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Aflac Incorporated 3rd Quarter 2015 10-Q [afl-09301510q.htm]
EXHIBIT 10.31
STATE OF GEORGIA,
COUNTY OF MUSCOGEE:
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the 19th day of August, 2015, by and
between AMERICAN FAMILY LIFE ASSURANCE COMPANY OF COLUMBUS (Aflac), a Nebraska
corporation, hereinafter referred to as “Corporation,” and PAUL S. AMOS, II, a
resident of said State and County, hereinafter referred to as “Employee;”
WHEREAS, the Employee and Aflac Incorporated, the parent company of the
Corporation, previously entered into an employment agreement dated January 1,
2005, as subsequently amended (the “Original Agreement”);
WHEREAS, the Employee is currently employed by the Corporation as its President;
WHEREAS, Corporation and Employee desire to amend and restate the Original
Agreement and to set forth the terms and conditions of Employee’s employment by
Corporation as its President;
NOW, THEREFORE, the parties, for and in consideration of the mutual covenants
and agreements hereinafter contained, do contract and agree as follows, to-wit:
1. Purpose and employment. The purpose of this Agreement is to define the
relationship between Corporation as an employer and Employee as an employee and
President of the Corporation.
2. Duties. Employee agrees to provide executive management services as
President of Corporation to Corporation and its subsidiaries and affiliates on a
full-time and exclusive basis; provided, however, nothing shall preclude
Employee from engaging in charitable and community affairs or managing his own
or his family’s personal investments.
3. Performance. Employee agrees to devote all necessary time and his best
efforts in the performance of his duties as President of Corporation on behalf
of Corporation and its subsidiaries and affiliates.
4. Term. The term of employment under the Original Agreement began on January
1, 2005, for a period of three (3) years until December 31, 2007. Under the
Original Agreement, effective each January 1, beginning effective January 1,
2006, the scheduled term of the Original Agreement was automatically extended
for successive one (1)-year periods. Most recently, the term was automatically
extended on January 1, 2015, such that the current term is through December 31,
2017. Under this Agreement, the term shall continue to be extended for one
(1)-year periods as of
each January 1, beginning January 1, 2016, unless written notice of termination
is given prior to such annual date by one party to the other party that the
Agreement will not be extended by its terms.
5. Base salary. For all the services rendered by Employee, Corporation shall
continue to pay Employee a base salary of six hundred seventy-seven thousand
nine hundred dollars ($677,900.00) per year commencing January 1, 2015, said
salary to be payable in accordance with Corporation’s normal payroll procedures.
Employee’s base salary may be increased annually during the term of this
Agreement and any extensions hereof as determined by the Compensation Committee
of the Board of Directors of Aflac Incorporated (the “Compensation Committee of
the Board”).
6. Documentation of increase in base salary. Any increase in base salary
determined by the Compensation Committee of the Board under Paragraph 5 shall be
documented in the Corporation’s records and communicated to the Employee, as the
Compensation Committee of the Board may determine.
7. Management Incentive Plan. In addition to the base salary paid to Employee
in accordance with Paragraph 5, Corporation shall for each calendar year of
Employee’s employment by Corporation, beginning (for purposes of this Agreement)
with the calendar year 2015, continue to pay Employee, as performance bonus
compensation, an amount determined each year under the current Aflac
Incorporated Management Incentive Plan (i.e., short-term incentive program) with
a target level based on at least one hundred and twenty-five percent (125%) of
base salary. Nothing in this Paragraph shall preclude Employee from receiving
additional discretionary bonuses approved by the Chief Executive Officer or the
Compensation Committee of the Board. Amounts payable to Employee under the Aflac
Incorporated Management Incentive Plan (or any successor or other executive
bonus program) shall be payable in such manner, at such times and in such forms,
as prescribed by the terms of the Aflac Incorporated Management Incentive Plan
(or successor or other program).
8. Employee benefits. Employee shall be eligible to participate with other
employees of Corporation in all fringe benefit programs applicable to
similarly-situated employees generally which may be authorized and adopted from
time to time by the Board of Directors of Aflac Incorporated (the “Board”),
including without limitation: a qualified pension plan, a qualified 401(k) and
profit sharing plan, a disability income or sick pay plan, an accident and
health plan (including medical reimbursement and hospitalization and major
medical benefits), and a group life insurance plan. In addition, Corporation
shall furnish to Employee such other “fringe” or employee benefits as are
provided to similarly-situated key executive employees of Corporation and such
additional employee benefits which the Compensation Committee of the Board or
the Chief Executive Officer shall determine to be appropriate to Employee’s
duties and responsibilities as President of the Corporation, including, without
limitation, reimbursement of legal and accounting expenses incurred by Employee
in connection with the preparation of his employment or other agreements with
Corporation and any expenses for legal, accounting or financial services
incurred by Employee in connection with his employment. Any reimbursements made
pursuant to the preceding sentence shall be paid as soon as practicable but no
later than ninety (90) days after Employee submits evidence of such expenses to
Corporation (which payment date shall in no
2
event be later than the last day of the calendar year following the calendar
year in which the expense was incurred). The amount of such reimbursements
during any calendar year shall not affect the benefits provided in any other
calendar year, and the right to any such benefits shall not be subject to
9. Equity award plans. Employee shall be eligible to be awarded stock
options, restricted stock awards, and other equity awards (collectively, “Equity
Awards”) to purchase Corporation’s common stock under the Aflac Incorporated
Long-Term Incentive Plans for selected key employees and directors during the
10. Working facilities and expenses. Employee shall be provided with an
office, books, periodicals, stenographic and technical help, ground and air
transportation, and such other facilities, equipment, supplies and services
suitable to his position and adequate for the performance of his duties.
Corporation shall pay Employee’s fees and dues in such social and country clubs,
civic clubs and business societies and associations as shall be appropriate in
facilitating Employee’s job performance and in the best interest of Corporation.
Corporation shall also pay all appropriate business liability insurance and any
business licenses and fees pertaining to the services rendered by Employee
hereunder.
Employee is encouraged and is expected, from time to time to incur reasonable
expenses for promoting the business of Corporation, including expenses for
social and civic club memberships and participation, entertainment, travel and
other activities associated with Employee’s duties. The cost of all such
activities shall be the expenses of Corporation unless the Compensation
Committee of the Board shall determine in advance that any such expense of
Employee should be paid by Employee.
Any expense reimbursements made to satisfy the terms of this Paragraph 10 shall
be paid as soon as practicable but no later than ninety (90) days after Employee
submits evidence of such expenses to Corporation (which payment date shall in no
calendar year, and the right to any benefits under this Paragraph shall not be
subject to liquidation or exchange for another benefit.
11. Vacation. Employee shall continue to be entitled to his vacation time
with pay during each calendar year in accordance with Corporation’s vacation
policy for senior executive employees. In addition, Employee shall be entitled
to such holidays as Corporation shall recognize for its employees generally.
12. Sickness and total disability. Employee’s absence from work because of
sickness or accident (not resulting in Employee becoming “totally disabled,” as
that term is hereinafter defined) shall not result in any adjustment in
Employee’s compensation or other benefits under this Agreement.
Should Employee become totally disabled as a result of sickness or accident and
unable to adequately perform his regular duties prescribed under this Agreement,
his base salary (which shall
3
continue to be adjusted as provided for in Paragraph 5), together with incentive
bonuses under the Aflac Incorporated Management Incentive Plan and his
participation in Corporation’s employee benefit programs and retirement plan
shall continue without reduction except as hereinafter provided, during the
continuance of such disability for a period not exceeding the earlier of (1) the
end of the term of this Agreement or any extension hereof, or (2) a period of
one and one-half (1-1/2) years (547 calendar days) for each continuous
disability. Payments pursuant to this Paragraph 12 shall be reduced by any
amounts paid to Employee during any such period of disability from time to time
under any disability programs, plans or policies maintained by Corporation, its
subsidiaries or affiliates. In addition, if during, or on the first day of, the
period Employee is receiving such disability pay and benefits, (i) Employee
reaches or has reached the date upon which he satisfies the criteria to receive
the maximum percentage of retirement benefits available under the Aflac
Incorporated Supplemental Executive Retirement Plan (the “Maximum Retirement
Benefit Date”); and (ii) upon or after the Maximum Retirement Benefit Date,
there ceases to be a reasonable expectation that he will return to perform
services for Corporation, such that Employee has a separation from service (as
defined below) and his Benefit Commencement Date under the Aflac Incorporated
Supplemental Executive Retirement Plan (the “SERP”) has occurred (whether or not
the SERP benefit payments are to actually commence on his Benefit Commencement
Date or are to be delayed by six (6) months as may be required under the SERP to
satisfy the requirements of Section 409A of the Internal Revenue Code of 1986,
as amended (“Section 409A”)); the amount of disability pay consisting of base
salary and cash incentive bonuses being paid or payable under this Paragraph 12
shall be reduced effective as of the date of such separation from service to an
amount that is forty percent (40%) of the amount being paid or payable
immediately before such date.
Should Employee’s total disability continue for a period beyond the end of the
term of this Agreement or in excess of five hundred and forty-seven (547)
calendar days, this Agreement shall, at the end of such period which first
occurs, be automatically terminated. If, however, prior to such time, Employee’s
total disability shall have ceased and he shall have resumed the adequate
performance of his duties hereunder, this Agreement shall continue in full force
and effect and Employee shall be entitled to continue his employment hereunder
and to receive his full compensation and other benefits as though he had not
been disabled; provided, however, unless Employee shall adequately perform his
duties hereunder for a continuous period of at least sixty (60) calendar days
following a period of total disability before Employee again becomes totally
disabled, he shall not be entitled to start a new five hundred and forty-seven
(547)-day period under this Paragraph, but instead may only continue under the
remaining portion of the original five hundred and forty-seven (547)-day period
of total disability. In the event Employee shall not adequately perform his
following a period of total disability, the running of the original five hundred
and forty-seven (547)-day period shall cease during the time of Employee’s
adequate performance of his duties hereunder before Employee again becomes
totally disabled.
If, following Employee’s becoming totally disabled, this Agreement shall be
terminated (as provided in the preceding paragraph) and Employee’s employment
with Corporation terminated, Employee shall be one hundred percent (100%) vested
in, and entitled to, benefits under the SERP determined as if Employee’s “Years
of Participation” and “Years of Employment” (as such terms (or similar terms)
are defined in the SERP) include the period of
4
time before such termination date during which Employee was totally disabled.
Furthermore, if on such termination date Employee is not yet eligible for an
early retirement benefit under the SERP, Employee will be entitled to benefits
under the SERP the amount of which shall be determined as if his termination
date was Employee’s Early Retirement Date (as such term is defined in the SERP);
provided, these provisions shall not affect the timing or form of his SERP
distributions, which shall be determined solely under the terms of the SERP.
For the purpose of this Agreement, the term “totally disabled” or “total
disability” shall mean Employee’s inability to adequately perform his executive
and management duties hereunder on account of accident or illness. It is
understood that Employee’s occasional sickness or other incapacity of short
duration may not result in him being or becoming “totally disabled;” however,
such illness or incapacity could constitute Employee’s being or becoming
“totally disabled” if such illness or incapacity is prolonged or recurring.
13. Termination of employment.
A. Termination by Corporation. The Chief Executive Officer may terminate this
Agreement and Employee’s employment (the date thereof being referred to as his
“Actual Termination Date”), at any time, with or without “good cause” (“good
cause” being hereinafter defined), (i) immediately upon giving written notice to
Employee of his termination for “good cause,” and (ii) by giving at least thirty
(30) days’ written notice to Employee of its intention to terminate Employee’s
employment without “good cause;” provided, however, with respect to termination
without “good cause,” Corporation may, at its election, terminate Employee’s
actual employment (so that Employee no longer renders services on behalf of
Corporation) at any time during said thirty (30) day period; and,
(1) In the event such termination is for “good cause,” Corporation shall be
obligated only to pay Employee his base salary earned under Paragraph 5 through
his Actual Termination Date.
For purposes of this Agreement (including Paragraph 18 hereof), “good cause”
shall mean: that, in the sole discretion of the Chief Executive Officer, any of
the following have occurred or exist: (i) the willful and deliberate failure of
Employee to substantially perform his executive and management duties hereunder
for reasons other than Employee’s sickness, injury or disability; (ii) the
willful and deliberate conduct by Employee which results in substantial injury
or damage to Corporation; or (iii) the conviction or plea of guilty by Employee
of a felony crime. A termination of Employee for “good cause” based on clause
(i) or (ii) of the preceding sentence will take effect immediately, unless Chief
Executive Officer, in his sole discretion, allows Employee a right to cure, in
which case such termination for “good cause” will take effect thirty (30) days
(or such shorter period as determined by the Chief Executive Officer) after
Employee receives from Corporation written notice of its intent to terminate
Employee’s employment and Corporation’s description of the alleged cause, unless
Employee, in the opinion of the Chief Executive Officer, during such permitted
cure period, makes significant progress toward remedying (and as soon as
practicable thereafter, substantially completes the remedy of) the events or
circumstances constituting “good cause;” a termination of Employee for “good
cause” based on clause (iii) of the preceding sentence will take effect
immediately.
5
(2) In the event such termination is without “good cause,” as defined in
subparagraph (1) of this Paragraph and, if applicable, subject to the terms of
Paragraph 18, and if Employee timely signs and does not revoke a release as
provided in subparagraph G of Paragraph 13, Corporation shall be obligated to:
(a) upon Employee’s separation from service, pay Employee his base salary as
provided for in Paragraph 5 of this Agreement up to the end of the scheduled
term of this Agreement; provided, if at the time Employee has a separation from
service (such that his Benefit Commencement Date under the SERP has occurred)
Employee has attained his Maximum Retirement Benefit Date, all payments being
paid or payable under this subparagraph (a) shall cease or not commence, as
applicable. Such amount, if any, payable under this subparagraph (a) for the
period after his Actual Termination Date will be paid in accordance with the
regular payroll schedule applicable to all other similarly-situated active
executive employees of Corporation commencing with the next regularly scheduled
payday, with any portion of such amount that is payable within the six (6)-month
period beginning on the date of his separation from service being paid in a lump
sum upon the day after the six (6)-month anniversary of his separation from
service;
(b) pay Employee an amount equal to a portion of his performance bonus
compensation as provided for in Paragraph 7 of this Agreement prorated based on
the number of days through the end of the scheduled term of this Agreement;
provided, if at the time Employee has a separation from service (such that his
Benefit Commencement Date under the SERP has occurred) Employee has attained his
Maximum Retirement Benefit Date, all payments being paid or payable under this
subparagraph (b) shall cease or not commence, as applicable. The amount of such
bonus payable under this subparagraph (b), if any, will be paid to Employee
pursuant to the terms and customary operations of the Aflac Incorporated
Management Incentive Program (or other applicable bonus program) except that
Employee’s performance will be deemed to be at target while actual performance
of Corporation will be applied; provided, if the scheduled term of this
Agreement ends after the calendar year in which the notice of termination is
given, (i) the bonus payment for the calendar year in which such notice is given
(and any other full calendar year that ends before the scheduled term of this
Agreement ends) will be paid without any proration; and (ii) the amount of the
bonus payment for the calendar year in which the scheduled term of this
Agreement ends will be calculated on a pro rata basis, using the number of days
elapsed during such calendar year through the end of the scheduled term of this
Agreement, and will be paid upon Employee’s separation from service in a lump
sum between January 1 and March 15, inclusive, of the calendar year following
the calendar year in which the scheduled term of this Agreement ends or, if
later, upon the day after the six (6)-month anniversary of his separation from
service;
6
(c) continue to honor all Equity Awards, subject to the terms thereof,
granted to Employee prior to the termination date stated in said written notice,
all of said options to be or become fully vested as of the termination date
stated in said written notice; provided, any Equity Awards that vest based on
performance will remain subject to the applicable performance criteria, and
Employee’s performance will be deemed to be at target while actual vesting based
on performance of Corporation will be applied in the manner and at the time
provided in the agreements for such Equity Awards;
(d) upon Employee’s separation from service, continue to pay or provide to
Employee all of the retirement, health, life and disability benefits, as are
provided for in this Agreement or under any programs, plans or policies covering
Employee at the time of any such notice of termination, up to the end of the
scheduled term of this Agreement.
Notwithstanding the foregoing, after Employee’s Actual Termination Date,
Employee shall not actively participate in any retirement plan qualified under
Code Section 401(a), any employee stock purchase plan under Code Section 423,
any fully insured benefit for which the insurer does not allow post-employment
participation, or any other plan or benefit (other than Corporation’s
self-insured group health plan) that Corporation or the third-party insurer of
such benefit reasonably determines is not suitable or available for
post-employment participation. In such event, Employee shall be entitled to the
benefits described in the next succeeding paragraph, to the extent applicable,
up to the end of the scheduled term of this Agreement.
(i) After Employee’s Actual Termination Date, Employee shall no longer
actively participate in the Aflac Incorporated 401(k) Savings and Profit Sharing
Plan (the “401(k) Plan”). Corporation shall pay to Employee an amount equal to
the dollar amount of matching contributions, if any, that would have been made
to Employee’s account(s) under the 401(k) Plan if Employee had continued to
actively participate in such plan for the period from Employee’s Actual
Termination Date through the end of the scheduled term of this Agreement, and
maximum matching contribution (if any) available to him under the terms of the
401(k) Plan with such amount being calculated as if Employee’s compensation and
the limits applicable under the 401(k) plan all remained at the levels in effect
as of the date the notice of termination is given. This payment shall be made to
Employee in a lump sum upon the day after the six (6)-month anniversary of his
separation from service.
(ii) If, following Employee’s separation from service, Employee does not
qualify for retiree health benefits (if
7
any) under Corporation’s group health plan, then upon Employee’s separation from
service, Corporation shall allow Employee to continue to participate in
Corporation’s group health plan for the remainder of the stated term of this
Agreement as if he remained an active employee; provided, Employee pays the full
premium cost for such coverage; and provided further, Corporation shall
reimburse Employee for the employer portion of the cost of such coverage (such
that Employee shall pay in net terms only the active employee cost of such
coverage) within sixty (60) days after the end of each calendar month in which
Employee maintains such coverage.
B. Termination by Employee. Employee may terminate this Agreement, at any
time by giving at least sixty (60) days’ written notice to Corporation of his
intention to terminate his employment;
(1) in the event such termination by Employee shall be without “good reason”
(as defined in Paragraph 18 hereof) and with a bona fide intent either (i) to
retire or (ii) not to work in, or engage in a business or activity that would be
in a Competing Business (as defined in Paragraph 15) that would violate the
covenant against competition as set forth in Paragraph 15, Corporation shall be
obligated to:
(a) pay Employee his base salary due him under Paragraph 5 of this Agreement
up to his Actual Termination Date;
(b) pay Employee an amount equal to any performance bonus compensation due
him under Paragraph 7 of this Agreement for the period ending on the earlier of
(i) the termination date stated in such written notice, or (ii) the last day of
the calendar year in which written notice of termination is provided. The amount
of said bonus, if any, will be paid to Employee pursuant to the terms and
customary operations of the Aflac Incorporated Management Incentive Program (or
other applicable bonus program) except that Employee’s performance will be
deemed at target while actual performance of Corporation will be applied, and
will be calculated on a pro rata basis, using the number of days Employee was
actually employed by Corporation during the calendar year in which Employee
provides such written notice of termination;
(c) continue to honor all Equity Awards, subject to the terms thereof, which
have been granted to Employee and are fully vested prior to the termination date
stated in said written notice;
(d) pay Employee, and if elected by Employee, his spouse such retirement
benefits as are provided for in the Aflac Incorporated Supplemental Executive
Retirement Plan (the “SERP”) under Paragraph 9 thereof. For purposes of this
subparagraph, Employee shall continue to accrue “credited service” as an
employee under the SERP up through his Actual Termination Date; provided,
8
these provisions shall not affect the timing or form of his SERP distributions,
which shall be determined solely under the terms of the SERP.
(2) In the event such termination by Employee shall be for “good reason” (as
defined in Paragraph 18 hereof), and if Employee timely signs and does not
revoke a release as provided in subparagraph G of Paragraph 13, Corporation
shall be obligated to provide Employee with the payments, benefits and rights in
a manner, at such times and in such forms as specified in subparagraphs
A.(2)(a)-(d) of this Paragraph 13.
(3) In the event (i) such termination by Employee shall be without “good
reason” (as defined in Paragraph 18 hereof) and (ii) Corporation determines that
Employee’s post-employment activities violate, or will be in violation of, the
Covenants of Paragraphs 15 and/or 16, then Corporation shall not be obligated to
make or provide any further payments or benefits to Employee under this
Agreement except as herein provided in this subparagraph.
(a) Subject to Corporation’s rights under Paragraphs 15 and 16, Corporation
shall pay Employee his base salary due him under Paragraph 5 of this Agreement
(b) Subject to Corporation’s rights under Paragraphs 15 and 16 hereof,
Corporation shall continue to honor all Equity Awards, subject to the terms
thereof, which have been granted to Employee and are fully vested prior to the
termination date stated in said written notice.
C. Termination while disabled. If Employee is totally disabled at the time
any such notice of termination is given, then notwithstanding the provisions of
this Paragraph 13, Corporation shall nevertheless continue to pay Employee, as
his sole compensation hereunder, the compensation and other benefits for the
remaining period of Employee’s total disability as provided for in Paragraph 12
hereinabove. It is understood that in no event shall such disabled Employee be
entitled to compensation under this Paragraph 13 in addition to the continuation
of his compensation under Paragraph 12.
D. Cooperation After Notice of Termination. Following any such notice of
termination, Employee shall fully cooperate with Corporation in all matters
relating to the winding up of his pending work on behalf of Corporation and the
orderly transfer of any such pending work to other employees of Corporation as
may be designated by the Chief Executive Officer; and to that end, Corporation
shall be entitled to full-time services of Employee through his Actual
Termination Date and such full-time or part-time services of Employee as
Corporation may reasonably require during all or any part of the sixty (60)-day
period that follows his Actual Termination Date; provided, the parties
acknowledge that, depending on the level of services so required, the provision
of such services may delay the timing of Employee’s separation from service.
E. Separation from Service. The term “separation from service” when used in
this Agreement shall mean that Employee separates from service with Corporation
and all affiliates, as defined in Code Section 409A and guidance issued
thereunder (“Section 409A”). As
9
a general overview of Section 409A’s definition of “separation from service”, an
employee separates from service if the employee dies, retires, or otherwise has
a termination of employment with all affiliates, determined in accordance with
the following:
(1) Leaves of Absence. The employment relationship is treated as continuing
intact while the employee is on military leave, sick leave, or other bona fide
leave of absence if the period of such leave does not exceed six (6) months, or,
if longer, so long as the employee retains a right to reemployment with an
affiliate under an applicable statute or by contract. A leave of absence
constitutes a bona fide leave of absence only while there is a reasonable
expectation that the employee will return to perform services for an affiliate.
If the period of leave exceeds six (6) months and the employee does not retain a
right to reemployment under an applicable statute or by contract, the employment
relationship is deemed to terminate on the first date immediately following such
six (6)-month period. Notwithstanding the foregoing, where a leave of absence is
due to any medically determinable physical or mental impairment that can be
of not less than six (6) months, where such impairment causes the employee to be
unable to perform the duties of his or her position of employment or any
substantially similar position of employment, a twenty-nine (29)-month period of
absence shall be substituted for such six (6)-month period.
(2) Status Change. Generally, if an employee performs services both as an
employee and an independent contractor, the employee must separate from service
both as an employee and as an independent contractor pursuant to standards set
forth in Treasury Regulations to be treated as having a separation from service.
However, if an employee provides services to affiliates as an employee and as a
member of the Board of Directors, the services provided as a director are not
taken into account in determining whether the employee has a separation from
service as an employee for purposes of this Agreement.
(3) Termination of Employment. Whether a termination of employment has
occurred is determined based on whether the facts and circumstances indicate
that the employer and the employee reasonably anticipate that (A) no further
services will be performed after a certain date, or (B) the level of bona fide
services the employee will perform after such date (whether as an employee or as
an independent contractor) will permanently decrease to less than fifty percent
(50%) of the average level of bona fide services performed (whether as an
(36)-month period. Facts and circumstances to be considered in making this
determination include, but are not limited to, whether the employee continues to
be treated as an employee for other purposes (such as continuation of salary and
participation in employee benefit programs), whether similarly-situated service
providers have been treated consistently, and whether the employee is permitted,
and realistically available, to perform services for other service recipients in
the same line of business. For periods during which an employee is on a paid
bona fide leave of absence and has not otherwise terminated employment as
described in subparagraph (1) above, for purposes of this subparagraph, the
employee is treated as providing bona fide services at a level equal to the
level of services that the employee would have been required to perform to
receive the compensation paid with respect to such leave of absence. Periods
during which an employee is on an unpaid bona fide leave of absence and has not
otherwise terminated employment are disregarded for purposes of this subsection
(including for purposes of
10
determining the applicable thirty-six (36)-month period).
F. Separate Payments. Each payment made to Employee pursuant to this
Paragraph 13 or Paragraph 18 shall be treated as a separate payment for purposes
of Code Section 409A.
G. Release Requirement. As a condition to Employee receiving any pay or
benefits under subparagraph A(2) or B(2) of this Paragraph 13 or under Paragraph
18 (as applicable), Employee must sign (and not revoke) a written release
agreement (“Release”) containing any terms specified by Corporation for (i)
Employee’s release of Corporation and its affiliates from all claims arising
from Employee’s employment or termination, (ii) Employee’s non-revocation of
that release during the seven (7)-day period applicable to age-based claims, and
(iii) Employee’s promise to comply with specified confidentiality,
noncompetition and/or nonsolicitation provisions. Corporation will terminate
Employee’s eligibility for severance pay and benefits if she fails to sign, if
she revokes, or if she fails to follow the terms of this Release and if it is
not signed and returned to Corporation within the earlier of (i) the deadline
specified by Corporation, or (ii) sixty (60) days after Employee’s Actual
Termination Date (or Termination Date for purposes of Paragraph 18). Employee
must sign the Release after his Actual Termination Date (or Termination Date for
purposes of Paragraph 18). In the event that any payment under subparagraph A(2)
or B(2) of this Paragraph 13 or under Paragraph 18 (as applicable) is not exempt
from Code Section 409A, the payment timing is based on the signing of this
Release, and the period in which Employee could timely sign and return the
release spans two (2) calendar years, such payment shall in all events be made
in the second such calendar year. Notwithstanding the foregoing, if the payment
timing of any portion of payments or benefits, which rely solely on the
short-term deferral rule to be exempt from Code Section 409A, would be delayed
beyond the short-term deferral rule period due to Employee’s late signing of the
Release, such portion shall be forfeited.
14. Death of Employee. In the event of Employee’s death during the term of
this agreement or any extension hereof, this Agreement shall terminate
immediately, and Employee’s estate shall be entitled to receive terminal pay in
an amount equal to the amount of Employee’s base salary and any performance
bonus compensation actually paid by Corporation to Employee during the last
thirty-six (36) months of his life, said terminal pay to be paid in thirty-six
(36) equal monthly installments beginning on the first day of the month next
following the month during which Employee’s death occurs. If the Employee’s
death occurs before he has been employed for thirty-six (36) months, the
terminal pay shall be based on an amount equal to the Employee’s base salary and
any performance bonus actually paid by Corporation to Employee during the period
of his employment plus the amount of base salary and performance bonus the
Employee would have been paid had he survived for the full initial thirty-six
(36)-month period. Terminal pay as herein provided for in this Paragraph shall
be in addition to amounts otherwise receivable by Employee or his estate under
this or any other agreements with Corporation or under any employee benefits or
retirement plans established by Corporation and in which Employee is
participating at the time of his death. In addition, Corporation shall honor all
Equity Awards, subject to the terms thereof, granted to Employee prior to his
death and Employee or his estate shall, if not otherwise vested, become fully
vested in said options as of the date of Employee’s death. For purposes of this
Paragraph, Employee shall, upon his death, be given such additional “credited
service” as necessary
11
to fully qualify Employee under Aflac Incorporated Supplemental Executive
Retirement Plan (“SERP”) and to provide a survivor annuity to Employee’s spouse
under the Plan. If upon Employee’s death Employee was not eligible for (at
least) an early retirement benefit under the SERP, benefits will be payable
under the SERP the amount of which shall be determined as if Employee’s date of
death was his Early Retirement Date (as such term is defined in the SERP);
15. Covenants not to compete and not to disclose confidential information and
trade secrets.
A. Covenant against competition. During employment and for a twenty-four
(24)-month period after Employee’s Actual Termination Date (or Termination Date
for purposes of Paragraph 18) resulting from (i) Employee’s voluntary
termination without “good reason” (as defined in Paragraph 18), or
(ii) Corporation’s termination of Employee for “good cause” (as defined in
Paragraph13), Employee will not, on his own behalf, or on behalf of any other
person or entity, compete with Aflac Incorporated and its affiliated companies
(the “Aflac Companies”) by providing in the Restricted Territory (as defined in
subparagraph A(3) of this Paragraph 15) to any Competing Business (as defined in
subparagraph A(2) of this Paragraph 15), services similar to those Employee
provided to the Aflac Companies with respect to the Aflac Business (as defined
in subparagraph A(1) of this Paragraph 15), in circumstances in which Employee’s
responsibilities and duties are substantially similar to those performed by him
during the 24-month period ending on his Actual Termination Date.
(1) “Aflac Business” means the Aflac Companies’ insurance company business,
which the Aflac Companies operate throughout the United States (including the
District of Columbia, Puerto Rico, the U.S. Virgin Islands and Guam) and
throughout Japan, and which includes but is not limited to (i) the development,
underwriting marketing, distribution and sale of individual and group voluntary
insurance products, including accident, cancer and other specified diseases,
dental, hospital confinement indemnity, hospital confinement sickness indemnity,
hospital intensive care, life, annuities, lump sum cancer, lump sum cancer
critical illness, specified health event, short term disability and vision;
(ii) the offering of un-reimbursed medical, dependent care, and transportation
flexible spending accounts; and (iii) operating a private medical and insurance
product exchange and similar enrollment services. “Aflac Business” will also
include any additional insurance and reimbursement account products and
services, which become part of the business conducted by the Aflac Companies,
whether through acquisition and/or development, and in which or to which
Employee has had direct exposure in his position with the Aflac Companies.
