
months) A – Launch Vehicle Hardware Redundant pyrotechnic command
delivered by VEB to Spacecraft system (one triple command, current > 3A or > 5A)
A 10 [***] [***]
Redundant electrical command delivered by VEB to spacecraft (one) A 11
[***] [***] Dry loop command delivered by VEB to spacecraft (one) A 12
[***] [***] Spacecraft GN2, purge A 13 [***] [***] Specific access
door A 14 [***] [***] B – Mission Analysis Any additional
Mission Analysis study or additional flight program requested or due to any
change induced by CUSTOMER : Preliminary CLA B 10 [***] [***]
Preliminary trajectory and separation analysis B 11 [***] [***]
Preliminary EMC analysis B 12 [***] [***] Re-run final CLA B 13
[***] [***] Re-run final trajectory and separation analysis B 14 [***]
[***] Final EMC analysis B 15 [***] [***] Re-run Thermal analysis
B 16 [***] [***] Additional flight program B 17 [***] [***]
- ARIANESPACE PROPRIETARY - V-6
Optional Services Ref. # Price (k€) Latest date for option request (in
months) C – Interface Tests Note : Any loan or purchase of equipment
(adapter, clamp-band, bolts, separation pyro set) can be envisaged and is
subject to previous test plan acceptance by ARIANESPACE.
Fit-check (mechanical/electrical) with ground test hardware at CUSTOMER
premises, including:
C 10 [***] [***] Loan
of: Flight standard adapter, mechanically and electrically equipped
Flight standard separation system Set of ground bolts
Associated ground support equipment
ARIANESPACE support for interface test (4 days max.).
Equipment transport and personnel travel expenses, corresponding to the incurred
cost, will be invoiced to the CUSTOMER.
Fit-check (mechanical/electrical) with ground test hardware in Kourou,
including:
C 11 [***] [***] Loan of : Flight standard adaptor,
mechanically and electrically equipped Flight standard separation
system Set of ground bolts Associated ground support equipment
premises, including:
C 15 [***] [***] Loan of : Flight standard adaptor,
mechanically and electically equipped Flight standard separation system
Set of ground bolts
- ARIANESPACE PROPRIETARY - V-7
Associated ground support equipment Pyrotechnic test hardware Spares
• Supply of consumable material for one test (separation system) :
Set of igniters Set of bolt cutters or pin pullers Set of flight bolts
Set of clamp-band catchers
Optional Services
Ref. # Price (k€) Latest date for option request (in months) D – Range
Operations and services
Campaign extension above the contractual duration
Per day : D 10 [***]
Additional shipment of spacecraft Ground Support Equipment from Cayenne to CSG,
one way (see conditions in the General Range Support description)
per trailer of 1 to 3 10-ft pallets or containers:
D 11 [***] [***]
Extra working shift for S/C and equipment arrival
Per shift (8 hours) : D 12 [***] [***]
Extra working shift, before beginning of hazardous operations in HPF:
Per shift (8 hours) : D 13 [***] [***]
Extra working shift, after beginning of hazardous operations in HPF :
Per shift (8 hours) : D 14 [***] [***]
- ARIANESPACE PROPRIETARY - V-8
Chemical analysis for propellant except Xenon
D 15 [***] [***]
Chemical analysis for gas & particles
D 16 [***] [***]
Spacecraft weighing
D 18 [***] [***]
Campaign Secretary Œ
D 19 [***] [***]
Technical photos
D 20 [***] [***]
Film processing
D 21 [***] [***]
Transmission of TV Launch coverage to Paris
D 22 [***] [***]
Transmission of TV Launch coverage to the point of reception requested by
CUSTOMER
D 23 [***] [***]
ΠBilingual (English - French)
Optional Services Ref. # Price (k€)
Latest
date for
option
request (in
months)
E - Quality Reporting
A dedicated access right and adequate visibility on the Quality
Assurance (QA) system can be given through the steps listed below : E 10
192
At contract
signature
Quality System Presentation
A Quality System Presentation (QSP) is included in the agenda of the
Contractual Kick-off Meeting. This general presentation explicitly reviews the
Product Assurance provisions defined in the ARIANESPACE QUALITY MANUAL.