Similarly, “Aflac Business” will not include any business operation, which
formerly was part of the business conducted by the Aflac Companies and which
ceased being a part thereof due to divestiture or discontinuation of that part
of the business.
(2) “Competing Business” means any person, concern or entity, which is
engaged in, or conducts a business substantially the same as, the Aflac Business
or any part thereof.
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(3) “Restricted Territory” means the area within the United States
(including the District of Columbia, Puerto Rico, the U.S. Virgin Islands and
Guam) and Japan.
B. Covenant against disclosure of confidential information and trade secrets.
Employee acknowledges that, during the term of his employment under this
Agreement, Employee will be privy to (i) certain confidential and proprietary
information of Aflac Companies, which constitutes trade secrets as defined in
the Georgia Trade Secret Act of 1990 (the “Trade Secret Act”), and (ii) certain
other confidential and proprietary information of Corporation that may not
constitute trade secrets as so defined. With respect to such Trade Secrets and
other confidential and proprietary information, Employee covenants and agrees,
as follows:
(1) Employee agrees to not disclose to any third party, without the prior
written consent of the Chief Executive Officer or unless necessary to perform
his duties and responsibilities hereunder, the processes, machines, technical
documentation, computer programs, customer lists, identity of customers,
business plans, marketing plans and techniques, pricing data, financial data,
marketing programs, customer files, financial institution files, technical
expertise and know how, and other confidential and proprietary information and
trade secrets, whether as defined in the Trade Secret Act or which may lie
beyond it (collectively, the “Property”), which have been or will be provided to
Employee by any of the Aflac Companies and are confidential and proprietary
property of any of the Aflac Companies. Employee further agrees not to use any
Property to his personal benefit or the benefit of any third party. Employee
also agrees to return to Corporation all such Property which is tangible upon or
before his Actual Termination Date. Notwithstanding the foregoing, the Property
protected hereunder will not include any data or information that has been
disclosed to the public (except where such public disclosure has been made by
Employee without authorization), that has been independently developed and
disclosed by others, or that otherwise enters the public domain through lawful
means. The restrictions in this Paragraph are in addition to, and not in lieu
of, any rights or remedies Corporation may have available pursuant to the laws
of the State of Georgia to prevent the disclosure of trade secrets and
proprietary information, with such laws including but not limited to the Trade
Secrets Act.
(2) Employee’s obligations under the nondisclosure provisions in this
Paragraph 15.B (i) will apply to Property that does not constitute trade secrets
during the term of Employee’s employment hereunder and for as long as the
Property remains confidential, and (ii) will apply to Property that constitutes
trade secrets until such Property no longer constitutes trade secrets and is no
longer confidential.
16. Enforcement of restrictive covenants.
A.Blue Penciling. The parties agree that if any court finds that any provision
in Paragraph 15 or this Paragraph 16 is overly broad such that it is
unenforceable under applicable state law, the court may reform that provision to
narrow its scope to the extent necessary to render it enforceable.
B.Severability. Employee acknowledges and agrees that the covenant against
competition and the covenant against disclosure contained in Paragraphs 15.A and
15.B,
13
respectively, are reasonable and valid and do not impose limitations greater
than those that are necessary to protect the business interests and confidential
information of the Aflac Companies. The parties agree that the invalidity or
unenforceability of any one or more of such covenants, other provisions, or
parts thereof (collectively the “Covenants”) will not affect the validity or
enforceability of the other Covenants, all of which are inserted conditionally
on their being valid in law. In the event one or more Covenants contained herein
are ruled invalid (after application of subparagraph A of this Paragraph), this
Agreement will be construed as if such invalid Covenant had not been inserted.
The parties hereto agree that the Covenants contained in this Agreement are
severable and divisible; that none of such Covenants depends on any other
Covenant for its enforceability; that such Covenants constitute enforceable
obligations between the parties; that each such Covenant will be construed as an
agreement independent of any other Covenant of this Agreement; and that the
existence of any claim or cause of action by one party to this Agreement against
the other party to this Agreement, whether predicated on this Agreement or
otherwise, will not constitute a defense to the enforcement by any party to this
Agreement of any such Covenant.
C.Injunctive Relief. Employee hereby agrees that any remedy at law for any
breach of the Covenants will be inadequate and that any of the Aflac Companies
will be entitled to apply for injunctive relief in addition to any other remedy
the Aflac Companies might have under this Agreement.
D.Claim for Damages. Employee acknowledges that, in addition to seeking
injunctive relief, any of the Aflac Companies may bring a cause of action
against him for any and all losses, liabilities, damages, deficiencies, costs
(including, without limitation, court costs), and expenses (including, without
limitation, reasonable attorneys’ fees), incurred by the Aflac Companies and
arising out of or due to his breach of any Covenant or agreement contained in
Paragraph 15. Notwithstanding anything herein to the contrary, the breach of any
Covenant will cause Employee to forfeit any and all payments otherwise due under
subparagraphs A(1), B(1) and B(3) (as applicable) of Paragraph 13, and the
breach of the nondisclosure Covenant set forth in Paragraph 15.B will cause
Employee to forfeit any and all payments otherwise due under subparagraphs A(2)
and B(2) (as applicable) of Paragraph 13; and Employee agrees to repay to the
Aflac Companies any amount already paid under such applicable subparagraph.
E.Survival. Paragraph 15 and this Paragraph 16, to the extent applicable, will
survive the termination of this Agreement and Employee’s employment. In
addition, neither the termination of this Agreement nor Employee’s employment
will terminate any other obligations or rights that, by the specific terms of
this Agreement, extend beyond such termination.
17. Right to acquire insurance. If Employee shall terminate his employment
hereunder for any reason other than death, he may, at his election, acquire any
insurance policies upon his life owned by the Corporation by giving written
notice of his election to Corporation within ninety (90) days after his
termination of employment. Such policies shall be transferred to the Employee
upon his payment to Corporation of the then interpolated terminal reserve value
of said insurance. In the event any policies transferred to Employee as herein
provided shall not have an interpolated terminal reserve value, then the amount
to be paid by Employee shall be its then fair market value.
14
18. Change in control.
A. In general. In the event there is a Change in Control (as defined in this
Paragraph) of Corporation, this Agreement shall, in order to help eliminate the
uncertainties and concerns which may arise at such time, be automatically
extended upon all of the same terms and provisions contained herein, for an
additional period of three (3) years, beginning on the first day of the month
during which such Change in Control shall occur.
B. Notwithstanding the term of subparagraph A(2) and (B)(2) of Paragraph 13,
and in lieu of the obligations of the Corporation under such paragraph, if,
after a Change in Control Employee’s employment is terminated by Corporation
without “good cause” (as defined in Paragraph 13), or is terminated by Employee
for “good reason” (as defined in Paragraph 18), any such termination by
Corporation to be made only in accordance with the requirements specified by
Paragraph 13.A, Employee shall be entitled to the following if Employee timely
signs and does not revoke a release as provided in subparagraph G of Paragraph
13:
(1) In a manner, at such times and in such forms as provided in Paragraph
13.A(1), Corporation shall pay Employee’s full base salary to Employee through
the date of termination stated in Corporation’s written notice required pursuant
to Paragraph 13.A hereof (hereinafter in this Paragraph the “Termination Date”)
at the rate in effect on the date such notice is given and, additionally, shall
pay Employee all compensation and benefits payable to Employee under the terms
of any compensation or benefit plan, program or arrangement maintained by
Corporation during such period through the Termination Date.
(2) The Corporation shall pay Employee all compensation and benefits due
Employee under Corporation’s retirement, insurance and other compensation or
benefit plans, programs of arrangements as such payments become due. The amount
of such compensation and benefits shall be determined under, and paid in
accordance with, Corporation’s retirement, insurance and other compensation or
benefit plans, programs and arrangements.
(3) In lieu of any further salary payments to Employee for periods subsequent
to the Termination Date, the Corporation shall pay to Employee, immediately
after the Termination Date, a lump sum payment, in cash, equal to three (3)
times the sum of (i) Employee’s annual base salary in effect immediately prior
to the Change in Control and (ii) the higher of the amount paid to Employee
pursuant to the Aflac Incorporated Management Incentive Plan (or any successor
plan thereto) for the year preceding the year in which the Termination Date
occurs or paid in the year preceding the year in which the Change in Control
occurs; provided, if Employee’s separation from service occurs more than
twenty-four (24) months after the Change in Control, only the portion of such
lump-sum severance payment in excess of the total amount that would have been
payable under Paragraphs 13.A(2)(a) and (b) shall be paid pursuant to the terms
hereinabove, and the remainder shall be paid pursuant to the terms of Paragraphs
13.A(2)(a) and (b) as if no Change in Control had occurred; and, provided
further, such amount will be paid upon the day after the six (6)-month
anniversary of Employee’s separation from service; provided further, if upon his
Termination Date Employee has attained his Maximum Retirement Benefit Date, no
amount shall be payable under this subparagraph 3.
15
(4) The Corporation shall pay to Employee, immediately after the Termination
Date, a lump sum amount, in cash, equal to a pro rata portion (based on the
number of days Employee is an employee during the year in which the Termination
Date occurs) of the aggregate value of the maximum annual amount of all
contingent incentive compensation awards to Employee for all uncompleted periods
under the Aflac Incorporated Management Incentive Plan (or successor plan
thereto); provided, to the extent any amount of such lump sum payable after the
Termination Date is not exempt from Section 409A, such amount will be paid upon
the day after the six (6)-month anniversary of Employee’s separation from
service.
(5) For a thirty-six (36)-month period after Employee’s separation from
service, Corporation shall provide Employee with life, disability, accident and
health insurance benefits substantially similar to and equal or greater in
economic value than such benefits which Employee is receiving immediately prior
to the Termination Date (without giving effect to any reduction in such benefits
subsequent to a Change in Control which reduction in benefits would constitute
“good reason” as defined in this Paragraph). Benefits required to be provided to
Employee pursuant to this subparagraph B(5) shall be reduced to the extent
comparable benefits are actually received by or made available to Employee
without cost during such thirty-six (36)-month period and any such benefit
actually received by Employee shall be reported to Corporation by Employee.
Notwithstanding the foregoing, with respect to any of such life and/or
disability benefits that are fully insured, in lieu of providing such benefits
for such period, Corporation shall pay Employee a lump-sum amount equal to the
cost of such benefits on a post-employment basis for such thirty-six (36)-month
period; provided, any such cash payment shall be made as soon as practicable
after Employee’s separation from service, with any amount that is not exempt
from Section 409A and that is otherwise payable within the six (6)-month period
beginning on the date of his separation from service being paid upon the day
after the six (6)-month anniversary of his separation from service.
C. In addition to the payments provided for in subparagraph B of this
Paragraph 18, in the event that after a Change in Control Employee’s employment
by the Corporation is terminated by the Corporation without “good cause” or by
Employee for “good reason,” the Corporation shall continue to honor all Equity
Awards granted to Employee (subject to the terms of such awards) prior to the
Termination Date, and all Equity Awards granted to Employee prior to his Actual
Termination Date shall become fully vested and exercisable (and to the extent
applicable, e.g., with respect to any restricted stock units or similar awards)
payable, as of the Termination Date; provided, any Equity Awards that vest based
on performance will vest as if the maximum performance under the performance
criteria had been satisfied.
D. Notwithstanding any other provisions of this Agreement, in the event that
any payment or benefit received or to be received by Employee in connection with
a Change in Control or the termination of Employee’s employment (whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with the Corporation, any person whose actions result in a Change in
Control or any person affiliated with the Corporation or such person) (all such
payments and benefits being hereinafter called “Total Payments”) would not be
16
deductible (in whole or in part) by the Corporation, an affiliate or person
making such payment or providing such benefit as a result of Section 280G of the
Internal Revenue Code of 1986 (the “Code”) then, to the extent necessary to make
such portion of the Total Payments deductible (and after taking into account any
reduction in the Total Payments provided by reason of Section 280G of the Code
in such other plan, arrangement or agreement), adjustments in such payments
shall be made as follows: (i) the cash payments provided pursuant to
subparagraph B.(3) and B.(4) of this Paragraph 18 that are exempt from Section
409A shall first be reduced (if necessary, to zero); (ii) then, if further
reductions are necessary, benefits provided under subparagraph B.(5) of this
Paragraph 18 that are exempt from Section 409A shall be reduced (if necessary,
to zero); (iii) then, if still further reductions are necessary, the cash
payments provided pursuant to subparagraph B.(3) and B.(4) of this Paragraph 18
that are not exempt from Section 409A shall be reduced (if necessary, to zero);
and (iv) finally, if still further reductions are necessary, all of the benefits
provided under subparagraph B.(5) of this Paragraph 18 that are not exempt from
Section 409A shall be forfeited. For purposes of this limitation (i) no portion
of the Total Payments, the receipt or enjoyment of which Employee shall have
effectively waived in writing prior to the date of termination of employment
shall be taken into account (provided that, in no event will any such waiver
impermissibly affect any portion of the Total Payments that is subject to
Section 409A), (ii) no portion of the Total Payments shall be taken into account
which in the opinion of the tax counsel selected by the Corporation’s
independent auditors and reasonably acceptable to Employee does not constitute a
“parachute payment” within the meaning of Section 280G(b)(2) of the Code,
including by reason of Section 280G(b)(4)(A) of the Code, (iii) except as
provided in clause (iv) above, the payments and benefits be reduced only to the
extent necessary so that the Total Payments (other than those referred to in
clauses (i) or (ii)) in their entirety constitute reasonable compensation for
services actually rendered within the meaning of Section 280G(b)(4)(B) of the
Code or are otherwise not subject to disallowance as deductions, in the opinion
of the tax counsel referred to in clause (ii); and (iv) the value of any
Payments shall be determined by the Corporation’s independent auditors in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code. In no
event shall the Corporation’s obligation to continue to honor all Equity Awards
granted to Employee prior to the Termination Date nor the vesting of Equity
Awards in accordance with Paragraph 18.C hereof be affected by this Paragraph
18.D.
E. Definitions.
(1) “Change in Control” means a change in ownership or effective control of
the Corporation, Aflac Incorporated or any other “relevant corporation” within
the meaning of Treas. Reg. §1.409A-3(i)(5)(ii) (each a “Relevant Corporation”)
or a change in the ownership of a substantial portion of the assets of a
Relevant Corporation, all within the meaning of Section 409A. As a general
overview, Section 409A’s definition of these terms, and the dates as of which
they occur, are as follows:
(a) The date any one person, or more than one person acting as a group,
acquires ownership of stock of a Relevant Corporation that, together with stock
held by such person or group constitutes more than fifty percent (50%) of the
total voting power of the stock of a Relevant Corporation. However, if any one
person, or more than one person acting as a group, is considered to own more
17
than fifty percent (50%) of the total fair market value or total voting power of
the stock of a Relevant Corporation, the acquisition of additional stock by the
same person or persons is not considered to cause a change in the ownership of a
Relevant Corporation or to cause a change in the effective control of a Relevant
Corporation.
(b) The date any one person, or more than one person acting as a group,
acquires (or has acquired during the twelve (12)-month period ending on the date
of the most recent acquisition by such person or persons) ownership of stock of
a Relevant Corporation possessing thirty percent (30%) or more of the total
voting power of the stock of a Relevant Corporation.
(c) The date that any one person, or more than one person acting as a group
of the most recent acquisition by such person or persons) assets from a Relevant
Corporation that have a total gross fair market value equal to or more than
forty percent (40%) of the total gross fair market value of all of the assets of
a Relevant Corporation immediately before such acquisition or acquisitions.
(d) The date a majority of the board of directors of a Relevant Corporation
for which no other corporation is a majority shareholder is replaced during any
twelve (12)-month period by directors whose appointment or election is not
endorsed by a majority of the members of such Relevant Corporation’s board of
directors before the date of the appointment or election.
(2) “Good reason” shall mean the termination of employment by Employee upon
the occurrence of any one or more of the following events to the extent that
there is, or would be if not corrected, a material negative change in Employee’s
employment relationship with Corporation:
(a) A material breach by Corporation of the terms and conditions of this
Agreement affecting Employee’s salary and bonus compensation, any employee
benefit, Equity Awards or the loss of any of Employee’s titles or positions with
Corporation;
(b) A significant diminution of Employee’s duties and responsibilities;
(c) The assignment to Employee of duties significantly inconsistent with or
different from his duties and responsibilities existing at the time of a Change
in Control;
(d) A purported termination of Employee’s employment by Corporation other
than as permitted by this Agreement;
18
(e) The relocation of Corporation’s principal office or of Employee’s own
office to any place beyond twenty-five (25) miles from the current principal
office of Corporation in Columbus, Georgia; and
(f) The failure of any successor to Corporation to expressly assume and agree
to discharge Corporation’s obligations to Employee under this Agreement as
extended under this Paragraph, in form and substance satisfactory to Employee.
Notwithstanding the foregoing, Employee shall have good reason under this
Agreement only if (i) Employee provides Corporation, within ninety (90) days of
the occurrence of the event giving rise to the notice, a written notice
indicating the specific good reason provision(s) in this Agreement relied upon,
setting forth in reasonable detail the facts and circumstances claimed to
provide a basis for good reason, and indicating a date of termination of
employment (not less than thirty (30) nor more than sixty (60) days after the
date such notice is given); and (ii) such facts and circumstances are not
substantially corrected by Corporation prior to the date of termination
specified by Employee in such notice. Any failure by Employee to set forth in a
notice of good reason any facts or circumstances which contribute to the showing
of good reason shall not waive any right of Employee hereunder or preclude
Employee from asserting such fact or circumstances in enforcing his rights
hereunder.
19. No requirement to seek employment and no offset. Corporation agrees that,
if Employee’s employment is terminated by Corporation during the term of this
Agreement or by Employee for “good reason” during the term of this Agreement,
Employee is not required to seek other employment or attempt in any way to
reduce the amounts payable to Employee by Corporation pursuant to the applicable
terms of this Agreement; it being understood and agreed that the amount of any
payment or benefit to Employee provided for hereunder shall not be reduced by
any compensation or other benefits earned by Employee as a result of his
employment by another employer or, after a Change in Control, by Corporation’s
attempt to offset any amount claimed to be owed by Employee to Corporation or
otherwise.
20. Waiver of breach or violation not deemed continuing. The waiver by either
party of a breach or violation of any provision of this Agreement shall not
operate as or be construed to be a waiver of any subsequent breach hereof.
21. Notices. Any and all notices required or permitted to be given under this
Agreement will be sufficient if furnished in writing, sent by registered or
certified mail to his last known residence in the case of Employee or to its
principal office in Columbus, Georgia, in the case of the Corporation.
22. Authority. The provisions of this Agreement required to be approved by
the Board of Directors of Corporation or the Compensation Committee of the Board
have been so approved and authorized.
23. Arbitration. From time-to-time, Employee agrees to sign and become a
party to any arbitration agreement with such terms as Corporation may provide,
and the terms of such arbitration
19
agreement shall be incorporated herein by this reference and shall apply to all
claims under this Agreement; provided, notwithstanding the foregoing, any claims
or actions, whether for damages, injunctive relief or other relief, for any
violation or breach of the Covenants set forth in Paragraphs 15 and 16,
including but not limited to the actions described in subparagraphs C and D of
Paragraph 16, (i) shall be excluded from the arbitration agreement and its
applicability, and (ii) shall be subject to the jurisdiction of the applicable
court as set forth in Paragraph 24.
/s/ KC /s/ PSA
Initials for Corporation Initials of Employee
24. Governing Law. This Agreement shall be interpreted, construed and
governed according to the laws of the State of Georgia. Any legal action brought
in regard to this Agreement, which is not subject to arbitration as provided in
Paragraph 23 or is brought to enforce the finding of the arbitrator, shall be
brought in the Superior Court of Muscogee County, Georgia, or the United States
District Court of the Southern District of Georgia, whichever applies, and the
parties waive jurisdiction and venue in any other court.
25. Paragraph Headings. The paragraph headings contained in this Agreement
are for convenience only and shall in no manner be construed as part of this
Agreement.
26. Two originals. This Agreement is executed in two (2) originals, each of
which shall be deemed an original and together shall constitute one and the same
Agreement, with one original being delivered to each party hereto.
27. Code Section 409A. This Agreement is intended to comply with the
requirements of Code Section 409A and shall be construed accordingly. Any
payments or distributions to be made to Employee under this Agreement upon a
“separation from service” (as defined above) of amounts classified as
“nonqualified deferred compensation” for purposes of Code Section 409A, payable
due to a separation from service and not exempt from Section 409A, shall in no
event be made or commence until six (6) months after such separation from
service. Each payment of nonqualified deferred compensation under this Agreement
Notwithstanding the foregoing, Corporation shall not be liable to Employee or
any other person if the Internal Revenue Service or any court determines for any
reason that any payments under this Agreement are subject to taxes or penalties
under Section 409A.
28. Tax Withholding. Corporation shall withhold all applicable taxes from any
amounts payable under this Agreement, including, but not limited to, any
federal, foreign, state and local taxes; and all such amounts described in this
Agreement shall be paid net of such taxes.
29. Amendments and Waivers. Except as otherwise specified herein, this
Agreement may be amended, and the observance of any term of this Agreement may
or prospectively), only with the written consent of Corporation and Employee.
20
IN WITNESS WHEREOF, Corporation has hereunto caused its name to be signed and
its seal to be affixed by its duly authorized officers, and Employee has
hereunto set his hand and seal, all being done in duplicate originals, with one
original being delivered to each party as of the 19th day of August, 2015.
AMERICAN FAMILY LIFE ASSURANCE
COMPANY OF COLUMBUS (Aflac)
/s/ Paul S. Amos, II
BY:
/s/ Kriss Cloninger, III
PAUL S. AMOS, II
KRISS CLONINGER, III
Employee
Executive Vice President
/s/ Robin L. Blackmon
ATTEST:
/s/ J. Matthew Loudermilk
Witness
J. MATTHEW LOUDERMILK
Vice President, Corporate Secretary
21 |
Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (“Agreement”) is made by and between STERLING
BANCSHARES, INC., a Texas corporation (“Company”) and J. DOWNEY BRIDGWATER
(“Executive”). Capitalized terms used herein without definition shall have the
respective meanings set forth in paragraph 7.1.
WITNESSETH:
WHEREAS, Company and Executive desire to enter into this Agreement for the
purposes, among other things, of providing for the employment of Executive
through December 31, 2009, establishing base and incentive compensation terms,
and providing for Executive to receive certain severance benefits in the event
that his employment is terminated following a Change of Control under the
WHEREAS, Company is desirous of continuing Executive’s employment as the senior
executive of Company and its wholly-owned subsidiary, STERLING BANK, a banking
association chartered by the State of Texas (the “Bank”), on the terms and
conditions, and for the consideration, hereinafter set forth and Executive is
desirous of continuing his employment by Company on such terms and conditions
and for such consideration; and
WHEREAS, references herein to Executive’s employment by Company shall also mean
his employment by Bank, and references herein to payments or benefits of any
nature to be made by Company to Executive shall mean that either Company will
make such payments or it will cause Bank to make such payments to Executive.
obligations contained herein, Company and Executive agree as follows:
ARTICLE 1: EMPLOYMENT AND DUTIES
1.1 EMPLOYMENT; EFFECTIVE DATE. Company agrees to employ Executive and Executive
agrees to be employed by Company, beginning as of the Effective Date (as
hereinafter defined) and continuing for the period of time set forth in Article
2 of this Agreement, subject to the terms and conditions of this Agreement. For
purposes of this Agreement, the “Effective Date” shall be January 1, 2007.
1.2 POSITION.
(a) From and after the Effective Date, Company shall employ Executive in the
capacity of Chief Executive Officer and President of both the Company and of the
Bank, or in such other positions as the parties mutually may agree.
(b) At all times during the term of this Agreement, Company shall use
commercially reasonable efforts to cause Executive to be elected a director of
the Company and the Bank and to serve on the Executive Committee of the Bank. If
elected, Executive agrees to serve as a director of the Company, the Bank and
any one or more of the Company’s subsidiaries and to serve on the Executive
Committee of the Bank.
1.3 DUTIES AND SERVICES. Executive agrees to serve in the capacities referred to
in paragraph 1.2 and to perform diligently and to the best of his abilities the
duties and services appertaining to such offices, as well as such additional
duties and services appropriate to such offices which the parties mutually may
agree upon from time to time. Executive’s employment shall also be subject to
the policies maintained and established by Company, as the same may be amended
1.4 OTHER INTERESTS. Executive agrees, during the period of his employment by
Company, to devote his primary business time, energy and best efforts to the
business and affairs of Company and Bank and not to engage, directly or
indirectly, in any other business or businesses, whether or not similar to that
of Company, except with the consent of the Board of Directors of Company (the
“Board of Directors”). However, Executive shall have the right to participate in
the following activities so long as they do not conflict with the business and
affairs of Company or interfere with Executive’s performance of his duties
hereunder: (i) engaging in and managing passive personal investments and other
business activities, and (ii) serving on civic, religious, educational and/or
charitable boards or committees.
ARTICLE 2: TERM AND TERMINATION OF EMPLOYMENT
2.1 TERM. Unless sooner terminated pursuant to other provisions hereof, Company
agrees to employ Executive for the period beginning on the Effective Date and
ending on December 31, 2009 (the “Employment Term”). Upon expiration of the
Employment Term, Executive shall become an “at will” employee and either Company
or Executive may terminate Executive’s employment by Company with or without
cause and with or without notice.
2.2 COMPANY’S RIGHT TO TERMINATE. Notwithstanding the provisions of paragraph
2.1, Company shall have the right to terminate Executive’s employment under this
Agreement at any time for any of the following reasons:
(a) upon Executive’s death;
(b) upon Executive’s becoming incapacitated by accident, sickness or other
circumstance which renders him, with reasonable accommodation, mentally or
physically incapable of performing the duties and services required of him
hereunder on a full-time basis for a period of at least 180 consecutive days;
(c) for cause, which for purposes of this Agreement shall mean Executive (A) has
engaged in gross negligence or willful misconduct in the performance of the
duties required of him hereunder, (B) has been convicted of or pleaded guilty or
nolo contendere to a misdemeanor involving moral turpitude or a felony, (C) has
willfully refused without proper legal reason to perform the duties and
responsibilities required of him hereunder, (D) has materially breached any
corporate policy or code of conduct established by Company which, if curable,
remains uncured for 30 days following written notice to Executive by Company of
such breach, or (E) has willfully engaged in conduct that he knows or should
know is materially injurious to Company or any of its affiliates;
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(d) for Executive’s material breach of any material provision of this Agreement
which, if correctable, remains uncorrected for 30 days following written notice
to Executive by Company of such breach; or
(e) for any other reason whatsoever, in the sole discretion of the Board of
Directors.
2.3 EXECUTIVE’S RIGHT TO TERMINATE. Notwithstanding the provisions of paragraph
2.1, Executive shall have the right to terminate his employment under this
(a) Good Reason or a material breach by Company of any material provision of
this Agreement which, if correctable, remains uncorrected for 30 days following
written notice of such breach by Executive to Company; or
(b) for any other reason whatsoever, in the sole discretion of Executive, by
written notice to Company at least six months’ prior to the effective date of
Executive’s termination of his employment, unless Company and Executive mutually
agree to a shorter notice period.
2.4 NOTICE OF TERMINATION. If Company or Executive desires to terminate
Executive’s employment hereunder at any time prior to expiration of the
Employment Term, it or he shall do so by giving written notice to the other
party that it or he has elected to terminate Executive’s employment hereunder
and stating the effective date and reason for such termination, provided that no
such action shall alter or amend any other provisions hereof or rights arising
hereunder, including, without limitation, the provisions of Articles 4 and 5
hereof.
ARTICLE 3: COMPENSATION AND BENEFITS
3.1 BASE SALARY. During the Employment Term, Executive shall receive an annual
base salary of $525,000. Executive’s annual base salary shall be paid in equal
installments in accordance with Company’s standard policy regarding payment of
compensation to executives but no less frequently than monthly. The Human
Resources Program Committee of the Company or any successor committee with
responsibility for executive compensation (the “HR Committee”) shall review
Executive’s Base Salary on an annual basis and may recommend to the Board of
Directors an increase in the Base Salary if it determines, in its discretion,
that an increase is appropriate. For purposes of this Agreement, “Base Salary”
shall mean Executive’s initial annual base salary and, if increased, the
increased annual base salary. During any period that Executive is receiving
benefits under Company’s Long Term Disability Plan Company shall only be
obligated to pay Base Salary to Executive in an amount equal to the excess, if
any, of the after-tax value of the Base Salary over the after-tax value of the
disability benefits being received by Executive.
3.2 BONUSES. Executive shall receive annual performance-based cash bonuses upon
the achievement of certain performance results described on Exhibit A. These
performance metrics, ROA and EPS, are derived from the Board approved budget at
the beginning of each fiscal year. The target bonus for the position of CEO is
based upon available market data and is subject to annual approval by the Human
Resource Programs Committee. The annual
3
performance bonus shall be determined and paid not later than March 15 of the
year following the year in respect of which the annual performance bonus is
being determined. Bonuses paid pursuant to this section shall be in lieu of any
bonuses to which the Executive may have been entitled to pursuant to the
Company’s short-term incentive program.
In the event that Executive receives a payment of performance-based cash bonuses
under this Section and the Company subsequently (i) determines that it must file
a formal restatement of its previously filed financial statements with the
Securities and Exchange Commission, and (ii) as a result of the restatement the
Board makes a formal determination that some portion of the Executive’s
performance based cash bonuses should not have been paid due to a change in
actual performance results based on such restatement, then the Company and
Executive agree that the provisions of this paragraph shall apply. The Board
shall be authorized to (i) recalculate Executive’s performance-based cash
bonuses for the current and any prior period, and (ii) determine the amount of
any excess cash bonus payments paid to Executive during such prior period.