Quality Status Meeting:
A specific Quality Status Meeting (QSM) may be organized about 12
months before the Launch with special emphasis on major quality and reliability
aspects (including failure reporting), relevant to the CUSTOMER Launch Vehicle
batch. In addition, visits to main contractor’s facilities may be organized, if
necessary.
Quality Status Review
A Quality Status Review (QSR) may be organized about four months before
the Launch to review the CUSTOMER Launch Vehicle hardware.
- ARIANESPACE PROPRIETARY - V-9
In the same time frame, and if necessary, special assistance is provided to the
CUSTOMER to facilitate his understanding of the ARIANE Quality Documentation
that builds up progressively. The information given to the CUSTOMER is
subject to the confidentiality provisions described in Article 16 of the
Agreement.
3 Options ordered by the CUSTOMER
In addition to the deliverables in the GRS, the following options have been
ordered by the CUSTOMER:
Optional N° Item Price (k€) Terms of
Payment
- ARIANESPACE PROPRIETARY - V-10 |
Name: Commission Regulation (EEC) No 3060/84 of 31 October 1984 fixing the amounts to be levied in the beef sector on products which left the United Kingdom during the week 8 to 14 October 1984
Type: Regulation
Date Published: nan
No L 288/50 Official Journal of the European Communities 1 . 11 . 84 COMMISSION REGULATION (EEC) No 3060/84 of 31 October 1984 fixing the amounts to be levied in the beef sector on products which left the United Kingdom during the week 8 to 14 October 1984 products listed in the Annex to the said Regulation must be fixed each week by the Commission ; Whereas, accordingly, the amounts to be levied on products which left the United Kingdom during the week 8 to 14 October 1984 should be fixed, THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Economic Community, Having regard to Council Regulation (EEC) No 1063/84 of 16 April 1984 on the granting of a premium for the slaughter of certain adult bovine animals in the United Kingdom during the 1984/85 marketing year ('), and in particular Article 5 thereof, Whereas, under Article 3 of Regulation (EEC) No 1063/84, an amount equivalent to the amount of the variable slaughter premium granted in the United Kingdom is levied on meat and meat preparations from animals on which it has been paid, when they are consigned to other Member States or to non member countries ; Whereas, under Article 7 ( 1 ) of Commission Regula tion (EEC) No 1355/84 of 16 May 1984 laying down detailed rules for the application of the premium for the slaughter of certain adult bovine animals for slaughter in the United Kingdom during the 1984/85 marketing year (2), as amended by Regulation (EEC) No 2018/84 (3), the amounts to be charged on depar ture from the territory of the United Kingdom of the HAS ADOPTED THIS REGULATION : Article 1 Pursuant to Article 3 of Regulation (EEC) No 1063/84, the amounts to be levied on the products referred to in Article 7 ( 1 ) of Regulation (EEC) No 1355/84 which left the territory of the United Kingdom during the week 8 to 14 October 1984 shall be those set out in the Annex. Article 2 This Regulation shall enter into force on the day of its 'publication in the Official Journal of the European Communities. It shall apply with effect from 8 October 1984. This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 31 October 1984. For the Commission Poul DALSAGER Member of the Commission (') OJ No L 105, 18 . 4. 1984, p . 1 . O OJ No L 131 , 17. 5 . 1984, p . 19. ( ') OJ No L 187, 14. 7 . 1984, p . 46 . 1 . 11 . 