Executive shall immediately deliver to the Company, upon demand, an amount in
cash equal to any excess bonus payments paid by the Company to Executive, as
adjusted for taxes. In the event such amount is not immediately delivered to the
Company, the Company may offset such payment obligation against any other
payments from the Company that Executive is entitled to receive under this
Agreement or any other agreement or arrangement with the Company. Nothing in
this Section shall be deemed to limit the Company’s rights against Executive for
any conduct which resulted in the formal restatement or formal determination
described herein in any action at law or in equity.
3.3 EQUITY INCENTIVES.
(a) Effective as of January 1, 2006, Executive was awarded 125,000 Performance
Restricted Share Units (“PRSUs”). These PRSUs, adjusted for the December 2006 3
for 2 stock split, now equal 187,500 PRSUs. As of the Effective Date, none of
the PRSUs were vested. If Executive has been continuously employed by Company
from the Effective Date through December 31, 2009, the PRSUs will vest on
December 31, 2009 based on the Company’s performance as compared to its peers
over the three year period beginning January 1, 2007 and ending on December 31,
2009, in accordance with Exhibit B. The peer banks were selected by the
Committee at the beginning of the three-year vesting period. Not later than
March 15, 2010, but effective as of January 1, 2010, Company will issue to
Executive one Bonus Share (as defined in the 2003 Plan) in respect of each
vested PRSU.
(b) Notwithstanding the foregoing, if Executive’s employment hereunder shall be
terminated by Company for any reason other than those encompassed by paragraphs
2.2(c) or (d), effective as of the date of termination Company shall issue Bonus
Shares to Executive in accordance with the following table:
Year of Termination of Employment
Cumulative
Bonus Shares Issued
2007
62,500
2008
125,000
2009
187,500
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(c) Notwithstanding the foregoing, upon a Change of Control, the 187,500 PRSUs
shall fully vest, and all Bonus Shares which may be issued as a result of the
vesting of such PRSUs shall be issued effective as of the date of the Change of
Control.
(d) The aggregate number of shares of Company Stock which may be awarded
hereunder to Executive shall be appropriately adjusted for any increase or
decrease in the number of outstanding shares of Company Stock resulting from a
stock split or other subdivision or consolidation of shares of Company Stock or
for other capital adjustments or payments of stock dividends or distributions or
other similar increases or decreases in the outstanding shares of Company Stock
without receipt of consideration by Company.
(e) In the event that Executive receives shares of Company Stock in connection
with the settlement of PRSUs under this Section and the Company subsequently
(i) determines that it must file a formal restatement of its previously filed
financial statements with the Securities and Exchange Commission, and (ii) as a
result of the restatement the Board makes a formal determination that some
portion of the Executive’s PRSUs were not properly vested due to a change in
actual performance results due to such restatement, then the Company and
shall be authorized to (i) recalculate the number of PRSUs that should have been
paid to Executive for the current or any prior period, and (ii) the amount of
any excess PRSU vesting that occurred during such prior period. Executive shall
immediately deliver to the Company, upon demand, (i) all shares of Company Stock
issued to Executive in connection with the improper vesting of some or all of
his PRSUs to as to which Executive is still the direct or indirect beneficial
owner; and (ii) if Executive has sold or otherwise transferred the shares of
Common Stock received in connection with improper vesting of his PRSUs,
Executive shall pay to the Company an amount in cash equal to the greater of
(A) the actual consideration received for such shares, or (B) the fair market
value of the shares on the date on which such shares were sold or otherwise
transferred, in either case adjusted for taxes. If an amount described in the
preceding sentence is not immediately delivered to the Company, the Company may
offset such delivery obligation against any other payments from the Company that
Executive is entitled to receive under this Agreement or any other agreement or
arrangement with the Company. Nothing in this Section shall be deemed to limit
the Company’s rights against Executive for any conduct which resulted in the
formal restatement or formal determination described herein in any action at law
or in equity.
5
3.4 LONG TERM INCENTIVE PROGRAM. Executive shall be allowed to participate in
the Company’s Long-Term Incentive (LTI) Stock Performance Program in accordance
with its terms. Executive’s participation in this program, including
establishment of specific award targets, shall be administered by the Human
Resources Program Committee.
3.5 BUSINESS AND ENTERTAINMENT EXPENSES. Subject to Company’s standard policies
and procedures with respect to expense reimbursement as applied to its executive
employees generally, Company shall reimburse Executive for, or pay on behalf of
Executive, reasonable and appropriate expenses incurred by Executive during his
employment hereunder for business related purposes, including dues and fees to
industry, professional and social organizations and costs of entertainment and
business development.
3.6 OTHER COMPANY BENEFITS. Executive and, to the extent applicable, Executive’s
spouse, dependents and beneficiaries, shall be allowed to participate in all
benefits, plans and programs, including improvements or modifications of the
same, which are now, or may hereafter be, available to other executive employees
of Company. Such benefits, plans and programs may include, without limitation,
pension benefit plans, health insurance or health care plans, life insurance,
disability insurance, supplemental retirement plans, vacation and sick leave
benefits, and the like. Company shall not, however, by reason of this paragraph
be obligated to institute, maintain, or refrain from changing, amending, or
discontinuing, any such benefit plan or program, so long as such changes are
similarly applicable to executive employees generally.
ARTICLE 4: CONFIDENTIAL INFORMATION
In the Executive’s position with the Company and the Bank, the Company has
previously (i) disclosed to Executive, and placed Executive in a position to
have access to or develop, trade secrets or confidential information of the
Company or its affiliates, (ii) entrusted Executive with business opportunities
of the Company or its affiliates, or (iii) placed Executive in a position to
develop goodwill on behalf of Company or its affiliates. Executive acknowledges
that in his position with the Company and the Bank, the Company shall continue
to (i) disclose to Executive, or place Executive in a position to have access to
or develop, additional and subsequent trade secrets or confidential information
of Company or its affiliates, (ii) entrust Executive with future business
opportunities of Company or its affiliates, or (iii) place Executive in a
position to develop business goodwill on behalf of Company or its affiliates.
Executive recognizes and acknowledges that Executive has had, will continue to
have, and is being provided contemporaneously with the execution of this
Agreement certain information of Company and that such information is
confidential and constitutes valuable, special and unique property of Company.
In consideration of Company’s promise to disclose and actual disclosure of its
Confidential Information contemporaneous with the execution of this Agreement,
Executive shall not at any time, either during or subsequent to the term of
employment with Company, disclose to others, use, copy or permit to be copied,
except in pursuance of Executive’s duties for and on behalf of Company, its
affiliates and their respective successors, assigns or nominees, any
Confidential Information of Company (regardless of whether developed by
Executive) without the prior written consent of Company. In the event Executive
becomes legally compelled (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demand, regulatory
demand or other similar process) to disclose any Confidential Information, the
Executive will provide the Company with prompt
6
written notice so that the Company may seek a protective order or other
appropriate remedy and/or waive compliance with the provisions of this Article
4. In the event that a protective order or other remedy is not obtained, or the
Company waives compliance with the provisions of this Article 4, the Executive
will furnish only that portion of the Confidential Information which is legally
required and exercise reasonable best efforts to obtain assurances that
confidential treatment will be accorded the Confidential Information. The term
“Confidential Information” means any secret or confidential information or
know-how and shall include, but shall not be limited to, the plans, customers,
costs, prices, uses, corporate opportunities, research, financial data,
evaluations, prospects, and applications of products and services, results of
investigations or studies owned or used by Company, and all apparatus, products,
processes, compositions, samples, formulas, computer programs, computer hardware
designs, computer firmware designs, and servicing, marketing or manufacturing
methods and techniques at any time used, developed, investigated, made or sold
by Company, before or during the term of employment with Company, that are not
readily available to the public or that are maintained as confidential by
Company. Executive shall maintain in confidence any Confidential Information of
third parties received as a result of Executive’s employment with Company in
accordance with Company’s obligations to such third parties and the policies
established by Company.
ARTICLE 5: NON-COMPETITION OBLIGATIONS
5.1 IN GENERAL.
(a) As part of the consideration for the compensation and benefits to be paid to
Executive hereunder; to protect the Confidential Information of Company and its
affiliates that has been, is contemporaneously with the execution of this
Agreement, and will in the future be disclosed or entrusted to Executive, the
business goodwill of Company and its affiliates that has been, are
contemporaneously with the execution of this Agreement, and will in the future
be developed in Executive, and the business opportunities that have been, are
be disclosed or entrusted to Executive by Company and its affiliates; and as an
additional incentive for Company to enter into this Agreement, Company and
Executive agree to the non-competition obligations hereunder. Executive shall
not, directly or indirectly for Executive or for others, in any county where
Company, Bank or any of its banking affiliates has offices as of the date of the
termination of the employment relationship or in any county contiguous thereto:
(i) engage in any business competitive with the banking business conducted by
Company, Bank, or its banking affiliates;
(ii) render advice or services to, or otherwise assist, any other person,
association, or entity who is engaged, directly or indirectly, in any banking
business competitive with the banking business conducted by Company, Bank, or
its banking affiliates with respect to such competitive business;
(iii) own, manage, operate, control, invest or acquire an equity interest in any
entity engaged in or conducting any banking business competitive with the
banking business conducted by Company, Bank or its banking affiliates;
7
(iv) request or induce any customer, depositor or borrower of Company, Bank or
any of its banking affiliates or any other person which has a business
relationship with Company, Bank or any of its banking affiliates and with
respect to whom Executive has had, directly or indirectly, Confidential
Information about or dealings with or has managed or supervised another
individual who has had Confidential Information about or dealings with such
customer, depositor, borrower, or other person, to curtail, cancel or otherwise
discontinue its business or relationship with Company, Bank or any of its
banking affiliates; or
(v) induce any employee of Company, Bank or any of its affiliates to terminate
his or her employment with Company, Bank or any such affiliate, or hire or
assist in the hiring of any employee of Company, Bank or any of its affiliates,
or any former employee of Company, Bank, or any of its affiliates, who has ended
his or her relationship with Company, Bank or any of its affiliates within six
months prior to the date of such hiring or assistance, by any person,
association, or entity not affiliated with Company.
(b) These non-competition obligations shall apply during the period that
Executive is employed by Company and shall extend for two years after the
termination of Executive’s employment.
(c) Notwithstanding the foregoing, nothing contained in this Agreement shall
prohibit Executive from acquiring or holding any issue of stock or securities of
any entity that has securities registered under Section 12 of the Securities
Exchange Act of 1934 and either listed on a national securities exchange or
quoted on the automated quotation system of the National Association of
Securities Dealers, Inc. so long as (i) Executive is not deemed to be an
“affiliate” of such entity as such term as used in paragraphs (c) and (d) of
Rule 145 under the Securities Act of 1933 and (ii) Executive and members of his
immediate family do not own or hold more than three percent (3%) of any voting
securities of any such entity. Executive acknowledges that while employed by
Company he will remain subject to Company’s Code of Ethics or any similar or
successor policy governing ownership of interests in any competitive or
potentially competitive financial institution.
5.2 ENFORCEMENT AND REMEDIES. Executive understands that the restrictions set
forth in paragraph 5.1 may limit Executive’s ability to engage in certain
businesses during the period provided for above, but acknowledges that Executive
will receive sufficiently high remuneration and other benefits under this
Agreement, including but not limited to the Company’s disclosure of its
Confidential Information as provided herein, to justify such restriction.
Executive acknowledges that money damages would not be a sufficient remedy for
any breach of this Article 5 by Executive, and Company shall be entitled to
enforce the provisions of this Article by terminating all compensation and all
benefits hereunder (other than all accrued and unpaid Base Salary through the
date such action is taken by the Company) and seeking specific performance and
injunctive relief as remedies for such breach. Such remedies shall not be deemed
the exclusive remedies for a breach of this Article 5, but shall be in addition
to all remedies available at law or in equity to Company, including without
limitation, the recovery of damages from Executive and Executive’s agents
involved in such breach and remedies available to Company pursuant to other
agreements with Executive.
8
5.3 REFORMATION. It is expressly understood and agreed that Company and
Executive consider the restrictions contained in this Article to be reasonable
and necessary to protect the proprietary information of Company. Nevertheless,
if any of the aforesaid restrictions are found by a court having jurisdiction to
be unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such court so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.
ARTICLE 6: EFFECT OF TERMINATION ON COMPENSATION
6.1 BY EXPIRATION. If Executive’s employment hereunder shall terminate as
provided in paragraph 2.1 hereof, then all compensation and all benefits to
Executive hereunder shall terminate contemporaneously with termination of his
employment except to the extent (i) any compensation (including bonuses), or
Bonus Shares earned by Executive during the Employment Term have not been
determined, paid, issued or delivered to Executive as of the expiration of the
Employment Term, in which case Company shall remain obligated to pay, issue or
deliver any such compensation, or Bonus Shares in accordance with the terms and
provisions hereof, and (ii) benefits continue pursuant to the specific terms of
any plan or program.
6.2 BY COMPANY. If Executive’s employment hereunder shall be terminated by
Company prior to expiration of the Employment Term, then, upon such termination,
all compensation and benefits to be paid or provided to Executive hereunder
shall, except as otherwise provided herein, terminate contemporaneously with the
termination by Company of Executive’s employment (except to the extent benefits
continue pursuant to the specific terms of any plan or program); provided,
however, that if Executive’s employment shall be terminated by Company prior to
a Change of Control pursuant to paragraph 2.2(v) or shall be terminated by
Company following a Change of Control pursuant to paragraph 2.2(iii), (iv) or
(v), then Company shall (i) pay Executive the Termination Payments and
(ii) provide Executive with Continuation Benefits.
6.3 BY EXECUTIVE. If Executive’s employment hereunder shall be terminated by
Executive prior to expiration of the Employment Term, then, upon such
termination, regardless of the reason therefor, all compensation and benefits to
Executive hereunder shall, except as otherwise provided herein, terminate
contemporaneously with the termination of such employment (except to the extent
benefits continue pursuant to the specific terms of any plan or program);
provided, however, that if such termination shall be pursuant to paragraph
2.3(i), then Company shall (i) pay Executive the Termination Payments and
6.4 REQUIRED RELEASE. Notwithstanding the provisions of paragraph 6.2 or 6.3, as
a condition to the receipt of any Termination Payments or Continuation Benefits
pursuant to paragraph 6.2 or 6.3, Executive and Company must first execute a
mutual release agreement, in a form mutually acceptable to Executive and
Company, which shall (i) release Company, its affiliates and their officers,
directors, employees and agents from any and all existing claims and
9
causes of action of any kind or character, including but not limited to all
claims or causes of action arising out of Executive’s employment with Company
and the termination of such employment, and (ii) release Executive from any and
all existing claims and causes of action of any kind or character, including but
not limited to all claims or causes of action arising out of Executive’s
employment with Company and service as an officer and director.
6.5 NO DUTY TO MITIGATE LOSSES. Executive shall have no duty to find new
employment following the termination of his employment under circumstances which
require Company to pay any amount to Executive pursuant to this Article 6. Any
salary or remuneration received by Executive from a third party for the
providing of personal services (whether by employment or by functioning as an
independent contractor) following the termination of his employment under
circumstances pursuant to which this Article 6 apply shall not reduce Company’s
obligation to make a payment to Executive (or the amount of such payment)
pursuant to the terms of this Article 6.
6.6 INCENTIVE AND DEFERRED COMPENSATION. This Agreement governs the rights and
obligations of Executive and Company with respect to Executive’s base salary,
bonus, life insurance and certain perquisites of employment. Executive’s rights
and obligations both during the term of his employment and thereafter with
respect to incentive compensation (including, without limitation, the Bonus
Shares) shall be governed by the separate agreements, plans and other documents
and instruments governing such matters.
6.7 ADDITIONAL PAYMENTS BY COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding, if it is
determined that any payment, distribution or issuance by Company to or for the
benefit of Executive, whether paid or payable, distributed or distributable, or
issued or issuable pursuant to the terms of this Agreement or otherwise pursuant
to or by reason of any other agreement, policy, plan, program or arrangement,
including, without limitation, any Company Stock, stock option, stock
appreciation right or similar right, or the lapse or termination of any
forfeiture provision or restriction on, or the acceleration of any vesting,
exercisability or issuance of, any of the foregoing (a “Payment”), would be
of 1986, as amended (the “Code”), by reason of being “contingent on a change of
ownership or control” of the Company, within the meaning of Section 280G of the
Code or to any similar tax imposed by state or local law, or any interest or
penalties with respect to such excise tax (such tax or taxes, together with any
such interest and penalties, being hereinafter collectively referred to as the
“Excise Tax”), then Executive will be entitled to receive an additional payment
or payments (a “Gross-Up Payment”) in an amount such that, after payment by
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment,
(b) All determinations required to be made under this paragraph 6.7, including
whether an Excise Tax is payable by Executive and the amount of such Excise Tax
and whether a Gross-Up Payment is required and the amount of such Gross-Up
Payment, will
10
be made by Company’s independent auditors. If the independent auditors determine
that any Excise Tax is payable by Executive, Company shall pay to the Executive
(on or before the earlier of the date on which Company is required to withhold
such Excise Taxes or Executive is required to pay such Excise Taxes) the
required Gross-Up Payment. Any determination by the independent auditors as to
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment
will be binding upon Company and Executive, absent manifest error.
6.8 PREEMPTIVE CONSIDERATIONS. Notwithstanding anything to the contrary set
forth herein:
(a) If Executive is suspended and/or temporarily prohibited from participating
in the conduct of the Company’s or Bank’s affairs by a notice served under
Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C.
1818(e)(3) and (g)(1)), the Company’s obligations under this Agreement shall be
suspended as of the date of service unless stayed by appropriate proceedings. If
the charges in the notice are dismissed, the Company shall (i) pay the Executive
the compensation withheld while this Agreement’s obligations were suspended, and
(ii) reinstate any of its obligations which were suspended.
(b) If the Executive is removed and/or permanently prohibited from participating
in the conduct of the Company’s or Bank’s affairs by an order issued under
Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C.
1818(e)(4) or (g)(1)), all obligations of the Company under this Agreement shall
terminate as of the effective date of the order, but vested rights of the
parties shall not be affected.
6.9 If the performance of any of Company’s obligations under this Agreement
would constitute a golden parachute payment as defined by Section 359.1(f) of
the Federal Deposit Insurance Corporation Rules and Regulations (12 C.F.R.
§359.1(f)) and prohibited by Section 359.2 of the Federal Deposit Insurance
Corporation Rules and Regulations (12 C.F.R. §359.2), or any other applicable
law or regulation, Company’s obligations under this Agreement to make any such
golden parachute payment shall terminate.
ARTICLE 7: DEFINITIONS
7.1 DEFINITIONS. As used in this Agreement, terms defined in the preamble and
recitals of or elsewhere in this Agreement shall have the meanings set forth
therein and the following terms shall have the meanings set forth below:
(a) “Bonus Shares” shall mean the shares of Company Stock issued to Executive
pursuant to paragraph 3.3(a).
(b) A “Change of Control” shall be deemed to have occurred if:
(i) any “person” or “group” (within the meanings of Sections 13(d) or 14(d)(2)
indirectly, of securities of Company representing thirty-five percent (35%) or
11
more of the combined voting power of Company’s then outstanding securities
eligible to vote for the election of the board of directors of Company (the
“Company Voting Securities”); provided, however, that the event described in
this paragraph (i) shall not be deemed to be a Change of Control by virtue of an
acquisition by any of the following persons or groups: (A) by Company, (B) by
any employee benefit plan (or related trust) sponsored or maintained by Company,
(C) by any underwriter temporarily holding securities pursuant to an offering of
such securities, or (D) by any person or group pursuant to a Non-Qualifying
Transaction (as defined in paragraph (ii) below);
(ii) the consummation of a merger, consolidation, share exchange or similar form
of corporate transaction involving Company that requires the approval of
Company’s shareholders, whether for such transaction or the issuance of
securities in the transaction (a “Business Combination”), unless immediately
following such Business Combination: (A) more than seventy-five percent (75%) of
the total voting power of (x) the corporation resulting from such Business
Combination (the “Surviving Corporation”), or (y) if applicable, the ultimate
parent corporation that directly or indirectly has beneficial ownership of 100%
of the voting securities eligible to elect directors of the Surviving
Corporation (the “Parent Corporation”), is represented by Company Voting
Securities that were outstanding immediately prior to such Business Combination
(or, if applicable, is represented by shares into which such Company Voting
Securities were converted pursuant to such Business Combination), and such
voting power among the holders thereof is in substantially the same proportion
of the voting power of such Company Voting Securities among the holders thereof
immediately prior to the Business Combination, (B) no person (other than any
Surviving Corporation or the Parent Corporation), is or becomes the beneficial
owner, directly or indirectly, of fifty-percent (50%) or more of the total
voting power of the outstanding voting securities eligible to elect directors of
the Parent Corporation (or, if there is no Parent Corporation, the Surviving
Corporation) and (C) at least the majority of the board of directors of the
Corporation) following the consummation of the Business Combination were
Incumbent Directors (as herein defined) at the time the board of directors of
Company approved the execution of the initial agreement providing for such
Business Combination (any Business Combination which satisfies all of the
“Non-Qualifying Transaction”);
(iii) the individuals who constitute the board of directors of Company as of the
date of this Agreement (the “Incumbent Directors”) shall cease for any reason to
constitute at least a majority of the members of the board of directors of
Company, provided that any person becoming a director subsequent to the date of
this Agreement, whose election or nomination was approved by a vote of at least
a majority of the Incumbent Directors then comprising the board of directors of
Company shall be, for purposes of this Agreement, considered an Incumbent
Director; provided, however, that no individual initially elected or nominated
as a
12
director of Company as a result of an actual or threatened contest with respect
to directors or as a result of any other actual or threatened solicitation of
proxies (or consents) by or on behalf of any person other than the board of
directors shall be deemed to be an Incumbent Director;
(iv) the consummation of a sale of 50% or more of the assets of Company; or
(v) the shareholders of Company shall approve a plan of complete liquidation or
dissolution of Company.
(c) “Company Stock” shall mean the Company’s common stock, $1.00 per share.
(d) “Continuation Benefits” shall mean the following benefits, which shall be
provided to Executive following the termination of Executive’s employment
hereunder, at a cost to Executive (exclusive of applicable tax obligations of
Executive in respect of such benefits) not greater than his cost if he had
remained employed by Company, for the remainder of the Employment Term or, if
following a Change of Control and if greater, for the three years after the
Change of Control:
(i) a car allowance, or use of company owned vehicle, and the use of a cell
phone or any other such personal business tools provided by Company or Bank if
any of these items were being provided to Executive on the day immediately prior
to the earlier of his termination or any Change of Control (the “Benefit
Measurement Date”);
(ii) welfare benefits (such as medical, dental, vision, Employee Assistance Plan
and flexible spending accounts) and life insurance benefits for Executive
(including his spouse and dependents) who were covered on the Benefit
Measurement Date or, to the extent that any such benefit cannot be lawfully
provided or Executive otherwise does not qualify for coverage, the cost
(exclusive of applicable tax obligations of Executive) of providing any such
welfare benefit or life insurance benefit that is at least equal to the benefit
provided to Executive on the Benefit Measurement Date;
(iii) club dues paid that do not exceed those being paid for Executive on the
Benefit Measurement Date;
(iv) continuation of banking services without service charge or at a reduced
charge if any of these banking services were being utilized by Executive on the
Benefit Measurement Date;
(v) to the extent permitted by applicable law and the applicable terms of any
plan, participation in Company’s Deferred Compensation Program (or similar
program if termination follows a Change of Control);
13
(vi) to the extent permitted by applicable law and the applicable terms of any
plan, participation in Company’s Employee Stock Purchase Program (or similar
(vii) to the extent permitted by applicable law and the applicable terms of any
plan, participation in Company’s Employee Savings Plan (or similar program if
termination follows a Change of Control);
(viii) payment of up to $50,000 in fees to one or more executive outplacement
firms for purposes of job placement efforts for Executive; and
(ix) to the extent permitted by applicable law, immediate and full vesting upon
termination in all Company plans (or similar plans if termination follows a
Change of Control) that require a vesting period including, without limitation,
all unvested contributions to Company’s Employee Savings Plan.
Notwithstanding the foregoing, any such benefit listed above shall terminate if
and to the extent Executive becomes eligible to receive (at a cost not greater
than what Executive would have paid if still employed by Company) a
substantially comparable benefit from a subsequent employer, and any such
eligibility shall be promptly reported to Company by Executive. In addition, if
Executive (or his spouse) would have been entitled to any retiree benefit under
Company’s plans had Executive voluntarily retired on the date of such
termination, then any such benefit shall be continued as provided under such
plans.
(e) “Good Reason” means, without Executive’s express written consent, the
occurrence of any one of the following events after a Change of Control:
(i) (A) any change in the duties or responsibilities of Executive that is
inconsistent in any material and adverse respect with Executive’s position,
duties, responsibilities or status with Company immediately prior to such Change
of Control or (B) a material and adverse change in Executive’s titles or offices
with Company (or any Parent Corporation or Surviving Corporation) and including,
if applicable, membership or position on a board of directors with Company or
Bank (or either’s respective successor), as in effect immediately prior to such
Change of Control;
(ii) a reduction in Executive’s rate of Base Salary or target bonus
opportunities (including any material and adverse change in the formula for such
bonus target) as in effect immediately prior to the Change of Control or as the
same may be increased from time to time thereafter, or the failure of Company
(or any Parent Corporation or Surviving Corporation) to pay any such amounts
when due;
(iii) any requirement that Executive be based anywhere more than twenty-five
(25) miles from the office where Executive was located at the time of the Change
of Control, if such relocation increases Executive’s commute by more than
twenty-five (25) miles;
14
(iv) the failure of Company (or any Parent Corporation or Surviving Corporation)
to continue in effect a total compensation package (including incentive
compensation opportunities) providing a total compensation package at least
equivalent to Executive’s total compensation package in the calendar year
immediately preceding the calendar year in which the Change of Control occurs or
in effect immediately prior to the Change of Control, whichever is greater; or
(v) the failure of Company to obtain the assumption (and, if applicable,
guarantee) agreement from any Surviving Corporation (and, if applicable, Parent
Corporation) as contemplated in paragraph 8.10(b).
(f) “SEC” shall mean the Securities and Exchange Commission.
(g) “Termination Payments” shall mean:
(i) In the case of a termination of Executive’s employment prior to a Change of
Control either by the Company pursuant to paragraph 2.2(v) or by the Executive
pursuant to paragraph 2.3(i), a lump sum cash payment, payable within 10 days
after the last day of Executive’s employment with Company, in an amount equal to
the aggregate Base Salary, as in effect on the effective date of any such
termination, that Executive would earn during the remainder of the Employment
Term.
(ii) In the case of a termination of Executive’s employment following a Change
of Control either by the Company pursuant to paragraph 2.2(c), (d) or (e) or by
Executive pursuant to paragraph 2.3(i), a lump sum cash payment, payable within
10 days after the last day of Executive’s employment with Company, in an amount
equal to the product of three times the sum of (1) Executive’s base salary for
the calendar year prior to the calendar year in which the Change of Control
occurs or Executive’s Base Salary in effect immediately prior to the Change of
Control, whichever is greater, plus (2) the average annual performance bonus
paid or payable to Executive pursuant to paragraph 3.2 during the Employment
Term.
ARTICLE 8: MISCELLANEOUS
8.1 NOTICES. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
addressed as follows:
IF TO COMPANY TO: Chief Human Resources Officer Sterling Bancshares, Inc.
2550 North Loop West, Suite 600 Houston, Texas 77092
15
IF TO EXECUTIVE TO: J. Downey Bridgwater c/o Sterling Bank 2550 North
Loop West, Suite 600 Houston, Texas 77092
or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices of changes of address shall be
effective only upon receipt.
8.2 APPLICABLE LAW. This Agreement is entered into under, and shall be governed
for all purposes by, the laws of the State of Texas.
8.3 NO WAIVER. No failure by either party hereto at any time to give notice of
any breach by the other party of, or to require compliance with, any condition
or provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
8.4 SEVERABILITY. If a court of competent jurisdiction determines that any
provision of this Agreement is invalid or unenforceable, then the invalidity or
unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement, and all other
provisions shall remain in full force and effect.
8.5 COUNTERPARTS. This Agreement may be executed in one or more counterparts,
8.6 WITHHOLDING OF TAXES AND OTHER EMPLOYEE DEDUCTIONS. Company may withhold
from any benefits and payments made pursuant to this Agreement all federal,
with respect to Company’s employees generally.
8.7 HEADINGS. The paragraph headings have been inserted for purposes of
8.8 GENDER AND PLURALS. Wherever the context so requires, the masculine gender
includes the feminine or neuter, and the singular number includes the plural and
conversely.
8.9 AFFILIATE. As used in this Agreement, the term “affiliate” shall mean any
entity which owns or controls, is owned or controlled by, or is under common
ownership or control with, Company.
8.10 SUCCESSOR OBLIGATIONS.
(a) This Agreement shall be binding upon and inure to the benefit of Company and
any successor of Company, by merger or otherwise.
16
(b) Company agrees that in connection with any Business Combination, it will
cause each successor entity to Company or Bank to unconditionally assume, and
each Parent corporation to guarantee, by written instrument delivered to
Executive (or his beneficiary or estate), all of the obligations of Company
hereunder. Failure of Company to obtain such assumption prior to the effective
date of any such Business Combination that constitutes a Change of Control shall
be a breach of this Agreement and shall constitute Good Reason hereunder. For
purposes of implementing the foregoing, the date upon which any such Business
Combination becomes effective shall be deemed to be the date Good Reason occurs
and shall be the effective date of termination hereunder if requested by
Executive.
8.11 ASSIGNMENT. Except as provided in paragraph 8.10, this Agreement, and the
rights and obligations of the parties hereunder, are personal and neither this
Agreement, nor any right, benefit, or obligation of either party hereto, shall
be subject to voluntary or involuntary assignment, alienation or transfer,
whether by operation of law or otherwise, without the prior written consent of
the other party.
8.12 TERM. This Agreement has a term co-extensive with the Employment Term
provided in paragraph 2.1. Termination shall not affect any right or obligation
of any party which is accrued or vested prior to such termination. Without
limiting the scope of the preceding sentence, the provisions of Articles 4 and 5
shall survive any termination of the employment relationship and/or of this
Agreement.
8.13 ENTIRE AGREEMENT. Except as provided in (i) the written benefit plans and
programs referenced in paragraphs 3.5 and 6.7 and (ii) any signed written
agreement contemporaneously or hereafter executed by Company and Executive, this
Agreement constitutes the entire agreement of the parties with regard to the
subject matter hereof, and contain all the covenants, promises, representations,
warranties and agreements between the parties with respect to employment of
Executive by Company. Without limiting the scope of the preceding sentence, all
prior understandings and agreements among the parties hereto relating to the
subject matter hereof are hereby null and void and of no further force and
effect. Any modification of this Agreement shall be effective only if it is in
writing and signed by the party to be charged.
8.14 TAX CONSEQUENCES. Company makes no representations to Executive regarding
any tax liabilities that may be incurred, including, but not limited to, any
application of or taxes incurred under Code Section 409A, because of any
payments made to Executive under this Agreement or any plan or program
referenced herein.
8.15 SECTION 409A COMPLIANCE.
(a) General Suspension of Payments. If Executive is a “specified employee,” as
such term is defined within the meaning of Code Section 409A and determined
under the Company’s Deferred Compensation Plan, any payments or benefits payable
or provided as a result of Executive’s termination of employment that would
otherwise be paid or provided within six months and one day of such termination
(other than due to death or “disability”, as such term is defined within the
meaning of Code Section 409A)
17
shall instead be paid or provided on the earlier of (i) six months and two days
following Executive’s termination, (ii) the date of Executive’s death, or
(iii) any date that otherwise complies with Code Section 409A. In the event that
Executive is entitled to receive payments during the suspension period provided
under this Section, Executive shall receive the accumulated benefits that would
have been paid or provided under this Agreement within the six month and one day
suspension period on the earliest day that would be permitted under Code
Section 409A.
(b) Medical Benefits. To the extent that Executive is entitled to receive
medical continuation benefits for any period in excess of eighteen (18) months
following Executive’s termination date, the following provisions shall apply:
(i) Following the end of the eighteen (18) month COBRA continuation period under
the Company’s group health and/or dental plan (the “Health Plan”), Executive may
elect to receive additional coverage for Executive (including his spouse and
dependents) during any period specified under this Agreement by (i) filing a
written notice with the Company, and (ii) paying an amount equal to the then
applicable COBRA rates for such coverage. The parties hereby agree that,
notwithstanding any other provision of this Agreement, Executive shall pay the
full cost to receive such instead of the subsidized cost of coverage paid by an
active employee of the Company.
(ii) Following the end of the eighteen (18) month COBRA continuation period
provided under the Health Plan, the Company shall, as a separate obligation,
reimburse Executive for any medical premium expenses he incurs to purchase
continued medical coverage under the Health Plan for Executive (including his
spouse and dependents), but only to the extent such expense is in excess of the
premium level that would be paid by Executive on the Benefit Measurement Date
(which amount shall be referred to herein as the “Medical Reimbursement”). In
accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv)(A), the premiums
available for reimbursement under this paragraph in any calendar year will not
be increased or decreased to reflect the amount actually reimbursed in a prior
or subsequent calendar year, and all reimbursements under this paragraph will be
paid to Executive within twenty (20) days following the Company’s receipt of a
request for reimbursement. In addition, the Company will pay Executive an amount
equal to the aggregate of the Federal, state and local income taxes that
Employee pays on the Medical Reimbursement payments, plus the additional
Federal, state and local income taxes imposed on Employee due to such additional
income tax gross-up payment by the Company. The Company will pay the additional
income tax gross-up amounts owed to Executive under this paragraph at the same
time payments of the Medical Reimbursement are made.
(c) Reimbursement Payments. The following rules shall apply to payments of
Continuation Payments that are treated as “reimbursement payments” under Code
Section 409A: (i) the amount of expenses eligible for reimbursement in one
calendar year shall not limit the available reimbursements for any other
calendar year; (ii) Executive shall
18
file a claim for all reimbursement payments not later than thirty (30) days
following the end of the calendar year during which the expenses were incurred,
(iii) the Company shall make such reimbursement payments within thirty (30) days
following the date the Executive delivers written notice of the expenses to the
Company; and (iv) the Employee’s right to reimbursement payments under this
Section 9(c) shall not be subject to liquidation or exchange for any other
payment or benefit.
(d) General. Notwithstanding any provisions of this Agreement relating to the
timing of any benefits or payments, including without limitation the provisions
of paragraphs 6.2, 6.3 and 6.7, to the extent required to comply with applicable
law, including Code Section 409A, or to prevent the imposition of any excise
taxes or penalties on Company or Executive, the commencement of payment or
provision of any Termination Payments, Continuation Benefits, Gross-Up Payment
or other payment or benefit shall be deferred to the minimum extent necessary so
as to comply with any such law or to avoid the imposition of any such excise tax
or penalty.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
19
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the 20th
day of December, 2007, to be effective as of the Effective Date.
STERLING BANCSHARES, INC. By:
/s/ James W. Goolsby, Jr.
James W. Goolsby, Jr. Executive Vice President and General Counsel APPROVED:
/s/ George Beatty, Jr.
George Beatty, Jr. Chairman, Human Resources Programs Committee “COMPANY”
/s/ J. Downey Bridgwater
J. Downey Bridgwater “EXECUTIVE”
20
EXHIBIT A - 2007 STERLING BANCSHARES, INC.
Target Bonus is 60% of Base
Weight
Measure
35% ROA from Approved Plan 35% EPS from Approved Plan 30% Board
Evaluation 100%
Return on Assets - 35% Weight
Earnings per Share 35% Weight
Board Evaluation 30% Weight
Return on Assets
Points
Earned
Earnings
Per Share
Diluted
Points
Earned
Rating
Points
Earned
2007 target = 1.20%
2007 target = $0.71
Target = Meets Expectations
<1.18
— <$0.66 — Unsatisfactory —
1.18 - 1.19
1.00 $0.66-$0.70 1.00 Acceptable 1.00
1.20 - 1.21
2.00 $0.71-$0.74 2.00 Meets Expectations 2.00
1.22>
3.00 >$0.75 3.00 Above Expectations 3.00
Points Conversion
Points
Percentage
of Target
Bonus
1
0%
2
0%
3
25%
4
50%
5
75%
6
100%
7
125%
8
150%
9
200%
- i -
Potential 2007 Bonus
Position
Annual
Salary Target Payout %
Annual
Target
Award
Bridgwater, J. Downey
Chair., Pres., and CEO $ 525,000 60% $ 315,000 Actual payout could
be zero if metrics are not achieved. Minimum Payout %
25%
$
Minimum
78,750
Maximum Payout %
200%
$
Maximum
630,000
- ii -
EXHIBIT B – 2007
STERLING BANCSHARES, INC.
Three-Year Performance Metrics for Phantom Stock Units
2007 - 2009
STERLING BANCSHARES, INC. PERFORMANCE BASED PHANTOM STOCK UNITS VESTING TABLE
Return on Assets
Sterling Bank performance
Vs. PEERS 50% Weight
Earning per Share Growth
Sterling Bank performance
Percentile Rank
Percent of
PRS Vested
Percentile Rank
Percent of
PRS Vested Percent of
award based
on
performance
results
0-29.99%tile
0 % 0-29.99%tile 0 % 0%
30-34.99%tile
10 % 30-34.99%tile 10 % 20%
35-39.99%tile
25 % 35-39.99%tile 25 % 50%
40-49.99%tile
40 % 40-49.99%tile 40 % 80%
50-64.99%tile
50 % 50-64.99%tile 50 % 100%
65-74.99%tile
75 % 65-74.99%tile 75 % 150%
75%tile or higher
100 % 75%tile or higher 100 % 200%
- iii - |
Exhibit 10.32
(BARCODE) [f53609f5360904.gif]
Dealing Number
QUEENSLAND LAND REGISTRY LEASE/SUB LEASE FORM 7 Version 6 Land Title Act
1994, Land Act 1994 and Water Act 2000 Page 1 of 60
OFFICE USE ONLY
Privacy Statement
Collection of this information is authorised by the Land Title Act 1994 the Land
Act 1994 and the Water Act 2000 and is used to maintain the publicly searchable
registers in the land registry and the water register. For more information
about privacy in NR&W see the department’s website.
1.
Lessor Lodger (Name, address, E-mail & phone number) Lodger
THE PUBLIC TRUSTEE OF QUEENSLAND DibbsBarker Code
GPO Box 67 130
Brisbane Qld 4001
Telephone (07) 3100 5000
Ref: KJC:FEM:2837565
2.
Lot on Plan Description County Parish Title Reference
LOT 2 on RP 185406 STANLEY NORTH BRISBANE 16496089
3.
Lessee Given names Surname/Company name and number (include tenancy if
more than one)
PEPLIN LIMITED ACN 090 819 275
4.
lnterest being leased
Fee simple
5.
Description of premises being leased
That part of the third floor of the building identified as Lease E in Lot 2 on
RP 185406 on the annexed plan.
6.
Term of lease 7. Rental/Consideration
Commencement date/event: 01/05/2009 See Reference Schedule
Expiry date: 30/04/2016 and/or Event:
#Options: NIL
#Insert nil if no option or insert option period (eg 3 years or 2 x 3 years)
8.
Grant/Execution
The Lessor leases the premises described in item 5 to the Lessee for the term
stated in item 6 subject to the covenants and conditions contained in:- *the
attached schedule;
* delete if not applicable
Witnessing officer must be aware of his/her obligations under section
162 of the Land Title Act 1994
/s/ Ian James MacLannan
signature /s/ BRIAN WAYNE SHARP
BRIAN WAYNE SHARP
Ian James MacLannan
full name SIGNED AS DELEGATE FOR THE PUBLIC TRUSTEE UNDER
qualification 3/6/09 SECTION 11A OF THE PUBLIC TRUSTEE ACT 1978
Witnessing Officer
Execution Date Lessor’s Signature (Witnessing officer must be in
accordance with Schedule 1
of Land Title Act 1994 eg Legal Practitioner, JP, C Dec)
9.
Acceptance
The Lessee accepts the lease and acknowledges the amount payable or other
considerations for the lease.
signature PEPLIN LIMITED ACN 090 819 275
Peter Welburn
full name AUTHORISED SIGNATORY
qualification 10/5/09 /s/ David Smith
Witnessing Officer
Execution Date SECRETARYLessee’s Signature (Witnessing officer must be
in accordance with Schedule 1
QUEENSLAND LAND REGISTRY SCHEDULE Form 20 Version 2 Land Title Act 1994,
Land Act 1994 Page 2 of 60 and Water Act 2000
Title Reference 16496089
Contents
REFERENCE SCHEDULE OF LEASE DETAILS 2
1
DICTIONARY 4
2
GRANT OF LEASE 4
3
RENT 4
4
RENT REVIEW 4
5
PAYMENT OF ADDITIONAL STATUTORY CHARGES 5
6
PAYMENTS FOR SERVICES 6
7
USE OF PREMISES 8
8
AIR CONDITIONING EQUIPMENT ELEVATORS FIRE EQUIPMENT AND SERVICES 11
9
INSURANCES 12
10
OPTION FOR FURTHER TERM 13
11
PROVISION OF SECURITY 13
12
GOODS AND SERVICES TAX 15
13
MAINTENANCE, REPAIRS AND ALTERATIONS 15
14
LESSOR’S OBLIGATIONS 18
15
COMMON AREAS 18
16
INDEMNITIES AND RELEASE 19
17
RESTRICTIONS ON CHARGES, ASSIGNMENTS AND SUBLEASES 20
18
DEFAULT, TERMINATION ETC 21
19
HOLDING OVER, REMOVAL OF LESSEE’S FITTINGS ETC 23
20
SUBDIVISION 25
21
CAR PARK LICENCE 26
22
ROOF TOP LICENCE 30
23
GENERAL 34
24
EARLY ACCESS DATE 38
25
ENVIRONMENTAL OBJECTIVES 39
page i
26
LESSEE’S OBLIGATIONS 40
27
LESSOR’S COVENANTS 42
28
LIMITATION OF LIABILITY OF THE CUSTODIAN 43 ATTACHMENT 1 — DICTIONARY
46 ATTACHMENT 2 — PLAN OF PREMISES 53 ATTACHMENT 3 — ENVIRONMENTAL
BUILDING RULES 54 ATTACHMENT 4 — CAR PARK LICENCE AREA 55 ATTACHMENT
5 — LICENSED AREA 56
page ii
Land Act 1994 Page 3 of 60 and Water Act 2000
Title Reference 16496089
This is the Schedule referred to in the Lease dated the 3rd day of June 2009.
Reference Schedule of Lease Details
Item 1
Lessor: The Public Trustee of Queensland
C/- Opus Capital Limited
Level 1, 283 Elizabeth Street
BRISBANE 4000
Facsimile: 1300 792 404
Item 2
Lessee: Peplin Limited
Level 2, Brisbane Portal,
1 Breakfast Creek Road,
New Stead
BRISBANE 4006
Facsimile: 07 3250 1299
Item 3
Land: Lots 1 and 2 on RP 185406, County of Stanley, Parish of North Brisbane
contained in Title Reference 18402243 and 16496089
Item 4
Premises/Address of Premises That part of the third floor of the building
identified as Lease E on the plan annexed to this Lease.
Item 5
Term, Commencement Date,
Expiry Date: Term — 7 years
Commencement Date — 1 May 2009
Expiry Date — 30 April 2016
Item 6
Rent: $381,275.00.00 per annum plus GST
Item 7
Review Date(s): Annually on the anniversary of the Commencement Date
Fixed Increase Date(s) (if applicable): Not Applicable
CPI Adjustment Date(s) (if applicable): Annually on the anniversary of the
Commencement Date
Market Review Dates(s) (if applicable): Not Applicable
Item 8
Lessee’s Proportion: 9.91%
Item 9
Permitted Use Commercial Office
Item 10
Further Term Nil years
Land Act 1994 Page 4 of 60 and Water Act 2000
Title Reference 16496089
Item 11
Public Risk Insurance Minimum Sum: $20,000,000.00
Item 12
Security Amount: An amount equal to 6 months Rent plus GST
Item 13
Guarantor(s): Not Applicable
Item 14
Normal Business Hours 8.00am to 6.00pm on Business Days
Item 15
Car Park Licence Fee $54,000.00 per annum plus GST
Item 16
Licence Fee $1.00 per annum
Item 17
After hours Air Conditioning Rate $55.00 plus GST per hour per floor
(minimum of 2 hours)
Item 18
Base Year The financial year ending 30 June 2011
Land Act 1994 Page 5 of 60 and Water Act 2000
Title Reference 16496089
1 DICTIONARY
1.1 Dictionary. The Dictionary in Attachment 1 defines some of the terms
used in this Lease and sets out the rules of interpretation that apply to this
Lease.
2 GRANT OF LEASE
2.1 Grant of Lease. The Lessor grants to the Lessee and the Lessee takes a
lease of the Premises for the Term on the conditions set out in this Lease.
2.2 Exclusion of Implied Covenants and Powers. The covenants, powers and
provisions implied in leases by sections 105 and 107 of the Property Law Act
1974 do not apply to this Lease.
3 RENT
3.1 Rent. The Lessee must pay to the Lessor the Rent by equal monthly
instalments in advance on each Rent Day. For any period less than 1 month, the
Lessee must pay the Lessor the Rent proportionately by reference to the number
of days for which the Lessee is paying and the number of days in the relevant
year of the Lease. 3.2 Payment Requirements. The Lessee must pay to the
Lessor the Rent and any other amounts required to be paid under this Lease:
(a) Free of all deductions; (b) On the dates specified in this Lease
or, if no date is specified, within 14 days of receipt of written notification
from the Lessor; and (c) By wire transfer into a Bank account as directed
by the Lessor or Manager and until such direction at the place and in the manner
notified by the Lessor or the Manager in writing at any time or in the absence
of that direction, at the address of the Lessor set out in this Lease.
4 RENT REVIEW
4.1 Fixed Increases. The Rent from and including each Fixed Increase Date is
the Rent for the previous year increased by the Fixed Increase. 4.2 CPI
Adjustment of Rent. The Rent from and including each CPI Adjustment Date is the
Rent for the previous year increased by the CPI provided that the amount so
calculated must not be less than 104% of the Rent payable in the immediately
preceding Lease Year (disregarding any abatement). 4.3 Market Reviews. The
Lessor must give the Lessee a notice stating the Lessor’s assessment of the
current annual market rent of the Premises on each Market Review Date, such
notice to be given not earlier than 6 months before and not later than 6 months
after the Market Review Date. The Rent from and including the relevant Market
Review Date shall be the amount stated in the Lessor’s notice unless the Lessee
gives the Lessor a notice disagreeing with that amount, such notice to be given
within 21 days after the Lessor’s notice is given (and in this respect, time is
of the essence). If the Lessor and the Lessee do not agree on the current annual
market rent of the Premises to apply from the relevant Market Review Date within
21 days after the Lessee’s notice is given, then the current annual market rent
of the Premises on the relevant Market Review Date shall be determined by a
valuer who:
(a) Is appointed by the parties and if they do not agree on who to appoint
within 30 days after the Lessee’s notice is given, then that valuer is to be
nominated at either party’s request by the President of the Queensland Division
of the Australian Property Institute; and
Land Act 1994 Page 6 of 60 and Water Act 2000
Title Reference 16496089
(b) Is a full member of at least 5 years standing of that institute; and
(c) Must be instructed to give a written valuation setting out what was taken
into account, what was disregarded, their respective weightings and other
adjustments; and (d) Acts as an expert and not as an arbitrator and whose
decision is final and binding; and (e) Whose costs must be borne equally
by the Lessor and the Lessee. Despite the above, the Rent from a Market
Review Date must not be less than the rent determined under Clause 4.2 as though
the Market Review Date was a CPI Adjustment Date or Fixed Increase Date
(whichever is applicable) disregarding any abatement.
4.4 Provision for Adjustment/Deferment of Review.
(a) If the amount of any revised Rent has not been agreed or determined by
the relevant Review Date the Lessee must continue to pay Rent to the Lessor at a
rate equal to the Rent payable during the preceding Lease Year adjusted as
though the that date was a Review Date until the revised Rent is ascertained;
(b) When the revised Rent is ascertained, any necessary adjustment of Rent
calculated from the relevant Review Date must be paid by the Lessee or adjusted
by the Lessor within fourteen (14) days of the revised Rent being ascertained;
and (c) If the Lessor does not exercise its right to require the Rent to
be revised on a particular Review Date then the Lessor may revise the Rent by
notice in writing to the Lessee at any time prior to the next Review Date.
5 PAYMENT OF ADDITIONAL STATUTORY CHARGES
5.1 Payment of Outgoings. In addition to Rent the Lessee shall pay to the
Lessor the Lessee’s Proportion of any difference between the Outgoings actually
accrued for that Accounting Period and the Base Year by equal monthly
instalments based on the Lessor’s estimate of the Outgoings for each Accounting
Period. Within a reasonable time after the end of each Accounting Period, the
Lessor shall reconcile the actual Outgoings for the Accounting Period against
the amounts paid by the Lessee. Any necessary adjustment will be paid within
14 days of the Lessee receiving a copy of that reconciliation. Further, if the
Lessor is required to provide an audited statement in respect of Outgoings for
the Building to another tenant in the Building in accordance with the Retail
Shop Leases Act 1994, then the Lessor will provide a copy of that audited
Outgoings statement to the Lessee within three months of the end of the relevant
year. Base Year outgoings must include notional amounts for any expenses which
would have been incurred but for suppliers’ warranties, guarantees and similar
allowances. The Outgoings for the Base Year will be increased annually by the
greater of CPI or 1.04 times that for the immediately preceding Lease Year.
5.2 Audit of Outgoings.
(a) The Lessor will, within 28 days following prior written notice given by
the Lessee, during normal business hours or as otherwise agreed, permit and
provide persons (Auditors) nominated by the Lessee supervised access to the
Lessor’s books, records, documents and other relevant information in respect of
Outgoings to verify correct calculation of the Outgoings and the Lessee’s
Proportion in accordance with the provisions of this Lease (Audit). (b) In
undertaking the Audit, the Lessee will ensure the Auditors comply with
reasonable security requirements of the Lessor made known to the Lessee or
Auditor. (c) The Lessor and Lessee will do all things reasonably necessary
to facilitate a prompt and efficient Audit.
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(d) Subject to due compliance with paragraph 5.2(b), the Auditors may make
copies of books, records, documents and other materials they have access to as
part of an Audit, and the Lessor will provide the Auditors with the necessary
facilities to enable them to do so. (e) The Lessee is responsible for
costs incurred in relation to an Audit unless the Audit reveals overstatement in
relation to calculation of the Outgoings of 5% or more.
6 PAYMENTS FOR SERVICES
6.1 Payment for Services to the Premises. The Lessee must pay all accounts
for the supply of water, gas, electricity (including electricity used to operate
the Air-Conditioning Equipment), telephones and all other services to the
Premises on or before the due date for payment if assessed directly against the
Lessee but otherwise to the Lessor within 14 days of receipt of written
notification from the Lessor. The Lessee must, if required by the Lessor in
writing, permit the Lessor to arrange the proper installation of separate meters
for any services capable of separate metering, including but not limited to the
supply of electricity with such installation to be at the expense of the Lessee.
6.2 Reimbursement Due to Alterations. If the Lessor effects any alterations
or additions to the Premises or the Building which may be:
(a) Required by virtue of the conduct of the Permitted Use; (b)
Required by virtue of the conduct of the Lessee’s Business; (c) Required
by virtue of the number or sex of the Lessee’s employees; or (d) Requested
by the Lessee and consented to by the Lessor,
the Lessee shall pay to the Lessor, within 14 days of receipt of written
notification from the Lessor, the total direct and indirect cost to the Lessor
of construction of such works including fees paid to architects, quantity
surveyors, engineers and other consultants. If such works are effected for the
benefit of other leased or licensed premises in the Building as well as the
Premises the amount payable by the Lessee to the Lessor under this clause shall
be calculated by multiplying the total direct and indirect cost of such works by
the area of the Premises and dividing by the area of that part of the Gross
Lettable Area which so benefits from such works. The Lessee shall deposit with
the Lessor, within 14 days of receipt of written notification from the Lessor,
the cost of such works estimated by the Lessor before any such works are
commenced. The deposit may be applied by the Lessor in whole or in part to the
works as they proceed or as the debts or obligations leading to the works are
incurred.
6.3 Future Taxes. Unless otherwise specifically provided, the Lessee shall
pay without exception all rates, taxes, charges, assessments, outgoings and
impositions (whether parliamentary, municipal or otherwise and whether assessed,
charged or imposed by or under federal or state law or by federal, state or
local authorities and whether on a capital or revenue value or any other basis
and even though of a novel character) of a kind not existing at the earlier of
the Commencement Date and the date of the Lessee’s occupation or possession of
the Premises but which may at any time be assessed, charged or imposed upon or
in respect of the Premises and whether assessed against the Lessor or directly
against the Lessee. Such sums do not include income tax on the income of the
Lessor of which the rents and profits of the Building form part nor any capital
gains tax on any profits received by the Lessor on the sale of the Building. Any
sums so payable by the Lessee if assessed directly against the Lessee shall be
paid to the assessing authority not later than the due date of the payment and
if assessed against the Lessor shall be paid to the Lessor within 14 days of
receipt of written notification from the Lessor. 6.4 Special Services. The
Lessee must pay all reasonable costs incurred by the Lessor for any special
services provided by the Lessor at the Lessee’s request. Payment must be made
within 14 days of receipt of written notification from the Lessor, which may be
before the special services are provided. 6.5 Costs, Charges and Expenses.
The Lessee must pay to the Lessor within 14 days of receipt of written
notification from the Lessor:
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(a) The cost of preparation and registration of any plan included in this
Lease; (b) All stamp duty (if applicable) and registration fees on this
Lease and any related document; and (c) The Lessor’s reasonable costs and
expenses (including legal costs) in connection with:
(i) The consideration and/or approval of the Lessor to any request of the
Lessee to deal with the Lease and/or make any alterations to the Premises in
accordance with Clauses 17 and 13.12 and of the Lease, respectively; and
(ii) Anything the Lessor does to enforce this Lease or because the Lessee
breaches this Lease.
The Lessor’s legal costs shall be calculated on a solicitor and own client
basis.
6.6 Lease preparation Costs. The Lessor and the Lessee shall each pay their
own legal costs and expenses in connection with the negotiation, preparation and
execution of this Lease.
6.7 Cleaning.
(a) The Lessor may from time to time engage a cleaning contractor to clean
or provide rubbish removal services to the various offices in the Building. If
that occurs, the Lessee shall pay to the Lessor within 14 days of receipt of
written notification:
(i) The Lessee’s Proportion of the cost of cleaning the Common Areas;
(ii) The Lessee’s Proportion of the cost of cleaning the Building. Such cost
includes the cost of cleaning the interior and exterior surfaces of all windows
in the Building but does not include the cost of cleaning the Common Areas, the
Premises and those parts of the Building leased or intended to be leased or
licensed to any person; (iii) 100% of the cost of cleaning the Premises
and the Licensed Area.
(b) The Lessee shall pay to the Lessor, if required by the Lessor, the
Lessor’s estimate of such costs monthly in advance. The Lessor shall determine
the costs payable by the Lessee under this clause after the end of each
Accounting Period and give to the Lessee as soon as practicable after the end of
each Accounting Period a written statement setting out reasonable details of
such costs. If the amount paid by the Lessee on account of such costs is less
than the amount payable by the Lessee during the relevant Accounting Period the
Lessee shall pay the deficiency to the Lessor within 14 days of receipt of
written notification. If the amount paid by the Lessee on account of such costs
is greater than the amount payable by the Lessee during the relevant Accounting
Period the Lessor may either refund the excess to the Lessee or credit the
excess against costs payable under this clause subsequently falling due or
against any other monies owing by the Lessee to the Lessor. In the event of
assignment or transfer of the Lessee’s interest in this Lease any adjustment
under this clause if paid or credited to the Incoming Lessee shall discharge the
Lessor from any further liability in respect of such adjustment. (c) If
the cleaning contractor engaged by the Lessor:
(i) does not clean the Premises to Lessee’s reasonable satisfaction;
(ii) and the Lessor has made two requests of the cleaner to improve the
cleaning services to the Lessee’s reasonable satisfaction; and (iii) the
cleaner does not after the requests from the Lessor clean the Premises to the
Lessee’s reasonable satisfaction;
then, providing that one (1) months written notice is given to the Lessor,
the Lessee is entitled to engage its own cleaning contractor.
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(d) If a cleaning contractor is engaged by the Lessee and the cleaning
contractor:
(i) does not clean the Premises to Lessor’s reasonable satisfaction; and
(ii) the Lessee has made two requests of the cleaner to improve the cleaning
services to the Lessor’s reasonable satisfaction; and (iii) the cleaner
does not after the requests from the Lessee clean the Premises to the Lessor’s
reasonable satisfaction;
then, providing that one (1) months written notice to the Lessee, the
Lessor is entitled to engage its own cleaning contractor.
(e) The Lessor is not liable for any loss or damage to the Premises or the
Lessee in connection with the cleaning services of any cleaning contractor
engaged to clean the Premises.
7 USE OF PREMISES
7.1 Permitted Use. The Lessee must use the Premises only for the Permitted
Use and not allow any other person or corporation to sell goods or property or
provide services on or from the Premises or any part of them.
7.2 Conduct of Business. The Lessee must, at all times during the Term (as
appropriate):
(a) Conduct its business in the Premises in a proper, efficient and
reputable manner and in accordance with the best business practices; and (b)
Receive and deliver goods and merchandise only in the manner, at the times and
in areas designated by the Lessor.
7.3 Retail Shop Leases Act 1994. Notwithstanding any other provision, the
Lessee shall not use the Premises wholly or predominantly for the carrying on of
one or more retail businesses. For the purposes of this clause the expression
“retail business” shall have the meaning set out in the Retail Shop Leases Act
1994.
7.4 Requirements of any Law or Governmental Agency. The Lessee must comply
promptly with all Laws and the requirements of any Governmental Agency in
respect of the Premises, the use of the Premises, or any machinery, plant,
equipment, fixtures, fittings or furnishings in the Premises.
7.5 Licences. The Lessee must, at its own expense, obtain and keep current
any registration, licence or permit required by any Law or Governmental Agency
in respect of the Permitted Use. The Lessee must produce such documents for
inspection by the Lessor within 14 days of receipt of written notification from
the Lessor.
7.6 Prospective Lessees and Purchasers. The Lessee must:
(a) Allow the Lessor to show the Premises to prospective purchasers at all
reasonable times and after receipt of reasonable notice from the Lessor; and
(b) Allow the Lessor, at any time within the six (6) month period immediately
preceding expiration of the Term, to show the Premises to prospective lessees
and to put up the usual “For Sale” or “To Let” notices where the Lessor thinks
fit and the Lessee must not remove any such notices without the written consent
of the Lessor.
7.7 Rules and Regulations. The Lessee and the Lessee’s Associates must:
(a) Observe and comply with; and (b) Not allow anything to be done
contrary to,
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the Rules and Regulations. Default in compliance with the Rules and
Regulations will be treated in all respects as a breach of the Lessee’s
Obligations. The Lessor may at any time amend, cancel, add to or suspend any or
all of the Rules and Regulations, or make additional or substitute rules and
regulations, which, in the Lessor’s opinion are required for:
(c) The management, use, safety, care, cleanliness or external appearance of
the Premises, the Land or the Building; or (d) The convenience of
occupiers and invitees,
PROVIDED HOWEVER that any such alteration shall not apply to the Lessee if
that alteration materially and substantially or permanently derogates from the
enjoyment of the rights conferred on the Lessee by this Lease.