84 Official Journal of the European Communities No L 288/51 ANNEX Amounts to be levied on products which left the territory of the United Kingdom during the week 8 to 14 October 1984 (ECU/100 kg net weight) CCT heading No Description Amount 1 2 3 ex 02.01 A II a) and ex 02.01 A II b) ex 02.06 C I a) ex 16.02 B III b) 1 Meat of adult bovine animals, fresh , chilled or frozen : 1 . Carcases, half-carcases or 'compensated' quarters 2. Separated or unseparated forequarters 3 . Separated or unseparated hindquarters 4. Other : aa) Unboned (bone-in) bb) Boned or boneless Meat salted, in brine, dried or smoked, of adult bovine animals : 1 . Unboned (bone-in) 2. Boned or boneless Other prepared or preserved meat or meat offal, containing meat or offal of adult bovine animals : aa) Uncooked ; mixtures of cooked meat or offal and uncooked meat or offal : 1 1 . Containing 80 % or more by weight of beef meat excluding offals and fat 22. Other 26,26474 21,01179 31,51769 21,01179 35,98269 21,01179 29,941 80 29,94180 21,01179 |
AMERICAN INDEPENDENCE FUNDS TRUST II (the “Trust”) SUPPLEMENT DATED MARCH 2, 2014 TO THE PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION DATED MARCH 1, 2015 AMERICAN INDEPENDENCE MAR TACTICAL MODERATE GROWTH FUND (TICKER SYMBOL: MGZCX, MGZRX) AMERICAN INDEPENDENCE MAR TACTICAL GROWTH FUND (TICKER SYMBOL: MGMCX, MGMRX) This supplement to the Prospectus and Statement of Additional Information (“SAI”), each dated March 1, 2015, for the American Independence Funds Trust II, updates certain information in the Prospectus and SAI with respect to the Class C shares and Class R shares of the American Independence MAR Tactical Moderate
|
Exhibit 10.2
APOLLO GROUP, INC.
AMENDED AND RESTATED
2000 STOCK INCENTIVE PLAN
PLAN AMENDMENT
The Apollo Group, Inc. 2000 Stock Incentive Plan, as amended and restated (the
“Plan”), is hereby further amended, effective December 8, 2011, as follows:
1. Section 5.1 of the Plan is hereby amended in its entirety to read as
follows:
“5.1. NUMBER OF SHARES. Subject to adjustment as provided in Section 14.1, the
aggregate number of shares of Stock reserved and available for grant under the
Plan shall be 28,554,709 shares (which number takes into account all splits of
the Class A common stock effected since the Effective Date and after the
conversion of the University of Phoenix Online common stock into the Stock).
Such share reserve includes (i) the 5,000,000-share increase authorized by the
Board in May 2007 and subsequently approved by the holders of the Company's
outstanding voting stock, (ii) an additional 5,000,000-share increase authorized
by the Board in January 2008 and subsequently approved by the holders of the
Company's outstanding voting stock, (iii) the 975,481 shares transferred from
the Company's Long-Term Incentive Plan, effective June 25, 2009, with the
approval of the holders of the Company's outstanding voting stock, and (iv) an
additional 3,500,000-share increase authorized by the Board on December 8, 2011,
subject, however, to the approval of such increase by the holders of the
Company's outstanding voting stock. Shares of Stock subject to any Awards made
on the basis of such 3,500,000-share increase shall not become issuable or
exercisable unless and until such stockholder approval is obtained, and such
Awards shall become null and void, and no shares of Stock based on such share
increase shall become issuable or exercisable under those Awards, in the event
such stockholder approval is not obtained by November 30, 2012.”
2. Except as modified by this Plan Amendment, all the terms and provisions of
the Plan shall continue in full force and effect.
IN WITNESS WHEREOF, APOLLO GROUP, INC. has caused this Plan Amendment to be
executed on its behalf by its duly-authorized officer on this 8th day of
December 2011.
By:
/s/ Sean Martin
TITLE:
Senior Vice President, General Counsel & Secretary
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C.20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported):September 16, 2013 EASTERN 1998D LIMITED PARTNERSHIP (Exact name of registrant as specified in its charter) West Virginia
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