7.8 Prohibited Conduct. The Lessee shall not:
(a) Carry on in the Premises any noxious, offensive or illegal business,
occupation or practice; (b) Do any act or thing which may be a nuisance or
annoyance or cause damage or disturbance to any other occupier of the Building,
the Lessor or the occupiers of nearby land; (c) Hold in the Premises or
the Building any auction, fire, bankruptcy or liquidation sale; (d) Use
the Appurtenances for any purpose other than those for which they are provided
or interfere with any Appurtenances; (e) Paint, erect or affix any signs,
notices or advertisements within the Premises that are visible from outside the
Premises other than signs, notices or advertisements that directly relate to the
Permitted Use and that are of a reasonable standard and have been approved by
the Lessor; (f) Affix, suspend or support any fixtures or fittings from or
by any external wall of the Building or any internal structural wall or any
dividing wall or partition separating the Premises from any other leased or
licensed premises in the Building or from the Common Areas in the Building
without the Lessor’s prior consent. The Lessee shall make good any damage caused
to any such wall or partition notwithstanding that the Lessor may grant its
consent under this clause; (g) Hole, mark or damage any of the floors,
walls, ceilings, partitions or other parts of the Premises except so far as may
be reasonably necessary for the erection of approved signs, notices,
advertisements, fixtures and fittings; (h) Allow in the Premises any radio
or television receiver, loud speaker, amplifier or other similar device in such
a manner that the sound omitted from any such device may be heard in any part of
the Building other than the Premises; (i) Accumulate in or about the
Premises any waste materials; (j) Use any apparatus which radiates heat
(other than electrical apparatus for the heating of beverages) within the
Premises or the Building without the Lessor’s prior consent. Such consent may be
withdrawn by the Lessor at any time; (k) Prepare any food (other than
beverages) within the Premises whether or not for consumption upon the Premises
without the Lessor’s prior consent unless the preparation of food is expressly
stated in the Permitted Use in which case the consent of the Lessor is
unnecessary; (l) Bring upon or store in the Premises or the Building any
chemicals or other substances (in whatever form or state) of a flammable,
volatile, explosive, radioactive or corrosive nature except such as are normally
consumed or sold by the Lessee in the lawful conduct of the Lessee’s Business
and then only so long as they are confined in containers from or in which they
are normally consumed by the Lessee or sold to the public by the Lessee;
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(m) Allow any animals on the Building other than guide dogs for the blind;
or (n) Allow the smoking tobacco or related or similar products on or in
the Building.
7.9 Removal of Refuse. Unless otherwise notified by the Lessor the Lessee
shall remove the Lessee’s:
(a) Wet refuse from the Building daily; and (b) Waste materials from
the Building weekly.
During such times as the Lessor provides or employs persons to collect
that refuse the Lessee shall not dispose of it by any other means.
7.10 Rodents and Vermin. The Lessee shall keep the Premises free and clear
of rodents, termites, cockroaches and other vermin. 7.11 Overloading. The
Lessee shall observe the maximum floor loading nominated from time to time by
the Lessor and shall not permit the floors of the Premises to be broken,
strained or damaged by overloading the floors in any manner. The Lessee shall
not load the ceiling or roof structure of the Premises or the Building without
the Lessor’s prior consent. The Lessee shall not install upon the Premises any
safe, heavy machinery, compactus or other heavy plant and equipment without the
Lessor’s prior consent. 7.12 Infectious Diseases. If any disease is
detected upon the Premises which may require notification under any Statute the
Lessee shall give all necessary notices and information promptly required under
the Statute to the relevant authorities and shall give a copy of all such
notices and information promptly to the Lessor. If required by the Lessor or by
any relevant authority the Lessee shall thoroughly fumigate and disinfect the
Premises. 7.13 Compliance with Fire Regulations. The Lessee shall take
such precautions against fire in respect of the Premises as are required under
any Statute or by the Council or relevant authorities or as shall be determined
by the Lessor. The Lessee shall comply with all fire alarm, insurance and
sprinkler requirements in respect of the use and occupation of the Premises.
7.14 Suitability of Premises. The Lessor does not expressly or impliedly
promise that the design, shape, size or finishes of the Premises or the Building
are or shall remain fit, suitable or adequate for the purposes of the Lessee.
All promises implied by law as to the fitness, suitability and adequacy of the
Premises and the Building are expressly negatived. 7.15 Keys. The Lessor
may supply to the Lessee a key to the Building in order that the Lessee may have
access to the Premises during Normal Access Hours. The Lessor may supply to the
Lessee additional or replacement keys to the Building. For the purposes of this
clause “key” includes key cards and other means of entry. The Lessee shall not
make duplicate copies of any key held by them without the Lessor’s prior written
consent and the parties agree that any duplicate keys shall be returned to the
Lessor within one (1) Business Day of any request, if the Lessor, in its sole
discretion, considers that the key is held by a person who is endangering the
security of the Building. The Lessee shall furnish to the Lessor, within 14 days
of receipt of written notification from the Lessor, a list of all persons
possessing keys to the Building and shall immediately report to the Lessor the
loss of any such key. Upon the termination of this Lease (whether by effluxion
of time or otherwise) the Lessee shall return to the Lessor all keys to the
Premises and the Building. The Lessor may require the Lessee to return to the
Lessor within 14 days of receipt of written notice from the Lessor the any key
held by a person if such person is in the opinion of the Lessor using the key in
a manner which may endanger the security of the Building or in a manner not
consistent with the Lessor’s operation of the Building. The Lessee shall pay to
the Lessor within 14 days of receipt of written notice from the Lessor the
Lessor’s reasonable cost of supplying any key to the Lessee or altering any
security system in the Building as a result of the loss or abuse by the Lessee
or any Lessee’s Associates of any keys. 7.16 Fire and Emergency Drills.
The Lessee shall perform fire and emergency drills and observe all emergency
evacuation procedures. The Lessee shall cause all persons under its control to
co-operate with the Lessor and with any relevant authority in performing such
drills and procedures. The Lessee shall appoint persons to act as floor wardens.
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8 AIR CONDITIONING EQUIPMENT ELEVATORS FIRE EQUIPMENT AND SERVICES
8.1 Source of Light and Power. The Lessee shall not use any form of light,
power or heat other than electricity or gas (if any) supplied through meters.
The Lessee may use auxiliary power or lighting (other than exposed flame) during
any period of power failure or power restrictions. 8.2 Electrical
Overloading. The Lessee shall not install any electrical equipment on or in the
Premises that may overload the cables, switchboards or sub-boards through which
electricity is conveyed to the Premises without the Lessor’s prior consent. If
the Lessor grants such consent any alterations which are necessary to comply
with the insurance requirements of the Lessor and the requirements of any
relevant Statute shall be effected by the Lessor at the cost of the Lessee. The
Lessee shall pay to the Lessor within 14 days of receipt of written notification
from the Lessor the cost to the Lessor of such alterations. The Lessee shall
deposit with the Lessor within 14 days of receipt of written notification from
the Lessor the cost of such alterations estimated by the Lessor before any such
alterations are commenced. 8.3 Air Conditioning. The Lessor shall use all
reasonable endeavours to provide conditioned air to the Premises (in accordance
with Australian Standards 1668.1 and 3666.1) in conjunction with other tenancies
in the Building during Normal Business Hours and to rectify any failure to
provide such conditioned air to the Premises as soon as reasonably practical in
the circumstances. The Lessee shall not use any other method of air conditioning
(either heating or cooling) without the Lessor’s prior consent. Such consent
shall not be unreasonably withheld when conditioned air is not available or the
Air Conditioning Equipment is not functioning. 8.4 Additional Air
Conditioning. If the Lessee requests the Lessor to provide conditioned air to
the Premises for any period outside Normal Business Hours (provided that the
Lessee has first paid the cost of installation of the necessary meter) or if in
the reasonable opinion of the Lessor the Lessee by reason of its use of the
Premises requires or is obtaining an air conditioning supply in excess of that
which would be supplied but for such use, the Lessor may provide or continue to
provide additional or excess conditioned air to the Premises. The Lessee shall
pay to the Lessor, within 14 days of receiving written notification from the
Lessor, the reasonable cost of operating the Air Conditioning Equipment on an
hourly basis for any such purpose as determined by the Lessor, acting
reasonably, from time to time. As at the Commencement Date, such cost is the
rate specified in item 18 of the Reference Schedule, which may be adjusted by
the Lessor from time to time. 8.5 Elevators. The Lessor shall use
reasonable efforts to provide an elevator service to the Building during Normal
Business Hours. Except as provided in this clause the Lessee shall not use the
Elevators (other than such elevators (if any) designated by the Lessor from time
to time for the carriage of goods) for the carriage of goods without the
Lessor’s prior consent. The Lessee may use the Elevators for the carriage of
goods which may be conveniently carried by hand and which will not damage the
interior of the Elevators. 8.6 Bulk Supply of Electricity. The Lessor may
supply to the Lessee from any bulk supply of electricity purchased by the Lessor
all electricity consumed within the Premises. In such case the following
provisions shall apply:
(a) The Lessee shall purchase all electricity consumed within the Premises
from the Lessor; (b) So far as it is reasonably able to do so the Lessor
shall supply to the Lessee all the Lessee’s reasonable electricity requirements
for the Permitted Use; (c) The price to be charged by the Lessor to the
Lessee for the supply of electricity shall be at the same rate and governed by
the same conditions as would be imposed from time to time by the appropriate
authority if such authority were supplying electricity direct to the Lessee for
the Premises only; (d) The Lessor shall render accounts from time to time
to the Lessee and the Lessee shall pay to the Lessor such accounts within 14
Business Days after receiving such accounts. If this Lease is terminated
(whether by effluxion of time or otherwise) the Lessor may render an account up
to the date of termination and the Lessee shall pay to the Lessor the amount
shown upon the rendering of such account;
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(e) The Lessor shall not be responsible or liable for any failure of or
interruption to the supply of electricity arising from any cause or for any
failure of the electrical system in the Building or in the Premises due to
breakdown, repairs, maintenance restrictions, industrial action, accidents or
causes of any class or description or directness or remoteness; (f) If the
Lessee does not pay an account rendered by the Lessor for electricity charges
within the period of 14 Business Days after the account is rendered the Lessor
may disconnect the electricity supply to the Premises. The Lessee shall pay to
the Lessor within 14 Business Days of receipt of written notification the cost
to the Lessor of any disconnection and any reconnection of the electricity
supply; (g) The Lessee shall ensure that any electrical installation while
it remains connected to the electricity supply to the Premises is maintained
free from any defect. The Lessee shall make available to the Lessor, at any
reasonable time and on giving the Lessee reasonable written notice (deemed to be
at least 24 hours, other than in an emergency, when no notice or consent is
required), any electrical installation in the Premises for inspection. For the
purpose of this paragraph “electrical installation” has the same meaning as
ascribed in the Electricity Act 1994; and (h) Where, due to limitations in
the electricity supply, the Lessor is satisfied that for the purpose of ensuring
at all times a regular, efficient and constant electricity supply it is
necessary to restrict the electrical articles that may be used by the Lessee,
the Lessor may impose such restrictions in such manner and to such extent as the
Lessor considers reasonably necessary in the circumstances including the
prohibition of the use of any electrical article. For the purpose of this
paragraph “electrical article” has the same meaning as ascribed in the
Electricity Act 1994.
8.7 Fire Equipment Alteration. The Lessee shall pay to the Lessor within
14 days of receipt of written notification from the Lessor the cost of any
alteration to the Fire Equipment which is necessary by reason of the
non-compliance by the Lessee with the recommendations of the Insurance Council
of Australia, any Statutory requirements or the insurance requirements of the
Lessor. 8.8 Toilets. If any toilets and washrooms are unserviceable or
inadequate the Lessee and the Lessee’s Associates shall not use such toilets or
washrooms or they shall only use the toilets and washrooms nominated by the
Lessor.
9 INSURANCES
9.1 Insurances. The Lessee must effect and keep in force in respect of the
Premises and the Licensed Area insurance:
(a) Required by law; and (b) Which a prudent Lessee would take out
including:
(i) Insurances on the Lessee’s Fittings and stock-in-trade for full
replacement value; (ii) Plate Glass Insurance; (iii) Product
Liability Insurance (for retail lessees only); (iv) Adequate Public Risk
Insurance for an amount not less than the amount stipulated in Item 11 of the
Reference Schedule (or such higher amount as the Lessor reasonably requires and
notifies to the Lessee); and
(c) Include the names of the Lessee and the Lessor, and any other person
having an interest in the Land as specified by the Lessor, for their respective
rights and interests.
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9.2 Policies. In respect of all polices of insurance which the Lessee must
effect under this Lease, the Lessee must place those policies with an insurer
approved by the Lessor (that approval not to be unreasonably withheld):
(a) For those amounts; (b) To cover those risks; (c) With only
those conditions, endorsements and exclusions reasonably acceptable to or
required by the Lessor from time to time; and (d) Give the Lessor
satisfactory evidence of compliance with its obligations under this Clause 9.2,
when asked to do so.
9.3 Insurances not to be Affected. The Lessee must not do anything that may
affect rights under any insurance or which may increase an insurance premium
payable in connection with the Premises, the Building or any property in them.
9.4 Lessee’s Insurance Premiums. The Lessee shall pay to the insurer all
premiums and charges payable in respect of any insurance policy effected by the
Lessee under the provisions of this Lease on or before the due date for payment.
9.5 Excess on Lessor’s Insurance. The Lessee shall pay to the Lessor
within 14 days of receipt of written notification from the Lessor all extra or
excess premiums and other charges for insurances on the Premises or the Building
required on account of extra risk caused by the Permitted Use or the Lessee’s
Business or required by reason of the Lessee’s default under the provisions of
this Lease. 9.6 Benefit of Lessor’s Insurance. The Lessee shall not have
any interest in or be entitled to any benefit under any insurance policy
effected by the Lessor unless the Lessee is expressly named in such policy.
10 OPTION FOR FURTHER TERM Intentionally deleted. 11 PROVISION OF
SECURITY
11.1 Application. This Clause 11 applies unless Item 12 of the Reference
Schedule has not been completed. 11.2 Delivery of Security. On or before
the Commencement Date, the Lessee must deliver to the Lessor the Bank Guarantee
as security for the due and punctual performance of all the covenants,
obligations and provisions on the Lessee’s part contained in this Lease. the
Lessee may at any time during the Term of the Lease, in lieu of the Bank
Guarantee deposit with the Lessor the Security Deposit. 11.3 Calling Up
Security. If the Lessee does not comply with any of its obligations under this
lease (including any extension or holding over), whether this lease is
registered or not, then the Lessor may, without notice to Lessee:
(a) In the case of a Bank Guarantee, call on the Security; and (b) In
the case of a Security Deposit, appropriate and apply so much of or the whole of
the Security Deposit,
as may be necessary in the opinion of the Lessor to compensate the Lessor
for loss or damage sustained or suffered by the Lessor by reason of such breach
by the Lessee. Any such calling up or appropriation by the Lessor shall not be
deemed to and shall not operate to waive the Lessee’s breach and shall not
prejudice any other right of the Lessor arising from such breach.
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Title Reference 16496089
11.4 Additional/Replacement Security. If the Lessor calls on the Security or
if the Rent is increased, then no later than 7 days after the Lessor gives the
Lessee a notice asking for it, the Lessee shall deliver to the Lessor a
replacement or additional Security so that the amount guaranteed is the amount
specified in Item 12 of the Reference Schedule. Unless otherwise agreed in
writing by the Lessor, the replacement or additional Security must take the same
form as the Security previously held by the Lessor. 11.5 Return of
Security. The Security (so far as it has not been resorted to) shall be refunded
or surrendered by the Lessor to the Lessee upon:
(a) The fulfilment by the Lessee of all of its obligations under this lease;
and (b) The payment of any damages awarded against or agreed by the Lessee
to be paid to the Lessor for any breach by the Lessee of its obligations under
this lease.
11.6 Terms of Bank Guarantee. If a Bank Guarantee is provided, in respect of
the Bank Guarantee:
(a) It must be expressed to be in favour of the Lessor and any subsequent
owner of the Land; (b) It must be obtained from a bank or such other
financial institution as the Lessor may in its absolute discretion accept;
(c) It must entitle the Lessor by notice in writing to the provider of the
bank guarantee to make demand thereunder for an amount up to and including the
Security Amount; (d) It must contain a provision that the provider of the
Bank Guarantee is not allowed to inquire whether or not the Lessor is entitled
to make demand under the Bank Guarantee; (e) It must not contain an expiry
date; (f) It must be provided by the client/customer who is the Lessee
named in this Lease; (g) In the event that a payment is made to the Lessor
following a demand made under the Bank Guarantee the Lessee must immediately
provide a fresh Bank Guarantee to the Lessor for an amount of not less than the
Security Amount so that at all times the Bank Guarantee secures to the Lessor
the Security Amount; (h) On any permitted assignment of this Agreement the
incoming party must provide a substitute Bank Guarantee; and (i) If the
Lessor transfers its interest in the Land the Lessee will provide a Bank
Guarantee in favour of the transferee in substitution for the Bank Guarantee
provided here under within fourteen (14) days of written demand by the Lessor.
Any charges levied by the Lessee’s banker for the issue of a replacement Bank
Guarantee shall be borne by the Lessee.
11.7 Assignment by the Lessor. The Lessor will be at liberty:
(a) In the case of the Security Deposit, to pay the Security Deposit (less
any sums appropriated by the Lessor in accordance with Clause 11.3 and not
reinstated); and (b) In the case of the Bank Guarantee, provide the Bank
Guarantee (to the extent that it has not been called upon by the Lessor),
to any assignee or transferee of the Lessor’s interest in the Premises and
thereupon the Lessor shall be discharged from all liability to the Lessee or any
other person with respect to the Security.
11.8 Investment of Security Deposit. If a Security Deposit is provided, the
Lessor will invest the Security Deposit in the name of the Lessor in an interest
bearing account with a bank on call. All interest accrued on the Security
Deposit:
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(a) will become part of the Security Deposit; and (b) belongs to the
Lessee; and (c) is subject to clause 11.3.
12 GOODS AND SERVICES TAX
12.1 Recovery of GST. In the case of a Supply which is a Taxable Supply:
(a) The consideration payable to the Supplier will be increased by an amount
equal to the Applicable GST; (b) The Applicable GST shall be the GST
payable on the Supply calculated in accordance with the Act and on the value
stipulated in the Act in relation to the Supply; (c) The Applicable GST
shall be added to the consideration payable under the other provisions of this
Lease so as to form an additional part of the consideration for the Supply.
12.2 Recipient to Pay. The Recipient will pay the Applicable GST to the
supplier, on the earlier of the time of making payment of any monetary
consideration on which the Applicable GST is calculated and written demand, and
such amount will be a debt due and owing by the Recipient to the Supplier which
is recoverable without deduction or setting off any refund or counter claim.
12.3 Tax Invoice. The Supplier shall provide the Recipient with Tax Invoices
and/or Adjustment Notes in relation to the Supply at least 14 days before the
payment is due (but shall not be obliged or requested to create such invoices
for amounts in excess of amounts received, or due to be received, from the
Recipient) and do all things reasonably necessary to assist the Recipient to
enable it to claim and obtain any input tax credit available to the Recipient in
respect of the Taxable Supply. 12.4 Reimbursement of Expenses. If either
party is required to pay, reimburse or indemnify the other for the whole or any
part of any cost, expense, loss, liability or other amount that the other party
has incurred or will incur in connection with this Lease, the amount must be
reduced by the amount for which the other party can claim an input tax credit.
13 MAINTENANCE, REPAIRS AND ALTERATIONS
13.1 Repair and Maintenance.
(a) The Lessee must, at its own expense, keep the Premises in good
condition, having regard to their condition at the Commencement Date or, in the
case of any part of the Premises which has been renewed or renovated, to the
condition that part was in when it was renewed or renovated.
(b) This clause does not apply in respect of any structural maintenance,
replacement or repair unless it is due to:
(i) Any act, neglect, default or omission of the Lessee; or (ii) The
Lessee’s particular use or occupancy of the Premises.
(c) The Lessee agrees that the Premises were in good condition at the
Commencement Date. (d) Despite anything but subject to Clause 13.1(b), in
order to maintain warranties and system integrity, the Lessor must maintain and
repair all Air-Conditioning Equipment in the Building and the Premises at its
cost.
13.2 Cleaning by Lessee.
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(a) The Lessee must at its own expense and at all times during the Term keep
the Premises (including any toilets, washrooms, kitchen or kitchenette installed
in the Premises) clean, tidy and free from rubbish and arrange for the regular
and prompt removal of all garbage from the Premises. (b) The Lessee must
carry out its obligations under this clause as frequently and to the standard of
cleanliness reasonably required by the Lessor.
13.3 Maintenance of Lessee’s Fittings. The Lessee must, at its own expense,
keep and maintain the Lessee’s Fittings clean, and in good working order and
condition. 13.4 Rectification of any Damage. The Lessee must, at its own
expense, immediately make good or repair any breakage, defect or damage to the
Premises (including but not limited to repair or replacement of broken glass),
or any other part of the Building, arising out of any misuse or abuse of any
facility or structure, or any breach of the Lessee’s Obligations, by the Lessee
or the Lessee’s Associates. 13.5 Doors Locks and Windows. The Lessee shall
keep and maintain the doors, locks, windows and window fittings of the Premises
in good and efficient repair, order and condition. 13.6 Bulbs Tubes and
Illuminated Signs. The Lessee shall replace all defective light bulbs, tubes and
associated fittings within the Premises. 13.7 Drains and Wastes. The
Lessee shall keep, maintain and repair the waste pipes, drains and conduits
originating in or connected to the Premises in a clear and free flowing
condition. The Lessee shall employ licensed tradesmen first approved by the
Lessor to rectify any defect which may occur in such waste pipes, drains and
conduits within the Premises. The Lessee shall clean regularly any grease traps
(whether within the Premises or not) servicing the Premises exclusively. Any
defect which may occur in such waste pipes, drains and conduits between the
external boundaries of the Premises and the point of entry into any trunk drain
including sewerage pumping equipment shall be rectified by the Lessor. The
from the Lessor the cost of that rectification work unless the Lessee proves to
the satisfaction of the Lessor that such defect is caused without default,
negligence or wilful act or omission on the part of the Lessee or the Lessee’s
Associates. 13.8 Carpet. Where reasonably required by the Lessor, and
subject always to fair wear and tear (which is not at the expense of the
Lessee), the Lessee shall as expeditiously as reasonably possible and to the
satisfaction of the Lessor rectify any damage or wear to the carpets, floor
coverings, curtains or drapes in the Premises by repair or replacement with
carpet, floor coverings, curtains or drapes supplied by the Lessor at the
Lessee’s cost or first approved by the Lessor. The obligation under this clause
shall include lifting and reinstalling partitions installed over any carpet or
floor covering which has been damaged or worn. The obligations under this clause
shall extend to damage or wear caused by:
(a) The relocation of partitions, fixtures or fittings; (b) Use of the
Premises whether consistent or inconsistent with the Permitted Use; (c)
The default, negligence or wilful act or omission of the Lessee or the Lessee’s
Associates; (d) Solids, ink or other fluids kept on the Premises; or
(e) Any furniture, safe, compactus or other equipment.
13.9 Re-Carpeting. On the expiration or earlier termination of this Lease,
the Lessee must replace the carpet or floor coverings installed in the Premises
due to wear and tear beyond fair wear and tear and the Lessee shall pay the cost
of lifting, removing, storing and reinstalling partitions, fixtures and
fittings, safes, compactuses and other items installed in the Premises. The
Lessee shall not install or use in the Premises any carpet, floor covering,
curtains, drapes or other soft furnishings other than as supplied or first
approved by the Lessor.
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13.10 Lessor May Enter and Inspect. The Lessor may, at any time on giving
the Lessee reasonable written notice (deemed to be at least 24 hours) (other
than in an emergency, when no notice or consent is required) enter the Premises
for the purpose of determining if the Lessee is complying with the Lessee’s
Obligations. 13.11 Lessor May Enter and Effect Works.
(a) The Lessor may, at any time, on giving the Lessee reasonable written
notice (deemed to be at least 5 Business Days) (other than in an emergency, when
no notice is required) enter the Premises with any workmen or materials and
effect any works:
(i) Necessary to comply with any requirement, notification or order (for
which the Lessee is not liable under this Lease) of any Governmental Agency; or
(ii) Associated with any repairs, renovations, maintenance, extensions or
alterations to the Building regarded as necessary or desirable by the Lessor;
and
(b) The Lessor, in exercising its powers under this clause, must use its
reasonable endeavours to cause as little inconvenience to the Lessee as possible
in the circumstances.
13.12 Alterations.
(a) The Lessee must not, without the Lessor’s prior written consent, make
any alterations to the Premises or the Building (including, without limiting the
generality of the foregoing installing any Lessee’s Fittings or altering any
Lessee’s Fittings already installed). (b) The Lessor may, as a
pre-condition to giving its consent under this clause, require the Lessee to:
(i) Submit plans, drawings and specifications of any proposed works,
prepared by a qualified consultant approved by the Lessor; and (ii) Vary
such plans, drawings and specifications if reasonably required by the Lessor or
the Lessor’s consultant.
(c) The Lessor must, as soon as reasonably practical and in any event not
later than 10 business days after receipt of the Lessee’s plans, drawings and
specifications, provide the Lessee with written notice that the Lessee’s
proposed alterations to the Premises have or have not been approved or advise of
such variations that the Lessor, acting reasonably requires. (d) If the
Lessor consents to the Lessee carrying out any works under this clause the
Lessor may impose conditions, including specifying:
(i) Which parts of the Premises must be reinstated; and (ii) Which
items of Lessee’s Fittings installed as part of the works may not be removed,
when the Lessee vacates the Premises.
(e) The Lessee must ensure that any works are carried out:
(i) According to any plans, drawings or specifications approved by the
Lessor; (ii) By contractors approved by the Lessor acting reasonably;
(iii) In a proper and workmanlike manner; (iv) According to all Laws and
the requirements of any relevant Governmental Agency; (v) According to the
Lessor’s reasonable requirements; and
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(vi) According to the Environmental Objectives set out in Clauses 25 and 26
of the Lease.
(f) The Lessee must ensure that any contractors engaged by the Lessee (and
approved by the Lessor acting reasonably) effect and maintain a contractors all
risk insurance policy noting the names of the Lessor, the Lessee and the
Lessor’s mortgagee (if any) and their respective rights and interests.
13.13 Painting and Maintenance.
(a) The Lessee must paint, repaint, paper, clean or otherwise appropriately
treat each part of the Premises usually treated that way in a good and
workmanlike manner and using good quality suitable materials approved by the
Lessor in writing:
(i) From time to time, if necessary or reasonably required by the Lessor;
and (ii) On the expiration or earlier termination of this Lease; and
(b) This clause is without prejudice to other provisions of this Lease.
14 LESSOR’S OBLIGATIONS
14.1 Quiet Enjoyment. While the Lessee is paying the Rent and complying with
the Lessee’s Obligations, the Lessee is entitled to use the Premises during the
Term without any interruption or disturbance from the Lessor or any other person
authorised by the Lessor, except to the extent specifically provided for in this
Lease. 14.2 Lessor’s Successors and Assigns. If a person other than the
Lessor becomes entitled either by operation of law or otherwise to receive the
Rent and other money payable under the provisions of this Lease, that person
shall have the benefit of the provisions of this Lease on the Lessee’s part.
Upon demand by the Lessor, the Lessee shall enter into a covenant with that
other person in that regard upon such terms as the Lessor may reasonably
require.
15 COMMON AREAS
15.1 Control of Common Areas. The Common Areas are subject to the control of
the Lessor at all times. The Lessor may permit the granting to any person of
exclusive use of the Common Areas for any purpose, during any period and on any
terms and conditions the Lessor thinks fit (in its absolute discretion).
15.2 Use of Common Areas. Subject to the Lessor’s rights under the provisions
of this Lease, the Lessee and the Lessee’s Associates may during Normal Business
Hours in common with others having like rights:
(a) Use the vestibules, footways, passages, stairways and Elevators in the
Common Areas; and (b) Use the toilets, washrooms, tea rooms and other
facilities provided by the Lessor (if any) for the common use of all lessees of
the Building, for the purposes for which they are provided. The Lessee and
the Lessee’s Associates shall not use the Common Areas for any other purpose.
15.3 Obstruction of Common Areas. The Lessee and the Lessee’s Associates
shall not obstruct any part of the Common Areas. 15.4 Maintenance of
Common Areas. The Lessor may do anything in respect of the Common Areas
considered desirable to improve the use of the Building by customers of the
lessees of the Building, the convenience of those customers, or the advertising
or promotion of the Building, including, without limitation:
(a) Constructing, maintaining and operating lighting facilities;
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(b) Policing the Common Areas; and (c) Temporarily closing any or all
of the Common Areas or facilities for repairs or similar purposes,
PROVIDED HOWEVER that the Lessor in exercising its rights under this clause must
use its reasonable endeavours not to cause undue inconvenience to the Lessee.
15.5 Closure of Common Areas. The Lessor may restrict access to the Common
Areas and may close off the entrances or exits to the Building but not so as to
prevent reasonable access by the Lessee to the Premises during Normal Access
Hours. 15.6 Functions and Displays. Except to the extent it materially
adversely affects the Tenant’s Business, the Lessor may permit any person to
hold a function or exhibition or display any merchandise or organise any parade
in the Common Areas at such times and upon such terms as the Lessor may think
fit. 15.7 Public Address System. Except to the extent it materially
adversely affects the Tenant’s Business, the Lessor may provide a public address
system in the Common Areas and may play or broadcast or permit any other person
to play or broadcast music or announcements. 15.8 Directory Boards. The
Lessor shall have the sole control of any directory boards provided by the
Lessor in the Building. The Lessor may allot space for the names and
descriptions of the lessees of the Building. The form of the Lessee’s name and
description shall require the Lessor’s prior consent and if approved shall be
erected by the Lessor at the cost of the Lessee. 15.9 Exclusion of
Trespassers. The Lessor may for as long as the Lessor thinks fit exclude or
restrain any persons other than the Lessee and bona fide Lessee’s Associates
from entering upon the Building or from using or occupying the Common Areas. For
the purposes of this clause a Lessee’s Associate shall not be bona fide if the
Lessee’s Associate breaches the terms of this Lease or in the Lessor’s
reasonable opinion is likely to breach the terms of this Lease.
16 INDEMNITIES AND RELEASE
16.1 Risk. The Lessee agrees to occupy, use and keep the Premises at its own
risk. 16.2 Specific Indemnities. The Lessee is liable for and indemnifies
the Lessor against liability or loss arising from, and cost incurred in
connection with:
(a) Damage to, or loss of property or death or injury to any person caused
or contributed to by a breach of this Lease or the act, negligence, omission or
default of the Lessee or the Lessee’s Associates; (b) The Lessor doing
anything which the Lessee is obliged to do under this Lease but has not done or
which the Lessor, acting reasonably, considers the Lessee has not done properly;
or (c) Any failure by the Lessee to comply with a requirement under a
building management statement that regulates, among other things, the Building
of which the Premises form part.
16.3 Release of Lessor. The Lessee releases the Lessor from, and agrees that
the Lessor is not liable for, liability or loss arising from, or costs incurred
in connection with:
(a) Any damage to, or loss of property or death or injury to any person
unless it is caused by the act, omission, negligence or default of the Lessor;
or (b) Any failure by the Lessee to comply with a requirement under a
16.4 Supply Failure. Without limiting Clause 16.3 except to the extent
caused or contributed to by the Lessor’s (or its employee’s, agent’s or
contractor’s) negligence or wilful acts or omissions:
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(a) the Lessee releases the Lessor from, and agrees that the Lessor is not
liable for, liability or loss arising from, or costs incurred in connection
with:
(i) A Service being interrupted or not working properly; (ii) The
Lessor’s plant, machinery or equipment not working properly; or (iii) Any
failure in operation or defective operation of any facility, plant, machinery or
equipment located or used in the Building (whether or not owned by the Lessor);
and
(b) subject to the Lessee’s rights in respect of the Lessor’s (or its
employee’s, agent’s or contractor’s) negligence or wilful acts or omissions, the
Lessee may not terminate this Lease or claim any compensation or abatement by
reason of anything referred to in nor are any of the Lessee’s obligations
abrogated or suspended.
17 RESTRICTIONS ON CHARGES, ASSIGNMENTS AND SUBLEASES
17.1 Restrictions. Subject to Clause 17.2, the Lessee must not, without the
Lessor’s consent (such consent not to be unreasonably withheld):
(a) Assign, transfer or otherwise deal with the Lessee’s interest in the
Premises; (b) Demise, sublet or part with possession of or grant any
concessions, franchises or licences affecting the Premises; (c) Mortgage,
charge or encumber the Lessee’s interest in the Premises; nor (d) By any
act or deed procure any of those things.
17.2 Modification of Restrictions. The Lessee may only deal with the Lease
or its interest in the Lease in the manner set out in Clause 17.1 if, before it
does so, the following conditions are satisfied:
(a) The Lessee is not in default of any of the Lessee’s Obligations; (b)
In the case of an assignment, transfer, subletting, franchise or licence
arrangement:
(i) The Lessee satisfies the Lessor (acting reasonably) that the incoming
party (whether assignee, transferee, sub-lessee, franchisee or licensee) is:
(A) A respectable, responsible and solvent person; (B) Able to carry
on the business which this Lease allows in the Premises; and (C) Of
satisfactory financial standing with equivalent retail experience as the Lessee;
and
(ii) The incoming party enters into a covenant with, and in the form
reasonably required by, the Lessor that the incoming party must comply with all
the Lessee’s Obligations; and (iii) Any guarantee and indemnity which the
Lessor reasonably requires is provided; and
(c) In the case of a mortgage, charge or encumbrance:
(i) The Lessee seeks the prior approval of the Lessor, which approval will
not be unreasonably withheld; and
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(ii) The Lessee ensures that the prospective mortgagee, chargee or
encumbrancee enters into an agreement with the Lessor in a form acceptable to
the Lessor, acting reasonably.
17.3 Change in Control of Lessee.
(a) If the Lessee is a company that is not listed on the Australian
Securities Exchange (or the subsidiary of such a company), then a change in the
Controlling Persons of the Lessee is deemed to be a breach of this Lease unless
the Lessor first gives written consent to the change. (b) The Lessor will
consent to a change in the Controlling Persons of the Lessee if:
(i) The proposed new Controlling Persons would (under Clause 17.2(b)) be
acceptable transferees of this Lease; and (ii) Any guarantee and indemnity
reasonably required by the Lessor is provided.
17.4 Lessee’s Obligations Not Affected by Approved Assignment, Transfer or
Sublease. A dealing permitted by the Lessor under this Clause 17 does not
release the Lessee from the Lessee’s liability under the Lease. 17.5
Costs. The Lessee is responsible for any costs which the Lessor may reasonably
incur in respect of or arising pursuant to this Clause 17.
18 DEFAULT, TERMINATION ETC
18.1 Lessor’s Right to Terminate.
(a) The Lessor may terminate this Lease if there is an Event of Default
which the Lessee does not remedy within a reasonable time of being given a
notice to do so. A notice given under section 124 of the Property Law Act 1974
is a notice for the purposes of this Clause. (b) The Lessor may terminate
this Lease by giving the Lessee notice or by re-entry if the Lessee:
(i) Repudiates its obligations under this Lease; (ii) Does not comply
with an essential term of this Lease; (iii) Does not comply with an
obligation under this Lease (which is not an essential term) and, in the
Lessor’s reasonable opinion:
(A) The non-compliance can be remedied, but the Lessee does not remedy it
within a reasonable time after the Lessor gives the Lessee notice to remedy it;
(B) The non-compliance cannot be remedied or compensated for; or (C)
The non-compliance cannot be remedied but the Lessor can be compensated and the
Lessee does not pay the Lessor compensation for the breach within a reasonable
time after the Lessor gives the Lessee notice to pay it.
18.2 Essential Terms
(a) Each obligation of the Lessee under Clauses 3 (Rent), 5.1 (Payment of
Outgoings), 6.1 (Payment of Services to the Premises), 6.4 (Special Services);
6.5 (Costs, Charges and Expenses), 6.7 (Cleaning), 7.1 (Permitted Use), 7.2
(Conduct of Business), 7.3 (Retail Shop Leases Act 1994), 7.4 (Requirements of
any Law or Government Agency), 7.8 (Prohibited Conduct), 7.11 (Overloading),
7.13 (Compliance with Fire Regulations), 8.6 (Bulk Supply of Electricity), 8.7
(Fire Equipment Alteration), 9 (Insurances), 11 (Provision of Security), 12
(Goods and Services Tax), 13 (Maintenance, Repairs and Alterations), 16
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(Indemnities and Release),17.1, 17.2 and 17.3 (Restrictions, Modification
of Restrictions and Change in Control of Lessee), and 23.4 (Interest) is an
essential term of this Lease.
(b) Each obligation of the Lessor under Clauses 8.3 (Air-Conditioning), 8.5
(Elevators), 13.1(d) (Repair and Maintenance), 23.17 (Operation) is an essential
term of this Lease.
18.3 Right to Damages and Indemnity.
(a) If the Lessor terminates this Lease pursuant to Clause 18.1:
(iv) The Lessee’s liability for damages for not complying with the Lease is
not affected; and (v) The Lessee must compensate the Lessor for the Rent
and any other amounts that would have been payable by the Lessee if this Lease
was not terminated.
(b) Subject to the Lessor’s duty to mitigate any loss or liability, if this
Lease is terminated pursuant to Clause 18.1, then the Lessee indemnifies the
Lessor against any liability or loss arising from, and any cost incurred,
whether before or after termination of this Lease, in connection with the
Lessee’s breach of this Lease and the termination of this Lease including the
loss to the Lessor of the benefit of the Lessee performing its obligations under
this Lease from the date of that termination until the Expiry Date.
18.4 Lessor May Rectify Lessee’s Breaches. The Lessor may do anything which
the Lessee should have done under this Lease but which it has not done or which
the Lessor, acting reasonably, considers it has not done properly, and any costs
incurred by the Lessor in taking such action shall be recoverable from the
Lessee as a debt due and owing.
18.5 Antecedent Breaches. Expiration or earlier termination of this Lease
does not affect any rights in connection with a breach of this Lease before
then.
18.6 Power of Attorney.
(a) The Lessee appoints the Lessor and its officers severally as the
Lessee’s attorney to act at any time after the Lessor’s power to re-enter has
been exercised to: (b) Execute and sign a surrender of this Lease and
procure the surrender to be registered, using the name of the Lessee for such
purposes; (c) A statutory declaration of the Lessor or an officer of the
Lessor that the rights of the Lessor under paragraph (a) are exercisable will be
treated as conclusive evidence of its contents in favour of any person who is
not a party to this Lease; and (d) The Lessee must ratify and confirm
anything lawfully done or caused to be done by the Lessee’s attorney in
accordance with this clause 18.6.
18.7 Termination or Abatement on Damage.
(a) The following provisions apply if all or any part of the Premises or the
Building is destroyed or damaged by fire, flood, lightning, storm, tempest or
other disabling cause which, in the reasonable opinion of the Lessor:
(i) Renders the Premises substantially unfit for use and occupation by the
Lessee during the Term; (ii) Deprives the Lessee of substantial use of the
Premises; or (iii) Renders the rebuilding or reconstruction of the
Premises or the Building in their previous forms impracticable or undesirable.
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(b) If the circumstances in paragraph (a) arise, either the Lessor or the
Lessee, by notice in writing to the other, may terminate this Lease without
compensation. Before the Lessee may give notice to terminate the Lease, the
Lessor must have failed to rebuild or reinstate the Premises within a reasonable
time after a request in writing by the Lessee to do so. (c) Termination
under this clause is without prejudice to any rights of the Lessor and Lessee in
respect of any prior breach, matter or thing. (d) There is no obligation
on the Lessor to rebuild or reinstate the Premises or the Building or otherwise
make them fit for occupation. (e) The Rent and the Lessee’s contribution
to Outgoings (or proportionate amounts) abate according to the nature and extent
of the damage or destruction which occurs, until:
(i) The Premises are made fit for the Permitted Use again; or (ii) The
Lease is terminated under the provisions of this clause,
whichever first occurs.
(f) The rights of the Lessee under this clause do not apply if:
(i) The destruction or damage is caused or contributed to by the Lessee or
the Lessee’s Associates; or (ii) The Lessor fails to receive the benefit
of any insurance in respect of the destruction or damage due to any wilful or
negligent act or omission of the Lessee or the Lessee’s Associates.
(g) If a dispute (not being a dispute in respect of interpretation) arises
in respect of this clause:
(i) The dispute must be determined by a qualified valuer agreed upon by the
Lessor and Lessee; (ii) If the Lessor and Lessee fail to agree within
seven (7) days, a qualified valuer may be appointed at the request of either the
Lessor or the Lessee by the president for the time being of the Australian
Property Institute (Queensland Division); (iii) The valuer acts as an
expert and not as an arbitrator and the law relating to arbitration is not to be
applied; and (iv) The decision of the valuer (including any decision as to
costs) is final and binding except for fraud or manifest error.
19 HOLDING OVER, REMOVAL OF LESSEE’S FITTINGS ETC
19.1 Holding Over.
(a) The Lessee, with the consent of the Lessor, may hold over after the
expiry of the Term or any Further Term or earlier termination of this Lease.
(b) The Lessee holding over under this clause is a monthly Lessee of the
Lessor at a rental equal to a monthly proportion of the Rent and any other
moneys payable by the Lessee under the Lease increased by 8% per annum, at the
date of expiry or earlier termination. The applicable terms and conditions of
the Lease apply.
19.2 Make Good at End of Term.
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(a) At the commencement of this Lease, or in the case of a new fitout, when
the new fitout has been completed, the Lessor and Lessee agree to commission a
Quantity Surveyor to prepare a report on the condition of the Premises and the
Licensed Area (“Condition Report”) to be signed and dated by both the Lessor and
Lessee. The Lessor and Lessee shall bear the cost of the preparation of the
Condition Report equally. (b) At the expiry of, or alternatively, the
earlier determination of this Lease, the Lessor and Lessee agree to commission
the preparation of a make-good schedule by a Quantity Surveyor. The Lessor and
Lessee agreed to abide by the Royal Institute of Chartered Surveyors best
practice guidance notices in relation to the make good of the Premises as a
basis to resolving any disputes. The Lessor and Lessee shall bear the cost of
preparation of the make good schedule equally.
19.3 Removal of Lessee’s Fittings.
(a) Subject to paragraphs (b) and (c), the Lessee:
(i) May, at or before the expiration or earlier termination of the Lease;
and (ii) Must, if required by the Lessor, on or prior to the expiration or
earlier termination of the Lease,
remove from the Premises, the Licensed Area and the Building all Lessee’s
Fittings and/or the Lessor’s Property (where such Lessor’s Property was part of
the Lessee’s fitout works paid for by the Lessor) or other items brought on or
installed in the Premises or the Licensed Area by the Lessee, including without
limitation all signs fixed to or painted upon any windows or doors (unless
otherwise provided in this Lease) so that the Licensed Area and the Premises are
returned to a base building (open plan) configuration. (b) The Lessee must
remove those items without damaging the Premises, the Licensed Area or the
Building and must immediately make good any damage which occurs. (c) The
Lessee must ensure the removals contemplated under paragraph (a) are carried out
outside normal trading hours of other occupants within the Building if in the
Lessor’s opinion to do otherwise would cause undue disruption of other occupants
of the Building.
19.4 Lessee’s Fittings Not Removed.
(a) The Lessor, to the extent that the Lessee does not comply with Clause
19.3, may remove and dispose of any such items not removed by the Lessee, as if
they were the property of the Lessor. (b) The Lessee indemnifies the
Lessor against any damage, expense, loss or liability suffered or incurred by
the Lessor in respect of paragraph (a).
19.5 Yielding Up. On the expiration or earlier termination of this Lease,
the Lessee must:
(a) Give the Premises and the Licensed Area back to the Lessor clean, free
from rubbish and in a condition consistent with full compliance with the
Lessee’s Obligations; (b) To the extent required by the Lessor, reinstate
the Premises, the Licensed Area and Services to the Premises and the Licensed
Area which were altered to suit the Lessee’s requirements before or during the
Term, so that:
(i) The Premises and the Licensed Area are in the state and condition they
were in before the alterations were made; and (ii) The Services conform to
the standard for those Services prevailing in the Building;
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(c) Repair any damage to the Premises, the Licensed Area or the Building
resulting from the performance by the Lessee of its obligations under this
clause; (d) Without limiting or being limited by sub-clauses (a) to (c),
the Lessee must:
(i) Replace Services. Put all the Services into either the standard
configuration for the Building as notified by the Lessor (or, if required by the
Lessor, into such other positions as notified by the Lessor as long as the cost
to the Lessee of putting the Services in other positions is no greater than the
cost, estimated by the Lessor in good faith, of putting the Services into the
standard configuration for the Building). The Lessee’s replacement obligations
include installing new cables, conduits, wires, ducting, piping and pipes (of a
standard not less than that then existing) to connect the Services so that they
are operational once in the required positions. The Lessee must have the
replacement of the Services carried out by contractors approved by the Lessor
and in accordance with procedures approved by the Lessor acting reasonably;
(ii) Remove Cables. Remove all telephone data lines to the MDF floor riser
position, cables, conduits, wires, ducting, piping and pipes and additional
equipment of any kind (for example, air-conditioning units) in or servicing the
Premises and the Licensed Area installed by or on behalf of the Lessee, the
Lessee’s Associates or any other prior occupier of the Premises (or any
sublessee or licensee of any of them), other than those necessary for the
Services to be operational; (iii) Replace Carpet. In respect of wear and
tear beyond reasonable wear and tear which excludes any damage caused by
castors, replace the carpet with new carpet approved by the Lessor of a standard
not less than that of the carpet then provided by the Lessor to premises in the
Building; (iv) Steam Clean Carpet. Unless the carpet is newly laid, have
it steam cleaned by a reputable contractor; (v) Ceiling Support Grid. Put
the ceiling support grid and ceiling tiles into good repair, order and condition
(including replacement of damaged grid and tiles and such further replacements
as are needed to make replacements inconspicuous); (vi) Reinstate Holes in
Structure. Make good and reinstate the structure of any part of the Building
into which any penetration or cavity has been made by or on behalf of the
Lessee, the Lessee’s Associates or any other prior occupier of the Premises;
(vii) Remove Fitout. Remove fitout from the Premises even if the Lessor owns
it or has paid for it. (viii) Other Repairs. Repair or replace window
mullions, skirtings, facades on core walls and other parts of the Building which
have been damaged because of installation of the Lessee’s Fittings, removal of
the Lessee’s Fittings or otherwise; and
(e) Immediately repair any damage to the Premises or the Building arising
out of any act, default, misconduct, neglect, negligence or omissions of any
kind by the Lessee or the Lessee’s Associates.
20 SUBDIVISION
20.1 Subdivision. If the Lessor shall at any time during the Term seek to
subdivide the Building or any part of the Building, the Lessee will immediately
upon receipt of:
(a) A written request from the Lessor under this clause; and
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(b) A new lease document in respect of the Premises capable, after stamping
of immediate registration in the appropriate office following the registration
of the plan of subdivision on the terms set out in Clause 20.2 together with
necessary ancillary documentation,
deliver to the Lessor:
(a) A duly executed surrender of this Lease in a form capable, after
stamping, of immediate registration in the appropriate office and to take effect
from the date the Lessee signs such surrender or the date (if any) specified in
the request referred to in paragraph (a) of this clause, whichever is the later;
and (b) The duly executed documentation referred to in paragraph (b) of
this clause.
20.2 Terms of New Lease. The new lease referred to in Clause 20.1(b) shall
be on the terms and conditions contained in this lease except that:
(a) The date of commencement of the new lease shall be the date of
registration of the plan of subdivision and thus the term of the new lease shall
be shorter than the Term; (b) The amount of the Rent payable from the date
of commencement of the new lease shall be equal to the amount of the Rent
payable at the date of surrender of this Lease; and (c) The terms and
conditions of the new lease shall be varied to reflect the change in the
character of the Lessor’s estate or interest in the Land.
In the event of a dispute between the Lessor and the Lessee as regards the
terms and conditions of the new lease, the Lessor or the Lessee may refer such
dispute to a person nominated by the president or chief executive officer, for
the time being, of the Queensland Law Society Incorporated. Such nominated
person shall act as an expert and his or her determination shall be final and
binding upon both parties. The fees of such person shall be borne by both
parties in equal shares.
20.3 Interim Lease. In the event that the Lessor exercises the Lessor’s
rights under this part the Lessee shall occupy the Premises between the date of
surrender of this Lease and the date of commencement of the new lease and the
terms and conditions of such occupancy shall be the same as the terms and
conditions of this Lease.
20.4 Lessor’s Costs and Duty. The Lessor shall:
(a) Be responsible for its own costs associated with any surrender of this
Lease and any grant of a new lease under this part; (b) Pay any lodgement
fees on the surrender of this Lease and any new lease under this part; and
(c) Pay any duty on any new lease under this part that relates to the period
up to and including the Expiry Date.
20.5 Lessee’s Costs and Duty. The Lessor shall be responsible for the
Lessee’s reasonable costs and expenses (including legal costs and expenses)
associated with any surrender of this Lease and any grant of a new lease under
this Clause.
21 CAR PARK LICENCE
21.1 Permitted Use. The Lessor grants a licence to the Lessee to use the Car
Park License Area for the parking of 15 vehicles and for no other purpose during
the Term of the Lease provided the Lessee, at all times, complies with the
Lessee’s Obligations (Car Park Licence). 21.2 Events leading to
termination. The Lessor is entitled to immediately terminate this Car Park
Licence by notice to the Lessee if:
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(a) any part of the Car Park Licence Fee is unpaid for 14 days after written
demand for payment is made; (b) the Lessee fails to comply in any other
way with this Car Park Licence and fails to remedy the breach within 14 days of
written demand by the Lessor that it do so; (c) the Lessee fails to comply
in any other way with the Lease and fails to remedy the breach within 14 days of
written demand by the Lessor that it do so; (d) the Lessee ceases to be
the lessee under the Lease (other than the case of an assignment to any
permitted transferee of the Lease); or (e) the Lessee vacates the
Premises.
21.3 Licence Fee. During the term of this Car Park Licence, the Lessee must
pay the Lessor the Car Park Licence Fee by equal monthly instalments in advance
on the first day of each month. If necessary, the first and last instalments
will be apportioned on a daily basis. 21.4 Licence Fee review. The Car
Park Licence Fee is increased on and from each Review Date of the Lease in the
same manner as the Rent payable under Lease is increased. 21.5 Provision
for Adjustment/Deferment of Review
(a) If the amount of the revised Car Park Licence Fee has not been agreed or
determined by the relevant Review Date the Lessee must continue to pay the Car
Park Licence Fee to the Lessor at a rate equal to the Car Park Licence Fee
payable during the 12 month period immediately preceding the relevant Review
Date until the revised licence fee is ascertained. (b) When the revised
Car Park Licence Fee is ascertained, any necessary adjustment of the Car Park
Licence Fee calculated from the relevant Review Date must be paid by the Lessee
to the Lessor within fourteen (14) days of the revised Car Park Licence Fee
being ascertained.
21.6 Insurances
(a) The Lessee must maintain a public risk policy insurance to cover claims
arising in connection with the use of the Car Park License Area and this Car
Park Licence for an amount of not less the Public Risk Insurance Maximum Sum (or
such higher amount required by the Lessor), in respect to any single act.
(b) The Lessee must ensure that a policy of insurance required to be effected
by the Lessee under clause 21.6(a):
(i) has no unusual exclusions, endorsements or alterations unless first
approved by the Lessor; and (ii) contains a clause providing that any act,
neglect, fraud, misrepresentation, misdescription, non-disclosure or breach of
condition or warranty by any individual party comprising the insured whether
occurring prior to or during the policy period will not prejudice, reduce or
render void the rights of the other parties comprising the insured who are
themselves not guilty of the act, neglect, fraud, misrepresentation,
misdescription, non-disclosure or breach of condition or warranty that any
rights to cancel the policy will only be exercised in respect of the party whose
acts or omissions have given rise to the right.
(c) The Lessee must:
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(i) pay all premiums and other money payable in respect of its insurances by
the due date; and (ii) if requested by the Lessor, produce policies of
insurance which the Lessee is required to effect under this clause 21.6 and a
certificate of insurance.
(d) The Lessee must notify the Lessor if:
(i) an insurance policy under clause 21.6(b) is cancelled; (ii)
something happens that gives rise or might give rise to a claim; or (iii)
a claim under the policy is refused.
(e) Nothing in this clause 21.6 limits the obligations, liabilities and
responsibilities of the Lessee under the licence or otherwise.
21.7 Lessor’s regulations. The Lessee must:
(a) follow all reasonable instructions given by the Lessor for the use of
the Car Park Licence Area and parking of Vehicles; and (b) comply with the
reasonable directions and regulations displayed in the Car Park Licence Area.
21.8 Use of Car Park Licence Area. The Lessee must not:
(a) cause or permit any rubbish to be left in or about the Car Park Licence
Area; (b) grease, oil, wash or repair any Vehicles in the Car Park Licence
Area; (c) write, paint, affix or erect notices, advertisements, signs or
other devices in the Car Park Licence Area; (d) cause any damage or
obstructions in the Car Park Licence Area; (e) allow Vehicles in the Car
park Licence Area that:
(i) are not roadworthy; (ii) emit excessive fumes; (iii) have a
tare weight of more than 2.5 tonnes;
(f) cause or permit any storage or leaking of flammable petroleum or fuel in
the Car Park Licence Area, other than petroleum or fuel in the Vehicles fuel
tank; (g) cause or do anything that is a breach of any Laws for the
maintenance and use of the Car Park Licence Area; or (h) allow the Car
Park Licence Area to be used in any noxious or offensive manner or do or permit
any nuisance, annoyance or obstruction to the Lessor or other users, occupiers
or tenants of any adjoining or nearby premises.
21.9 Storage of Equipment. The Lessee must not store any equipment within
the Car Park Licence Area.
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21.10 Make Good. On termination of this Car Park Licence, the Lessee must
deliver the Car Park Licence Area to the Lessor in good repair, order and
condition, clean and free from rubbish, without any of the Lessee’s and Lessee’s
Associates’ (excluding trespassers) Vehicles, and reinstate the Car Park Licence
Area to its condition as at the Commencement Date, fair wear and tear excepted,
in a manner consistent with the requirements of Clause 21.8. 21.11
Lessee’s general environmental obligations
(a) The Lessee must:
(i) comply with all Environmental Laws; (ii) obtain and comply with
any consent, authorisation or licence required by an Environmental Law to use
the Car Park Licence Area; (iii) provide all reasonable assistance to and
comply with all reasonable requests of the Lessor regarding the Lessee’s use or
occupation of the Car Park Licence Area, and (iv) take all steps necessary
to prevent the release of a contaminant which may cause or is likely to cause
harm to the Car Park Licence Area or the Environment.
The Lessee must ensure that the Lessee’s Associates comply with the
Lessee’s general environmental obligations in this clause 21. (b) The
Lessee must notify the Lessor as soon as it becomes aware of any of the
following:
(i) a leak, spill, escape, release Lease, or loss of contaminant of any
substance on or from the Car Park License Area whether or not that leak, spill,
escape, release, or loss of contaminant directly or indirectly causes or is
likely to cause harm to the Car Park Licence Area or the Environment; (ii)
a complaint (whether written or oral) relating to the Environment, received by
the Lessee or the Lessee’s Employees in relation to the use or occupation of the
Car Park Licence Area; or (iii) a notice, order, direction or other
communication received by the Lessee from an Authority in connection with the
Lessee’s use or occupation of the Car Park Licence Area.
The Lessee must provide the Lessor as soon as practicable, details and
copies of any notice, order, direction, or other communication received from an
Authority concerning any matter referred to in this clause 21.11.
(c) Despite any other provision of this Car Park Licence, the Lessee
indemnifies the Lessor to the maximum extent permitted by law against all Claims
incurred by the Lessor:
(i) arising directly or indirectly from the Lessee’s use or occupation of
the Car Park Licence Area and the Land; and (ii) whether arising before,
during or after the expiration or termination of this Car Park Licence,
except to the extent that they are caused or contributed to by the
Lessor’s or the Lessor’s employee’s, agent’s or contractor’s wrongful act or
omission, negligence or default.
21.12 No assignment. This Licence may not be assigned by the Lessee (other
than a permitted assignee of the Lease) nor may it grant a sub-licence without
the prior written consent of the Lessor.
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21.13 Transfer of the Car Park Licence. If the Lessor transfers its interest
in the Car Park Licence, so that another person is entitled to become Lessor of
the Car Park Licence:
(a) The Lessor is released from its obligations under this Car Park Licence
arising after it ceases to be Lessor of the Car Park Licence Area; and (b)
The Lessee must at the Lessor’s request and cost enter into a deed with the new
Lessor whereby:
(i) the Lessee agrees to be bound by this Car Park Licence as if the new
Lessor is the Lessor; (ii) the Lessee releases the Lessor from its
obligations under this Car Park Licence arising after it ceases to be Lessor;
and (iii) the new Lessor agrees to be bound by this Car Park Licence.
21.14 No proprietary interest. This Licence does not confer on the Lessee
any estate or interest in any part of the Car Park Licensed Area.
21.15 Waiver
(a) the Lessor’s failure or delay to exercise a power or right does not
operate as a waiver of that power or right. (b) The exercise of a power or
right does not preclude either its exercise in the future or the exercise of any
other power or right. (c) A waiver is not effective unless it is in
writing. (d) Waiver of a power or right is effective only in respect of
the specific instance to which it relates and for the specific purpose for which
it is given.
21.16 Acceptance or demand for Car Park Licence Fee not waiver. Regardless
of the Lessor’s knowledge at the time, a demand by it for the Car Park Licence
Fee or the subsequent acceptance of money does not constitute a waiver of any
earlier default by the Lessee. 21.17 Severability. If anything in this Car
Park Licence is unenforceable, illegal or void then it is severed and the rest
of this Car Park Licence remains in force. 21.18 Risk. The Lessee agrees
to occupy, use and keep the Car Park Licence Area at its own risk. The Lessor is
not liable to the Lessee or the Lessee’s Associates in respect of any claim
relating to or connected with, directly or indirectly, the use by the Lessee or
the Lessee’s Associates of the Car Park Licence Area or the Land and the Lessee
indemnifies the Lessor against any action, demand, loss, damage, injury, or
death to a person so arising, except to the extent that such claim, action,
demand, loss damage, injury or death arises as a result of any negligent act or
omission by the Lessor.
22 ROOF TOP LICENCE
22.1 Permitted Use. The Lessor grants a licence to the Lessee to use the
Licensed Area for purposes ancillary to the Permitted Use and for no other
purpose during the Term of the Lease provided the Lessee, at all times, complies
with the Lessee’s Obligations (Licence). 22.2 Events leading to
termination. The Lessor is entitled to immediately terminate this Licence by
notice to the Lessee if:
(a) any part of the Licence Fee is unpaid for 14 days after written demand
for payment is made;
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(b) the Lessee fails to comply in any other way with this Licence and fails
to remedy the breach within 14 days of written demand by the Lessor that it do
so; (c) the Lessee fails to comply in any other way with the Lease and
fails to remedy the breach within 14 days of written demand by the Lessor that
it do so; (d) the Lessee ceases to be the lessee under the Lease (other
than the case of an assignment to any permitted transferee of the Lease); or
(e) the Lessee vacates the Premises.
22.3 Licence Fee. During the term of this Licence, the Lessee must pay the
Lessor the Licence Fee on each anniversary of the Commencement Date. 22.4
Insurances
arising in connection with the use of the Licensed Area and this Licence for an
amount of not less than the Public Risk Insurance Minimum Sum (or such higher
amount required by the Lessor), in respect to any single act. (b) The
Lessee must ensure that a policy of insurance required to be effected by the
Lessee under clause 22.4(a):
insurance which the Lessee is required to effect under this clause 22.4 and a
certificate of insurance.
(i) an insurance policy under clause 22.4 is cancelled; (ii) something
happens that gives rise or might give rise to a claim; or (iii) a claim
under the policy is refused.
(e) Nothing in this clause 22.4 limits the obligations, liabilities and
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22.5 Lessor’s regulations. The Lessee must:
the Licensed Area; and (b) comply with the reasonable directions and
regulations displayed in the Licensed Area.
22.6 Use of Licensed Area. The Lessee must not:
(a) cause or permit any rubbish to be left in or about the Licensed Area;
(b) grease, oil, wash or repair anything or leave any grease or oil on the
surface of the Licensed Area; (c) write, paint, affix or erect notices,
advertisements, signs or other devices in the Licensed Area; (d) cause any
damage or obstructions in the Licensed Area; (e) cause or do anything that
is a breach of any laws for the maintenance and use of the Licensed Area; or
(f) allow the Licensed Area to be used in any noxious or offensive manner or
do or permit any nuisance, annoyance or obstruction to the Lessor or other
users, occupiers or tenants of any adjoining or nearby premises.
22.7 Storage of Equipment. The Lessee must not store any equipment within
the Licensed Area. 22.8 Make Good. On termination of this Licence, the
Lessee must deliver the Licensed Area to the Lessor in good repair, order and
condition, clean and free from rubbish, free of any chattels owned by the
Lessee, and reinstate the Licensed Area to its condition at the Commencement
Date, fair wear and tear excepted, in a manner consistent with the requirements
of Clause 22.6. 22.9 Lessee’s general environmental obligations
the Licensed Area; (iii) provide all reasonable assistance to and comply
with all reasonable requests of the Lessor regarding the Lessee’s use or
occupation of the Licensed Area, and (iv) take all steps necessary to
prevent the release of a contaminant which may cause or is likely to cause harm
to the Licensed Area or the Environment.
Lessee’s general environmental obligations in this clause 22.9.
(b) The Lessee must notify the Lessor as soon as it becomes aware of any of
the following:
substance on or from the Licensed Area whether or not that leak, spill, escape,
release, or loss of contaminant directly or indirectly causes or is likely to
cause harm to the Licensed Area or the Environment;
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(ii) a complaint (whether written or oral) relating to the Environment,
received by the Lessee or the Lessee’s Employees in relation to the use or
occupation of the Licensed Area; or (iii) a notice, order, direction or
other communication received by the Lessee from an Authority in connection with
the Lessee’s use or occupation of the Licensed Area.
Authority concerning any matter referred to in this clause 22.9.
(c) Despite any other provision of this Licence, the Lessee indemnifies the
Lessor to the maximum extent permitted by law against all Claims incurred by the
Lessor:
the Licensed Area and the Land; and (ii) whether arising before, during or
after the expiration or termination of this Licence,
22.10 No assignment. This Licence may not be assigned by the Lessee (other
the prior written consent of the Lessor. 22.11 Transfer of the Licence. If
the Lessor transfers its interest in the Licence, so that another person is
entitled to become Lessor of the Licence:
(a) The Lessor is released from its obligations under this Licence arising
after it ceases to be Lessor of the Licence; and (b) The Lessee must at
the Lessor’s request and cost enter into a deed with the new Lessor whereby:
(i) the Lessee agrees to be bound by this Licence as if the new Lessor is
the Lessor; (ii) the Lessee releases the Lessor from its obligations under
this Licence arising after it ceases to be Lessor; and (iii) the new
Lessor agrees to be bound by this Licence.
22.12 No proprietary interest. This Licence does not confer on the Lessee
any estate or interest in any part of the Licensed Area.
22.13 Waiver
it is given.
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22.14 Acceptance or demand for Licence Fee not waiver. Regardless of the
Lessor’s knowledge at the time, a demand by it for the Licence Fee or the
subsequent acceptance of money does not constitute a waiver of any earlier
default by the Lessee. 22.15 Severability. If anything in this Licence is
unenforceable, illegal or void then it is severed and the rest of this Licence
remains in force. 22.16 Risk. The Lessee agrees to occupy, use and keep
the Licensed Area at its own risk. The Lessor is not liable to the Lessee or the
Lessee’s Associates in respect of any claim relating to or connected with,
directly or indirectly, the use by the Lessee or the Lessee’s Associates of the
Licensed Area or the Land and the Lessee indemnifies the Lessor against any
action, demand, loss, damage, injury, or death to a person so arising, except to
the extent that such claim , action, demand, loss damage, injury or death arises
as a result of any negligent act or omission by the Lessor.
23 GENERAL
23.1 Roof and Exterior. The Lessor may use the roof and exterior walls of
the Building for any purpose including the erection and display of advertising
signs. 23.2 Naming Rights. The Lessor may name the Building and from time
to time change that name. 23.3 Time of the Essence. The time for payment
of any money by the Lessee to the Lessor under this Lease is of the essence.
23.4 Interest on Overdue Money. If the Lessee does not make a payment on time,
it must pay, within 14 days of receipt of written notification from the Lessor
by the Lessor:
(a) Interest on that amount from the due date for payment until it is paid;
and (b) The Lessor’s costs of recovering that amount.
Interest is calculated on daily balances at a rate 2% per annum above the rate
quoted on the day of demand by the Lessor’s principal bankers (as nominated by
the Lessor) on unsecured overdraft accommodation over $100,000.
23.5 Exclusion of Warranties. The Lessee agrees that no promise,
representation, warranty or undertaking has been given by or on behalf of the
Lessor in respect of:
(a) The suitability of the Premises for any business to be carried on there;
(b) The Building; (c) The fittings, finishes, facilities and
amenities of the Premises or the Building; or (d) Other businesses to be
carried on in the Building.
23.6 Waiver.
(a) Waiver of a breach of the Lessee’s covenants or of any rights created by
or arising upon default under this Lease, or upon an Event of Default, must be
in writing and signed by the party granting the waiver. (b) A breach of
the Lessee’s Obligations is not waived by a failure to exercise, a delay in
exercising or the partial exercise of any remedy available under this Lease or
in law or equity. (c) Any right created by, or arising upon, default under
this Lease, or on an Event of Default, is not waived by a failure to exercise, a
delay in exercising, or a partial exercise of that right.
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23.7 Notices.
(a) Any notice or other communication including, but not limited to, any
request, demand, consent or approval, to or by a party to this Lease:
(i) Must be in legible writing and in English addressed to a party at that
party’s address as shown at the commencement of this Lease or, in the case of a
corporation, at the registered office of that party, or as specified to the
sender by any party by notice. (ii) In the case of a corporation, must be
signed by a director or secretary or under the common seal of the sender or by
the solicitors for the corporation or, in the case of the Lessor, by the Manager
or the Manager’s agent; (iii) Is treated as being given by the sender and
received by the addressee:
(A) If by delivery in person, when delivered to the addressee; (B) If
by post, two (2) Business Days from and including the date of postage; or
(C) If by facsimile transmission, when transmitted legibly to the addressee,
(iv) but if the delivery or receipt is on a day which is not a Business Day
or is after 4.00 pm (addressee’s time) it is regarded as received at 9.00am on
the following Business Day; and (v) Can be relied upon by the addressee
and the addressee is not liable to any other person for any consequences of that
reliance if the addressee reasonably believes it to be genuine, correct and
authorised by the sender.
(b) A facsimile transmission is treated as legible unless the addressee
telephones the sender on the day of transmission and informs the sender that it
is not legible or if transmitted after 4.00pm, on the next Business Day after
transmission. (c) In this clause, a reference to an addressee includes a
reference to an addressee’s officers, agents or employees.
23.8 Caveats. The Lessee must not lodge or cause to be lodged any caveat
against the title to the Land to protect any of the Lessee’s interests under
this Lease. 23.9 Consents. Any consent or approval of the Lessor which the
Lessee requires under the Lease to do or execute any act, matter or thing must
be in writing and may be:
(a) Given (whether conditionally or unconditionally); or (b) Withheld,
by the Lessor in its absolute discretion unless otherwise expressly provided.
23.10 No Merger. Nothing in this Lease merges, extinguishes, postpones,
lessens or otherwise prejudicially affects any right, power, authority,
discretion or remedy which the Lessor may have against the Lessee. 23.11
Lessee’s Obligations. Unless the Lease otherwise provides, anything which must
be done by the Lessee under this Lease, whether or not at the request of the
Lessor, must be done at the cost of the Lessee. 23.12 Condition of
Lessor’s Liability
(a) The Lessor, in the case of a remediable breach, is neither in default,
nor treated as being in default, in the observance and performance of the
Lessor’s obligations unless:
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(i) The Lessee gives written notice of the default to the Lessor where the
Lessee knew or ought reasonably to have known of the default; and (ii) The
Lessor fails to take proper steps to rectify the default within a reasonable
time.
(b) This clause applies despite any other provision of the Lease to the
contrary (whether express or implied).
23.13 Moratorium. A provision of any legislation which at any time directly
or indirectly:
(a) Lessens or otherwise varies or affects in favour of the Lessee any of
the Lessee’s Obligations; or (b) Stays, postpones or otherwise prevents or
prejudicially affects the exercise by the Lessor of any of the Lessor’s rights
under this Lease,
is negatived and excluded from the Lease and all relief and protection conferred
on the Lessee by or under that legislation is also negatived and excluded unless
its application is mandatory by law.
23.14 Manager
(a) The Manager represents the Lessor in all matters in respect of the Lease
unless the Lessor directly notifies the Lessee otherwise in writing. (b)
Any communication from the Lessor to the Lessee supersedes any communication
from the Manager to the Lessee to the extent of any inconsistency.
23.15 Whole Agreement. This Lease constitutes the entire agreement between
the parties in respect of its subject matter. 23.16 Governing Law. This
Lease is governed by the laws of Queensland. 23.17 Operation. If the Air
Conditioning Equipment or the Elevators become unserviceable or are shut off for
inspection, service, maintenance or repair the Lessor shall use all reasonable
efforts to ensure that such Air Conditioning Equipment or Elevators become
operative as soon as reasonably practicable. So long as the Lessor complies with
this clause 23.17, the Lessor shall not be liable to the Lessee for any
breakdown or cessation of air conditioning or elevator services. So long as the
Lessor complies with this clause 23.18, such breakdown or cessation shall not
Outgoings or other moneys under this Lease and otherwise to observe and perform
the Lessee’s Obligations. 23.18 No Partnership or Agency. The only
relationship between the Lessor and Lessee is that of Lessor and Lessee on the
terms and conditions of the Lease, and nothing herein creates or deems the
relationship to be other than that of Lessor and Lessee (including, without
limitation, partners, principal and agent or joint venturers). 23.19
Limitation of Liability of Lessor. The Lessor is liable in damages only for
those breaches of the Lessor’s covenants which occur while it is the Lessor.
23.20 Transfer of the Building. If the Lessor transfers its interest in the
Premises or the Building of which the Premises form part, so that another person
is entitled to become Lessor of the Premises or the Building:
(a) The Lessor is released from its obligations under this Lease arising
after it ceases to be Lessor of the Premises or Building (as the case may be);
and (b) The Lessee must at the Lessor’s request and cost enter into a deed
with the new Lessor of the Premises or Building (as the case may be) in which
the Lessee:
(i) Agrees to be bound by this Lease as if the new Lessor is the Lessor; and
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(ii) Releases the Lessor from its obligations under this Lease arising after
it ceases to be Lessor.
23.21 No Trust.
(a) Subject to paragraph (b), the Lessee warrants to the Lessor that:
(i) It is the sole beneficial owner of this Lease; (ii) It has not
entered into this Lease:
(A) For, on behalf of or as trustee for any person; or (B) As trustee
of any trust or settlement; and
(iii) There is no trust in respect of this Lease and the assets of the
Lessee.
(b) The Lessee, if it has entered into this Lease in the capacity of
trustee, or it holds the Premises on the terms of any trust or subject to any
trust, whether or not it has given notice to the Lessor of any such trust:
(i) Accepts the Lease both as trustee and in its personal capacity; (ii)
Acknowledges its personal liability for the performance and observance of the
Lessee’s Obligations; (iii) Must take any steps and proceedings necessary
to ensure the assets of the trust are available to rectify all unremedied
defaults by the Lessee; (iv) On demand by the Lessor, must assign to the
Lessor any right of indemnity the Lessee has against the assets of the trust;
and (v) Warrants that:
(A) It has the power and authority under the terms of the trust to enter
into this Lease; and (B) Entry into this Lease by the Lessee is in the due
administration of the trust.
23.22 Dealings with Land. The Lessor may, as the Lessor thinks fit grant
easements or enter into any arrangement or agreement any Lessee or occupier of
the Land or any part of the Land or any owner, Lessee or occupier of or other
person interested in any land adjacent to or near the Land or any Governmental
Agency for the purposes of providing:
(a) Public or private access to and egress from the Land or any part of the
Land, the Building or the Premises; (b) Support of existing or future
structures erected on the Land or any adjoining land; (c) Services to or
from the Land, the Building or the Premises; or (d) Exclusive use of any
part of the Common Areas to such persons abovementioned or to the Lessor,
PROVIDED THAT the Lessor, in exercising such rights, does not create any
interests which derogate substantially from the enjoyment of any rights
conferred on the Lessee by this Lease.
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23.23 Lessee Mix in Building. The Lessee acknowledges that no promise,
Lessor:
(a) In respect of any proposed leases or the continuation of existing
leases; or (b) That the Lessee has an exclusive right to carry on the
Permitted Use, within the Building.
23.24 Mortgagee Consent. If the title to the Building is subject to a
mortgage or other encumbrance:
(a) The Lessee accepts this Lease subject to such mortgage or encumbrance;
(b) The Lessor must obtain the written consent (in registrable form) of each
mortgagee and encumbrance, where necessary to register the Lease; and (c)
The Lessee must execute and return to the Lessor any form of consent which may
reasonably be required by each mortgagee and encumbrance within 21 Business Days
of receiving such documentation from the Lessor.
23.25 Improvements to Building.
(a) The Lessor may, at any time and in its absolute discretion improve,
extend, vary, add to or reduce the Building, or alter or deal with any part or
all of the Building (other than the Premises), in any way or manner including,
without limitation, constructing or demolishing buildings or improvements within
the Building. (b) The Lessor may:
(i) Discontinue; (ii) Change the size, location and nature of;
(iii) Make repairs or changes to; (iv) Temporarily or permanently close;
or (v) Do any other thing in and to,
the Common Areas which, in its absolute discretion is desirable,
(c) The Lessor, in respect of paragraphs (a) and (b), must use its
reasonable endeavours to inconvenience the Lessee as little as possible in the
circumstances.
24 EARLY ACCESS DATE
24.1 General.
(a) On the condition that the Lessee has:
(i) Signed this Lease in triplicate and returned the signed Lease to the
Lessor; (ii) Provided the Lessor with evidence that all insurances
required under the terms of this Lease have been effected and the premiums for
such policies paid in full; (iii) Provided to the Lessor the Security;
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(iv) Paid to the Lessor, or as the Lessor may direct, the Lessor’s costs
payable in accordance with the terms of this Lease; and (v) Obtained
approval from the Lessor or local Government Agency (if required) for any
proposed alterations to the Premises in accordance with Clause 13.12 of the
Lease,
the Lessor must make the Premises available for the Lessee to commence works and
occupy the Premises (Early Access Date).
(b) From the Early Access Date to the Commencement Date, the provisions of
this Lease (with the exception of Clauses 3, 4, 5) apply as if the term has
commenced.
24.2 Risk. The Premises will be at the risk of the Lessee from and including
the Early Access Date. The Lessee must, at its own expense, effect the
insurances specified in the Lease from and including the Early Access Date.
25 ENVIRONMENTAL OBJECTIVES
25.1 DEFINITIONS In this lease:
ABGR Rating
for the Building means a rating of Stars under the ABGR Scheme.
ABGR Scheme
means the accreditation scheme for buildings administered nationally by the
Department of Energy Utilities and Sustainability (New South Wales) or other
body appointed in its place from time to time.
Air-conditioning
System
means any plant, machinery or equipment for heating, cooling or circulating
air installed in the Premises or the Building.
Building Automation
System (BAS)
means the operational, diagnostic and information display system installed in
the Building for the purposes of monitoring and controlling the Environmental
Performance of the Building.
Building Information
includes information collected from BAS in relation to the Environmental
Performance of the Premises and the Building.
Building
Performance
Assessment
means an assessment conducted by the Lessor or by the administrators of the
ABGR Scheme or the Green Star Rating System in relation to the Environmental
Building System
means any system for the collection and processing of water, rainwater, waste
water, sewerage or electricity (including solar power) and the Building’s
Air-conditioning Systems.
EMP
means an Environmental Management Plan for the Building as adopted by the
Lessor from time to time.
Contaminant
means a solid, liquid, gas, radiation or substance which makes the condition
of the Premises, Building or surrounding environment:
(a) unsafe, unfit or harmful for occupation by persons or
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animals;
(b) degraded in its capacity to support plant life; or
(c) such that it does not satisfy the contamination criteria or standards in the
Environmental Objectives, EMP or the Environmental Building Rules.
Environmental Laws
means all laws, regulations, policies and by laws which regulate the
environment including laws relating to land use, planning, pollution of air and
water, soil or ground water contamination, chemicals, waste, the use, handling,
storage or transport of dangerous goods or substances or any other aspect of
protection of the environment or person or property.
Environmental
Objectives
means:
• to achieve environmental sustainability and commercial viability in relation
to the Building;
• to minimise the Building’s energy consumption and greenhouse gas emissions;
• to protect the natural environment by appropriate selection of materials for
use in the Building;
• to adopt environmentally sound and healthy work practices, both during
construction of the Building and in occupancy; and
• to provide effective planning for the Building’s water and waste management.
Environmental
Performance
means the performance of the Building (including each tenancy) in respect of
consumption of materials, energy, water and other utilities, the generation of
residual and waste materials, internal ambient conditions for occupants and
other relevant parameters to the standards required by the ABGR Rating and the
Green Star Rating.
Fitout Guide
means the fitout guide from time to time adopted by the Lessor for the
Building.
Green Star Rating
means a rating for the Building of 4 Stars under the Green Star Rating System.
Green Star Rating
System
means the system of rating Buildings for sustainability administered by Green
Building Council Australia.
Environmental Building
Rules
means the environmental rules adopted from time to time by the Lessor for the
Building which, until varied or replaced are those contained in Attachment 3 to
this Schedule.
Water Management
System
means the systems installed in the Building for the utilisation of rainwater
and recycled fire test water to supplement the water required for the Building’s
cooling towers.
26 LESSEE’S OBLIGATIONS
26.1 Trading, use and environmental rating The Lessee must:
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(a) do everything reasonably required of it to support the Lessor’s
application for certification of the ABGR Rating and for the renewal of that
certification annually during the Term; (b) manage and conduct the
Lessee’s trade, business, occupation or profession having consideration to the
Environmental Objectives; (c) give to the Lessor prompt notice of any
circumstances likely to adversely affect the Environmental Performance of the
Building (or any part of the Building including the Premises), the ABGR Rating
or the Green Star Rating; and (d) co-operate and assist the Lessor in the
completion of any Building Performance Assessment of the Premises or the
Building. Such co-operation and assistance include permitting the Lessor to
enter and inspect the Premises upon the Lessor giving the Lessee reasonable
written notice.
26.2 Lessee’s negative Building performance obligations The Lessee
must not:
(a) store or use flammable, volatile or explosive substances on the
Premises; (b) overload the facilities or services of the Premises
including the Building Systems or use them for anything other than their
intended purpose; (c) smoke or permit any of its employees or invitees to
smoke tobacco products or other substances in or on the Premises or the
Building; (d) cause or allow the noise level emanating from the Premises
at any time to exceed the levels specified from time to time by the Lessor, any
Environmental Law or the EMP; (e) use materials or substances in or on the
Premises or the Common Areas which are known to be or may be detrimental to the
internal air quality of the Building and the health and comfort of other
Building occupants;
(f) use artificial or synthetic herbicides or pesticides in any landscaping
or any internal gardening activities within or on the Building or the Premises;
(i) use ozone-depleting chemicals within the Premises; or
(ii) use materials in the Premises or the Building that may release unwanted
volatile organic and or other toxic chemicals into the Building’s environment.
26.3 Lessee’s positive Building performance obligations The Lessee
must:
(a) minimise the use of power consuming equipment including but not limited
to hot water systems, office equipment and lighting and minimise the level of
energy consumption by such equipment having regard to the occupational health
and safety of the Lessee and the Lessee’s Associates and the EMP; (b)
recycle and re-use residual materials generated, as set out in the EMP; (c)
minimise the generation of waste material disposed as landfill; (d)
minimise water and energy consumption within the Premises; (e) ensure that
peak electrical demands for the Premises are held at or below any levels set out
in the EMP;
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(f) as far as is practicable use natural lighting and minimise the use of
artificial lighting consistent with good occupational health and safety
practice; and (g) ensure that materials used within the Premises are
consistent with the EMP.
The Lessor must use its reasonable endeavours to assist the Lessee to comply
with the obligations imposed by this clause.
26.4 Environmental Laws and issues The Lessee must:
(a) comply with all Environmental Laws to the extent that it is the Lessee’s
responsibility to do so; and (b) ensure that no Contaminant is placed or
released in, on, under or above the Premises by the Lessee or the Lessee’s
Associates other than a Contaminant expressly sanctioned by an Environmental Law
and for which the prior written consent of Lessor has been obtained.
26.5 Repair, redecoration and Lessee’s works Without limiting Clause
13 of this lease, any works (including repairs and maintenance and replacement
of damaged items) carried out by the Lessee must be carried out in a proper and
workmanlike manner, using high quality materials and in accordance with the
Environmental Objectives, the Fitout Guide, the Environmental Building Rules and
the EMP.
26.6 Extra equipment The Lessee must not, within the Premises,
without the prior written consent of the Lessor:
(a) install any portable equipment for the purpose of water consumption;
(b) install any equipment which relies upon any source of external power
supply; (c) use any materials whether for fit-out or otherwise that may be
detrimental to the internal air quality of the Premises and the Building or the
health and comfort of other occupants of the Building; or (d) install any
equipment for heating, cooling or ventilation of the Premises that relies upon
any source of external power supply other than office equipment (including
equipment for the preparation of food and beverages) which is usually installed
in a modern office Premises.
In exercising the discretion granted to the Lessor in this clause, the Lessor
must act reasonably and with regard to the Environmental Objectives and the EMP.
26.7 BAS The Lessee acknowledges that the Lessor will collect
Building Information and agrees that this may be used for the purposes of
modifying the EMP, the Environmental Building Rules or for publicity in relation
to the Building, educational purposes or any other reasonable use. The Lessor
will not directly identify the Lessee to any third party without the Lessee’s
prior agreement.
27 LESSOR’S COVENANTS
27.1 Lessor’s approval Unless otherwise stated wherever the Lessor
is requested to give approval in relation to any matter relevant to
Environmental Performance, the Lessor must not unreasonably withhold approval if
the request is consistent with the Environmental Objectives, the Environmental
Building Rules, the Fitout Guide (if applicable) and the EMP.
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27.2 ABGR Rating The Lessor must use reasonable endeavours to obtain
certification of the ABGR Rating within the period of 2 years starting on the
Commencing Date and annual renewals of certification of the ABGR Rating during
the Term. 27.3 Reasonable endeavours The Lessor must use its
reasonable endeavours to achieve and maintain the standards of Environmental
Performance of the Building required for the ABGR Rating and the Green Star
Rating.
28 LIMITATION OF LIABILITY OF THE CUSTODIAN
28.1 The Public Trustee of Queensland as Custodian for OPUS Capital Growth
Fund NO.1 (“the Public Trustee”) enters into this Lease as custodian of the
Trust and in no other capacity. 28.2 The parties other than The Public
Trustee acknowledge that the Obligations are incurred by The Public Trustee
solely in its capacity as custodian of the assets of the Trust and that The
Public Trustee will cease to have any Obligations if The Public Trustee ceases
for any reason to be custodian of the assets of the Trust. 28.3 The Public
Trustee will not be liable to pay or satisfy any obligations under this Lease
except to the extent to which it is indemnified by the Responsible Entity or
except out of the Assets against which it is entitled to be indemnified in
respect of any liability incurred by it. 28.4 The parties other than The
Public Trustee may enforce their rights against The Public Trustee arising from
non-performance of the Obligations only to the extent of The Public Trustee’s
indemnity as provided above in Clause 28.3. 28.5 If any party other than
The Public Trustee does not recover all money owing to it arising from
non-performance of the Obligations it may not seek to recover the shortfall by:
(a) Bringing proceedings against The Public Trustee in its personal
capacity; or (b) Applying to have The Public Trustee wound up or proving
in the winding up of The Public Trustee.
28.6 Except in the case of and to the extent of fraud, negligence or
material breach of duty on the part of The Public Trustee under its custody
agreement with the Responsible Entity, the parties other than The Public Trustee
waive their rights and release The Public Trustee from any personal liability
whatsoever, in respect of any loss or damage:
(a) Which they may suffer as a result of any:
(i) breach by The Public Trustee of any of its Obligations; or (ii)
non-performance by The Public Trustee of the Obligations; and
(b) Which cannot be paid or satisfied from the indemnity set out in Clause
28.3 above in respect of any liability incurred by it.
28.7 The parties other than The Public Trustee acknowledge that the whole of
this Lease is subject to this Clause and The Public Trustee shall in no
circumstances be required to satisfy any liability arising under, or for
non-performance or breach of any Obligations under or in respect of, this Lease
or under or in respect of any other document to which it is expressed to be a
party out of any funds, property or assets other than to the extent that this
Lease requires satisfaction out of the assets of the Trust under The Public
Trustee’s control and in its possession as and when they are available to The
Public Trustee to be applied in exoneration for such liability.
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28.8 The parties acknowledge that the Responsible Entity of the Trust is
responsible under its constitution for performing a variety of obligations
relating to the Trust, including under this Lease. The parties agree that no act
or omission of The Public Trustee (including any related failure to satisfy any
Obligations) will constitute fraud, negligence or breach of duty of The Public
Trustee for the purposes of Clause 28.6 to the extent to which the act or
omission was caused or contributed to by any failure of the Responsible Entity
or any other person to fulfil its obligations relating to the Trust or by any
other act or omission of the Responsible Entity or any other person. 28.9
No attorney, agent or other person appointed in accordance with this Lease has
authority to act on behalf of The Public Trustee in a way which exposes The
Public Trustee to any personal liability and no act or omission of such a person
will be considered fraud, negligence or breach of duty of The Public Trustee for
the purposes of Clause 28.6. 28.10 In this Clause
(a) “Obligations” means all obligations and liabilities of whatever kind
undertaken or incurred by, or devolving upon, The Public Trustee under or in
respect of this Lease; (b) “Assets” includes all assets, property and
rights real and personal of any value whatsoever; (c) “Responsible Entity”
means Opus Capital Limited the responsible entity of the Trust or any
replacement responsible entity of the Trust from time to time; and (d)
“Trust” means the managed investment scheme known as OPUS Capital Growth Fund
No.1.
29 RESPONSIBLE ENTITY
29.1 Despite any other provision of this Lease, the Responsible Entity
enters into this Lease as responsible entity of the Trust and in no other
capacity. 29.2 Any liability or Obligation of the Responsible Entity
arising under or in connection with this Lease:
(a) is limited; and (b) can be enforced against the Responsible Entity
only, to the extent to which it can be satisfied out of the property of the
Trust out of which the Responsible Entity is actually indemnified for the
liability under the Constitution.
29.3 The limitation of the Responsible Entity’s liability under this clause
applies despite any other provision of this Lease and extends to all liabilities
and Obligations of the Responsible Entity in any way connected with any
representation, warranty, conduct, omission, agreement or transaction related to
this Lease. 29.4 Despite any other provision of this Lease, the
Responsible Entity is not obliged to do or refrain from doing anything under
this Lease unless the Responsible Entity’s liability is linked in the manner set
out in this clause. 29.5 The Lessee must not take any action of any kind
against the Responsible Entity in any capacity other than as the responsible
entity of the Trust. 29.6 Despite any other provision of this Lease:
(a) the limitation of the Responsible Entity’s liability under this must not
apply to any Obligation or liability of the Responsible Entity to the extent
that it is not satisfied because there is a reduction in the extent of the
Responsible Entity’s indemnification out of the assets of the Trust as a result
of the Responsible Entity’s fraud, negligence or breach of trust; and
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(b) nothing this clause will make the Responsible Entity liable to any claim
for an amount greater than the amount which the Lessee would have been able to
claim and recover from the assets of the Trust in relation to the relevant
liability if the Responsible Entity’s Right of indemnification out of the assets
of the Trust had not been prejudiced by fraud, negligence or breach of trust.
29.7 If there is a change in the Responsible Entity of the Trust, the Lessee
must, promptly after being requested to do so (but at the reasonable cost of the
Responsible Entity), enter into a deed with the Responsible Entity and the new
responsible entity of the Trust in a form and content reasonably required by the
Responsible Entity under which:
(a) the rights, Obligations and liabilities of the Responsible Entity under
this Lease are novated to the new responsible entity of the Trust; and (b)
the Responsible Entity is released from all Obligations and liabilities under
this Lease.
29.8 This clause survives completion, termination or repudiation of this
Lease. 29.9 In this clause:
(a) “Responsible Entity” means Opus Capital Limited ACN 095 039 366 in its
capacity as responsible entity of the Trust or any substitute or replacement
responsible entity of the Trust from time to time; (b) “Trust” means the
Opus Capital Growth Fund No.1; and (c) “Constitution” means the
constitution of the Trust.
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ATTACHMENT 1 — DICTIONARY
Part I — Definitions
In this Lease, unless the subject or context is inconsistent, each of the
following expressions shall have the meaning assigned to it below:
Accounting Period
a period not exceeding 12 months selected from time to time by the Lessor for
the purpose of calculating the Outgoings and any other charges mentioned in this
Lease.
Act
the A New Tax System (Goods and Services Tax) Act 1999 and any related tax
imposition Act (whether imposing tax as a duty of customs, excise or otherwise)
and includes any legislation which is enacted to validate recapture or recoup
the tax imposed by any of such Acts.
Air-Conditioning Equipment
all plant in the Building used for the production and reticulation of chilled
water or conditioned or circulating air but does not include any air
conditioning equipment owned, hired or leased (other than from the Lessor) by
the Lessee.
Applicable GST
has the meaning ascribed to it in Clause 12.1.
Appurtenances
all plant and equipment, water closets, lavatories, grease traps, plumbing,
water apparatus, wash basins, bathrooms, gas fittings, electrical and
communication fittings, apparatus and other services contained in the Premises
and the Building and includes the Air Conditioning Equipment, Elevators and Fire
Equipment. The expression includes any part of the Appurtenances.
Bank Guarantee
means an unconditional undertaking (or any replacement or addition to it under
Clause 11 by a bank and on terms acceptable to the Lessor acting reasonably to
pay on demand the amount in Item 12 of the Reference Schedule or an
unconditional insurance bond on terms acceptable to the Lessor acting reasonably
to pay on demand the amount in Item 12 of the Reference.
Base Year
means the base year specified in Item 18 of the Reference Schedule.
Building
means:
(a) the building or buildings for the time being erected on the Land; (b)
any extension, modification, alteration, addition or replacement in respect of
the building(s); and (c) all fixtures, fittings, furnishings, plant,
machinery and equipment in the building(s) and owned by the Lessor.
Business Day
a day other than a Saturday, Sunday or public holiday in Brisbane.
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Commencement Date
the commencement date specified in Item 5 of the Reference Schedule.
Car Park Licence Area
the licence area identified in the plan in Attachment 4.
Car Park Licence Fee
the annual car park licence fee set out in Item 15 of the Reference Schedule
unless the car park licence fee has been revised under Clause 4, and then it
means the revised car park licence fee current from time to time.
Common Areas
those parts of the Building not leased or licensed or intended to be leased or
licensed to any person and intended by the Lessor for use by the Lessees and
licensees of the Building and other persons in common with each other. The
expression includes the entrances, lobbies, corridors, passageways, vestibules
stairways, elevators, escalators, travelators, toilets and washrooms but does
not include the car park. The expression includes any part of the Common Areas.
Controlling Person(s)
for a company, the person or group of persons who control the composition of
the board of directors or more than 50% of the shares with a right to vote at
general meetings.
Council
the local government or the council as constituted under either the Local
Government Act 1993 or the City of Brisbane Act 1924 within the area (as defined
by that legislation) in which the Premises are located or the South Bank
Corporation.
CPI
for a particular date, the percentage increase in the Brisbane (All Groups)
consumer price index (or the index officially substituted for it) for the period
from the last quarter published before the later of:
(a) the Lease Commencement Date; or (b) the last Review Date,
to the last quarter published before the particular date.
CPI Adjustment Date
each date (if any) specified as such in Item 7 of the Reference Schedule.
Elevators
the elevator cars, shafts, cables, motors, electrical installations and all
associated plant, plant rooms, equipment, fixtures and fittings (if any) within
the Building.
Event of Default
(a) non-compliance by the Lessee with any Lessee’s Obligations; or (b) if
the Lessee is an individual, an inability by the Lessee to pay the Lessee’s
debts as and when they fall due; or (c) if the Lessee is a company, the
passing of an order or a resolution for the winding up of the Lessee (other than
for the purposes of amalgamation or reconstruction).
Expiry Date
the Expiry Date specified in Item 5 of the Reference Schedule.
Fire Equipment
all fire prevention, extinguishing, warning and control equipment in the
Building.
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Fixed lncrease
the percentage (if any) specified as that in respect of any particular Fixed
Increase Date in Item 7 of the Reference Schedule.
Fixed Increase Date
Further Term
each Further Term (if any) specified in Item 12 of the Reference Schedule.
Governmental Agency
any government or any governmental, semi-governmental, administrative, fiscal
or judicial body, department commission, authority, tribunal, agency or entity
and including the relevant local authority.
GST
any tax imposed by or through the Act on a supply (without regard to any input
tax credit).
Guarantor
the covenantor (or if more than one, each of them) referred to in Item 13 of
the Reference Schedule and either:
(a) any successors and permitted assigns; or (b) if a covenantor is a
natural person, any executors, administrators and permitted assigns.
Land
the land described in Item 3 of the Reference Schedule and includes all land
acquired by the Lessor in the future and used in connection with the Building.
Law(s)
statutes, regulations, proclamations, ordinances or orders promulgated under
any statute or subordinate legislation.
Lease
the lease or tenancy that exists between the Lessor and the Lessee in relation
to the Premises (of whatever nature and whether at law or in equity) as
evidenced in whole or in part by this document including any exhibit, schedule
or annexure to it.
Lease Year
each separate year of the Term commencing respectively on the Commencement
Date and on each anniversary of that date
Lessee
the party described as such in Item 2 of the Reference Schedule and where the
context permits:
(a) its successors and permitted assigns; (b) if the Lessee is a natural
person, its executors, administrators and permitted assigns; (c) its
employees, officers, agents and contractors; and (d) any person executing
the Lease as a Covenantor.
Lessee’s Associates
the Lessee’s employees, agents, contractors, customers, clients, visitors
(with or without invitation), sub-lessees, licensees, invitees and others who
may at any time be in or upon the Premises or the Building excluding any
trespasser who may at any time be in or upon the Premises as a result of the
Lessor’s negligent acts or omissions.
Lessee’s Business
the business carried on from the Premises.
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Lessee’s Fittings
any fixtures, furnishings, plant, machinery and equipment which the Lessee has
installed, or seeks to install, in the Premises and for which title has not
passed to the Lessor.
Lessee’s Obligations
the covenants and agreements contained or implied in this Lease to be observed
and performed by the Lessee.
Lessee’s Proportion
the proportion that the floor area of the Premises bears to the Net Lettable
Area of the Building expressed as a percentage to the nearest second decimal
point. The Lessee’s Proportion as at the Commencement Date is set out in Item 1
of the Reference Schedule.
Lessor
the party described as such in Item 1 of the Reference Schedule and where the
context permits:
(a) its successors and assigns; (b) if the Lessor is a natural person, its
executors, administrators and assigns; and (c) its employees and agents.
Lessor Property
any fixtures, furnishings, fit out, plant, machinery and equipment which the
Lessor has paid for and is installed in the Premises.
Licensed Area
the licence area as identified in the plan in Attachment 5.
Licence Fee
the annual licence fee set out in Item 16 of the Reference Schedule.
Manager
means:
(a) any manager appointed by the Lessor to manage the Building; and (b)
the employees and agents of that manager.
Net Lettable Area
those parts of the Building lease or licensed or intended to be leased or
licensed by the Lessor at a commercial rental or fee. The expression does not
include any area leased or licensed or intended to be leased or licensed by the
Lessor for storage purposes or car park purposes only.
Normal Access Hours
the hours designated as such from time to time by the Lessor. Until otherwise
designated, those hours shall commence one hour before Normal Business Hours on
any day and expire two hours after Normal Business Hours on any day.
Normal Business Hours
designated those hours shall be the hours (if any) specified in Item 14 of the
Reference Schedule.
Outgoings
means the total of all amounts paid or payable by the Lessor for any one
Accounting Period and legally recoverable from the Lessee in respect of the
Premises including, but not limited to:
(a) Rates charges and other levies payable to the local or other authority in
whose area the Premises are located;
Land Act 1994 Page 51 of 60 and Water Act 2000
Title Reference 16496089
(b) Rates and charges (including charges for excess water) payable to any
local or other authority responsible for the provision or reticulation of water
and/or sewerage and/or drainage services; (c) Levies contributions and/or
other amounts payable to any local or other authority or company for or on
account of fire protection services (including for any dedicated telephone line
to the fire brigade); (d) All rates taxes (except income or capital gains
tax or land tax) charges assessments and impositions whatsoever (whether
parliamentary municipal or otherwise and whether assessed charged or imposed by
or under Federal or State law or by Federal State or local authorities and
whether on a capital or revenue value or any other basis and even though of a
novel character) which may at any time after the Commencement Date be assessed
charged or imposed in respect of the Premises or any part thereof other than any
such rates taxes charges assessments and impositions which may be assessed
directly in respect of the Premises and due to the Lessee’s use thereof (such
latter charges being payable by the Lessee pursuant to Clause 6); (e)
Insurance premiums and any other charges including stamp duties on insurances
against fire material damage public liability loss of profits workers
compensation and any other insurances effected by the Lessor in relation to any
risk relating to the Lessor’s ownership of or interest in the Premises; (f)
The cost of operating servicing repairing cleaning and maintaining the Lessor’s
Property and the Services, including the Air-Conditioning Equipment but not
items of a structural or capital nature; (g) A management fee (at fair
market rates) to cover the Lessor’s costs of managing the Premises and the
Building; (h) The cost to the Lessor of producing estimates and/or
statements of outgoings required to be furnished by the Lessor to the Lessee
under this Lease or by law; (i) The cost of any emergency fire evacuation
training required by the relevant fire authority; (j) The cost of any fees
properly payable by the Lessor to comply with its obligations under the
Workplace Health and Safety Act 1995; (k) The costs of challenging any
assessment of the unimproved value of the Land or any account or assessment
relating to the Land; and (l) Contributions to the administrative and
sinking funds of the Body Corporate (if any) (but not special levies) levied
pursuant to the Body Corporate and Community Management Act.
Owner
the registered owner of the Land.
Permitted Use
the use of the Premises as set out in Item 9 of the Reference Schedule.
Plan
the registered plan applicable to the Land.
Land Act 1994 Page 52 of 60 and Water Act 2000
Title Reference 16496089
Premises
means the premises described in item 5 of the form 7 extending:
(a) up to and including the internal face of an external wall and of an
internal structural wall of the Building; (b) up to and including the
internal face of the glass in an external wall of the Building; (c) up to
and including the internal face of a partition which separates the Premises from
Common Areas; (d) to the centre line of an internal partition (other than a
structural wall) which separates the Premises from premises other than Common
Areas; and (e) from and including the surface of the floor up to and
including the underside of the roof or floor slab as the case may be.
The expression includes all Appurtenances, pillars, columns, pipes, internal
partitions, ceilings, floor coverings, and other objects, fittings, fixtures and
chattels installed or located from time to time in the Premises but does not
include chattels owned, hired or leased (other than from the Lessor) by the
Lessee. The expression includes any part of the Premises and includes all
fixtures, fittings, furnishings, plant, machinery and equipment in the
building(s) and owned by the Lessor.
Recipient
in relation to a Supply, the entity to which the Supply was made.
Reference Schedule
the schedule described as such and as set out in this Lease.
Rent
the annual Rent set out in Item 6 of the Reference Schedule unless the Rent
has been revised under Clause 4, and then it means the revised Rent current from
time to time.
Rent Day
the Lease Commencement Date and the first day of each month during the Term.
Review Date
a Fixed Increase Date or a CPI Adjustment Date as the case may be.
Rules and Regulations
the rules and regulations applicable to the Building as amended from time to
time under the Lease.
Security
means either the Bank Guarantee or the Security Deposit referred to in Clause
11.
Security Deposit
means the security deposit referred to in Clause 11 for the amount specified
in Item 12 of the Reference Schedule.
Services
the services to or of the Building provided by the Lessor or any Governmental
Agency and which are intended to service, or are for the benefit of, the
Premises (including, without limitation, water, electricity, telephone lines,
air-conditioning, lifts, communication systems, fire services and trade waste
services).
Statute
all statutes and all subordinate legislation thereunder whether specifically
named or otherwise.
Land Act 1994 Page 53 of 60 and Water Act 2000
Title Reference 16496089
Supply
any supply (within the meaning which it bears in the Act) by the Supplier
under this Lease.
Supplier
the entity which makes the Supply.
Term
the term of the Lease specified in Item 5 of the Reference Schedule.
Termination Date
the termination date specified in Item 5 of the Reference Schedule.
Vehicle
any motor car, van or truck.
Part 2 — Interpretation
In this Lease, unless the context otherwise requires:
(a) Headings and underlinings are for convenience only and do not affect the
interpretation of the Lease. (b) Words importing the singular include the
plural and vice versa; words importing a gender include any gender. (c) An
expression importing a natural person includes any company, partnership, joint
venture, association, corporation or other body corporate and any Governmental
Agency. (d) A reference to any thing includes a part of that thing. (e)
A reference to a part, clause, party, annexure, exhibit or schedule is a
reference to a part and clause of, and a party, annexure, exhibit and schedule
to, the Lease. (f) A reference to a statute, regulation, proclamation,
ordinance or by-law includes all statutes, regulations, proclamations,
ordinances or by-laws varying, consolidating or replacing it, and a reference to
a statute includes all regulations, proclamations, ordinances and by-laws issue
issued under that statute. (g) A reference to a party to a document includes
that party’s successors and permitted assigns. (h) Where the day on or by
which any thing is to be done is not a Business Day, that thing must be done on
or by the preceding Business Day. (i) No rule of construction applies to the
disadvantage of a party because that party was responsible for the preparation
of the Lease or any part of it. (j) A covenant or agreement on the part of
two or more persons binds them jointly and severally. (k) A reference to any
body other than a party to this document (including, without limitation, an
institute, association or authority), whether or not it is a statutory body:
• which ceases to exist; or • whose powers or function are transferred
to any other body,
refers to the body which replaces it or which substantially succeeds to its
powers or functions.
Land Act 1994 Page 54 of 60 and Water Act 2000
Title Reference 16496089
ATTACHMENT 2 — PLAN OF PREMISES
Page 55 of 60
(FLOOR PLAN) [f53609f5360903.gif]
Land Act 1994 Page 56 of 60 and Water Act 2000
Title Reference 16496089
ATTACHMENT 3 — ENVIRONMENTAL BUILDING RULES
1. The Lessee, its employees, invitees, agents, workman, sub-contractors and
licensees must observe these rules. The Lessee acknowledges that any failure to
observe these rules will constitute a breach of the Lease. 2. The Lessee
must not:
(a) cover or obstruct the floors or any skylight, glazed panel, window or
ventilation system that reflects or admits light or air into any part of the
Premises; (b) leave any doors or windows unlocked or unfastened when the
Premises or the Building are left unoccupied except those under control of the
Building Automation System.
3. The Lessee must:
(a) prevent ingress of air into the Premises and leakages of air that are
detrimental to the environmental performance of the Building in accordance with
the EMP and not do anything which adversely affects the efficient working of the
central air-conditioning system; (b) take all reasonable steps in
accordance with the EMP to minimise the generation of any materials that may
require disposal to landfill together with any other garbage; (c) use
rainwater (or mains water when necessary) as supplied by the Lessor for all
water consumed within the Premises; (d) use treated wastewater (or mains
water when necessary) for toilet pan flushing; (e) comply with any
reasonable direction from the Lessor in relation to the use of water in the
Premises during periods of rainwater shortage.
4. When selecting materials for any fit-out, alteration or addition to the
Premises, the Lessee must use its reasonable endeavours to ensure that:
(a) existing materials, if any, are reused; (b) recycled materials are
used in preference to new materials; (c) all non-recycled materials are
recyclable; (d) materials are made from renewable sources; (e)
materials used have a low embedded energy and greenhouse gas emission content
and zero ozone-depleting potential; (f) there is no use of materials that
are or may be reasonably suspected to be toxic; and (g) materials are
chosen according to the presence of low allergenic characteristics.
Land Act 1994 Page 57 of 60 and Water Act 2000
Title Reference 16496089
ATTACHMENT 4 — CAR PARK LICENCE AREA
Page 58 of 60
(FLOOR PLAN) [f53609f5360902.gif]
Land Act 1994 Page 59 of 60 and Water Act 2000
Title Reference 16496089
ATTACHMENT 5 — LICENSED AREA
Page 60 of 60
(FLOOR PLAN) [f53609f5360901.gif]
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Title: Moving states with underage girlfriend
Question:I am 19 yo male. My girlfriend is 17 year old female. We are currently living together with her mom and grandparents in texas. We have been together for four years. Planning on moving to Colorado. We have verbal permission from them to move states, but how can i go about moving without having to worry about legal issue? Marriage isn’t an option as we are planning on having a big wedding and both our families would be upset if we married without a wedding.
Answer #1: You have identified the only two options that exist for you if you want to ensure there is no chance of being charged with kidnapping or contributing to delinquency, and potential Mann Act violations. A civil wedding doesn’t preclude a big bash later on. |
EXHIBIT 10.3
SHARE REPURCHASE AGREEMENT
This Share Repurchase Agreement (this “Agreement”) is entered into as of June
25, 2004, by and between Entravision Communications Corporation, a Delaware
corporation (the “Company”), and TSG Capital Fund III, L.P., a Delaware limited
partnership (“TSG”).
RECITALS
WHEREAS, TSG is the holder of 5,865,102 shares of the Company’s Series A
preferred stock, par value $0.0001 per share, which shares represent one hundred
percent (100%) of the issued and outstanding shares of such Series A preferred
stock (the “Series A Preferred”).
WHEREAS, the Company desires to repurchase the Series A Preferred on the terms
NOW THEREFORE, in consideration of the foregoing and of the mutual covenants,
agreements, and conditions hereafter set forth, and for other good, valuable,
and binding consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound hereby agree as
follows:
AGREEMENT
I. Terms of Share Repurchase.
(a) Repurchase. Subject only to the conditions set forth in Sections I(e) and
(f) below, the Company hereby agrees to repurchase the Series A Preferred from
TSG and TSG hereby agrees to sell the Series A Preferred to the Company free and
clear of all
1
liens, security interests, pledges, claims and encumbrances of any kind, nature
or description, and on the terms and conditions set forth herein (the “Share
Repurchase”).
(b) Initial Share Repurchase. Within three (3) business days of the date on
which the Company receives the approval required by Section I(f) below, the
Company will deliver to TSG Fifty-Five Million Dollars ($55,000,000) by wire
transfer of immediately available funds, and TSG will surrender a stock
certificate or certificates evidencing Two Million Five Hundred Forty-Two
Thousand and Six (2,542,006) shares of the Series A Preferred, together with any
letters of instruction, stock powers or any other documents necessary to effect
the repurchase of that portion of the Series A Preferred by the Company (the
“Initial Share Repurchase”).
(c) Subsequent Share Repurchases. Following the Initial Share Repurchase,
subject only to the conditions set forth in Sections I(e) and (f) below, the
Company shall, by June 30, 2005 (the “Final Repurchase Date”), repurchase the
remaining Three Million Three Hundred Twenty-Three Thousand and Ninety-Six
(3,323,096) shares of Series A Preferred held by TSG through one or more
additional share repurchases (each a “Subsequent Share Repurchase”) on the terms
set forth herein. At any time prior to the Final Repurchase Date, the Company
may deliver a written notice to TSG, indicating its intent to consummate a
Subsequent Share Repurchase (each, a “Repurchase Notice”). The Repurchase Notice
shall specify (i) a closing date for the Subsequent Share Repurchase, which must
be at least three (3) business days from the date of the Repurchase Notice (the
“Closing Date”) and (ii) the amount to be paid by the Company in connection with
the Subsequent Share Repurchase (the “Subsequent Share Repurchase Price”), which
amount shall not be less than Twenty Million Dollars ($20,000,000)
2
except as provided below. The number of shares of Series A Preferred to be
repurchased in any Subsequent Share Repurchase (the “Share Number”) shall be the
Subsequent Share Repurchase Price divided by the per share liquidation value as
of the Closing Date, which per share liquidation value (the “Per Share
Liquidation Value”) shall be calculated as follows: (i) $24.4668, discounted to
the Closing Date from April 19, 2006 by 7.4% per annum (compounded annually and
based on a 365-day year), plus (iii) $.11935. Notwithstanding that any
Subsequent Share Repurchase Price shall otherwise not be less than Twenty
Million Dollars ($20,000,000), if the Share Number exceeds the number of shares
of Series A Preferred then held by TSG, then the Subsequent Share Repurchase
Price shall be reduced to the amount necessary to repurchase all remaining
shares of the Series A Preferred from TSG at the price of the Per Share
Liquidation Value per share.
(d) Closing. On any Closing Date, the Company will deliver the Subsequent Share
Repurchase Price to TSG by wire transfer in immediately available funds, and TSG
will surrender the stock certificate or certificates evidencing the Share Number
of shares of Series A Preferred, together with any letters of instruction, stock
powers or any other documents necessary to effect the repurchase of that portion
of the Series A Preferred by the Company.
(e) Bank Refinancing Condition for Subsequent Repurchases. The Company shall use
commercially reasonable efforts to enter into a senior bank refinancing
transaction of at least Four Hundred Million Dollars ($400,000,000) on terms
acceptable to the Company in its sole discretion (the “Bank Refinancing”).
Notwithstanding the foregoing, if the Bank Refinancing is not consummated on or
before September 30, 2004, then neither party shall have the obligation to
consummate any Subsequent Share Repurchases.
3
(f) Board Approval. The parties’ obligations hereunder are expressly conditioned
upon the ratification by the Company’s Board of Directors of this Agreement and
the Share Repurchase and, with respect to each Subsequent Share Repurchase, also
upon the prior approval thereof by the Company’s Board of Directors; provided,
however, that if the Bank Refinancing condition set forth in Section I(e) above
has been satisfied, but the Company fails to repurchase all of the remaining
shares of Series A Preferred by the Final Repurchase Date (including due to a
failure to obtain the prior approval of the Company’s Board of Directors as
required by this Section I(f)), then the Company shall pay to TSG, on the date
that all accrued and unpaid dividends on the Series A Preferred become due and
payable, an amount calculated in the manner of interest at an annual rate equal
to one and one-half percent (1.5%) and accruing continuously on the liquidation
preference from time to time of each such share that is outstanding on July 1,
2005 for the period from July 1, 2005 through and including April 19, 2006, such
total amount to then bear interest at a rate of eight and one-half percent
(8.5%) per annum, compounded annually, from April 19, 2006 until the date on
which payment is actually made. Notwithstanding the preceding, if any shares of
Series A Preferred remain outstanding for any reason after the accrued and
unpaid dividends on such shares become due and payable (whether by reason of
default in payment, insufficient legally available funds or otherwise), then an
additional payment consistent with the preceding sentence shall be made by the
Company at the time payment is actually made. Nothing in this Section I(f) shall
excuse the Company’s obligation to repurchase all outstanding shares of Series A
Preferred on or before June 30, 2005 in the event the Company’s Board of
Directors has approved such repurchase as contemplated above.
4
(g) Representations and Warranties. Each of the following representations and
warranties is made as of the date of this Agreement. Each party’s obligation to
close the Initial Share Repurchase or any Subsequent Share Repurchase shall be
contingent on the representations and warranties of the other party being true
and correct in all material respects as of the applicable closing. Each party
covenants and agrees not to take any action which would cause its
representations and warranties to be untrue as of such closing.
(i) Each party hereby represents and warrants to the other that such party has
full power and authority to execute and deliver this Agreement, and upon
execution and delivery, that this Agreement shall constitute the valid and
binding agreement of such party, enforceable in accordance with its terms.
(ii) TSG represents and warrants to the Company that TSG has good, marketable
and unencumbered title to the shares of Series A Preferred, free and clear of
all liens, encumbrances, security interests, pledges, claims, options and rights
of others.
(iii) The Company hereby represents and warrants to TSG that the execution of
this Agreement does not, and the Share Repurchase will not, violate, conflict
with or result in a breach of, the Company’s certificate of incorporation or
bylaws or any note, bond, mortgage or other instrument or agreement to which the
Company is a party or by which it or its assets or properties may be bound or
affected, and that the Share Repurchase will not violate any provision of the
Delaware General Corporation Law or state or federal securities laws, and that
the Company’s Board of Directors has not declared any or all of the accrued but
unpaid dividends with respect to the Series A Preferred.
5
(h) Alternative Transaction. If the Company should receive, prior to the closing
of the final Subsequent Share Repurchase, a proposal from a third party to
acquire the Company or all of its outstanding capital stock (an “Alternative
Transaction”), it shall promptly notify TSG of such proposal, and TSG may, in
its discretion, elect to participate in the Alternative Transaction with respect
to any Series A Preferred still held by TSG at such time, or to proceed with the
closing of any remaining Subsequent Share Repurchases.
(i) Other Agreements. The rights and obligations of the parties under that
certain Investor Rights Agreement dated as of April 19, 2000 by and among the
Company and TSG, among others (the “Investor Rights Agreement”), shall continue
notwithstanding this Agreement unless and until such time as all Series A
Preferred has been acquired by the Company, at which time the Investor Rights
Agreement shall become null and void and of no further force and effect. In
addition, the rights and obligations of the Company and TSG under any other
agreement to which the Company and TSG or its affiliates are parties, including,
without limitation, any other investor rights agreement, shall continue in
effect and shall be unaffected by this Agreement. Notwithstanding the foregoing,
this Agreement replaces in its entirety that previous Share Repurchase Agreement
entered into by and between the Company and TSG as of May 5, 2004, which
previous agreement is hereby terminated.
II. Miscellaneous.
(a) Additional Actions and Documents. Each of the parties hereto hereby agrees
to act in good faith and to use best efforts to take or cause to be taken such
further
6
actions to execute, deliver, and file such further documents and instruments,
and to obtain such consents as may be necessary in order to fully effectuate the
purposes, terms and conditions of this Agreement.
(b) Notices. Any notice, request, demand or consent required or permitted to be
given under this Agreement, including without limitation any Subsequent
Repurchase Notice, shall be in writing (including facsimile transmissions and
similar writings) and shall be effective when transmitted and confirmation of
receipt is obtained for facsimile transmissions and similar writings; when
delivered personally; one (1) business day after sent by recognized overnight
courier; or five (5) days after sent by mail, first class, postage prepaid; in
each case to the following address or facsimile number, as applicable:
Walter F. Ulloa Entravision Communications Corporation 2425 Olympic
Boulevard, Suite 6000 West Santa Monica, California 90404 Telephone:
(310) 447-3870 Facsimile: (310) 447-3899
With a required copy to:
Michael G. Rowles Entravision Communications Corporation 2425
Olympic Boulevard, Suite 6000 West Santa Monica, California 90404
Telephone: (310) 447-3870 Facsimile: (310) 449-1306
If to TSG:
Darryl B. Thompson TSG Associates III, LLC 177 Broad Street, 12th
Floor Stamford, Connecticut 06901 Telephone: (203) 541-1535
Facsimile: (203) 541-1590
Brett W. Dixon Finn Dixon & Herling LLP One Landmark Square, 14th
Floor Stamford, Connecticut 06901 Telephone: (203) 325-5016
Facsimile: (203) 348-5777
7
(c) Entire Agreement. This Agreement constitutes the entire agreement between
the parties and supersedes all prior oral and written agreements, undertakings,
representations, and warranties, and courses of conduct and dealing between the
parties on the subject matter hereof. It may be amended or modified only by a
writing executed by each of the parties.
(d) Assignment. This Agreement shall inure to the benefit of, and be binding
upon, the successors and assigns of the parties. Neither party may assign this
Agreement or its rights hereunder without the consent of the other party.
(e) Breach; Specific Performance. In the event of breach by a party of its
obligations under this Agreement, the other party shall have the right to seek
injunctive relief and/or specific performance. Such right is cumulative and not
alternative to the right of such party to seek damages at law. Each party agrees
to waive any defense as to the adequacy of the other party’s remedies at law and
to interpose no opposition to the propriety of injunctive relief or specific
performance as a remedy.
(f) Governing Law. This Agreement will be governed by and construed under the
laws of State of Delaware without regard to conflict of laws principles.
(g) No Waiver. No waiver of a breach of, or default under any provision of this
Agreement shall be deemed a waiver of such provision or of any subsequent breach
or default of the same or similar nature or of any other provision or condition
of this Agreement.
8
(h) Severability. If any provision of this Agreement or the application thereof
to any person or circumstances, is held invalid, such invalidity shall not
affect any other provision which can be given effect without the invalid
provision or application, and to this end the provisions hereof shall be
severable. Any such invalid provision shall be given effect to the extent
possible or shall be reformed so as to make it enforceable and valid while
preserving the original intent of the parties.
(i) 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.
(j) Expenses. The Company shall reimburse TSG for its reasonable expenses
incurred in connection with this Agreement and the Share Repurchase, including
without limitation reasonable fees and expenses of its attorneys and investment
bankers.
9
IN WITNESS WHEREOF, each party has caused this Share Repurchase Agreement to be
duly executed and delivered in his name and on its behalf, all as of the date
COMPANY:
ENTRAVISION COMMUNICATIONS
CORPORATION, a Delaware corporation
/s/ WALTER F. ULLOA
By:
Walter F. Ulloa
Its:
TSG:
TSG CAPITAL FUND III, L.P.
By:
TSG Associates III, LLC
Its:
General Partner
/s/ DARRYL B. THOMPSON
By:
Darryl B. Thompson
Its:
Managing Member
10 |
VIA EDGAR August 18, 2014 Anu Dubey Division of Investment Management U.S. Securities and Exchange Commission treet, N.E. Washington, D.C.20549 Re:Investment Managers Series Trust (filing relates to the Strategic Latin America Fund) (File Nos. 333-122901 and 811-21719) Dear Ms. Dubey: This letter summarizes the comments provided by you on August 6, 2014, to the Preliminary Proxy Statement on Schedule 14A filed by Investment Managers Series Trust (the “Registrant”) with the Commission via EDGAR Accession No. 0001398344-14-003836 on July 31, 2014 (the “Proxy Statement”).The purpose of the Proxy Statement is to solicit proxies in connection with a meeting of the shareholders of the Strategic Latin America Fund series of the Registrant (the “Existing Fund”) at which such shareholders will be asked to approve the reorganization of the Existing Fund into the newly created Strategic Latin America Fund series of World Funds Trust (the “Reorganization”).Responses to all of the comments are included below and as appropriate will be reflected in the Registrant’s definitive Proxy Statement, to be filed concurrently with this letter. General Comments 1. Comment:Explain why the Reorganization does not result in a new investment decision under Rule 145 of the Securities Act of 1933, as amended (the “1933 Act”), which would require registration under the 1933 Act. Response:The Registrant believes that it is common industry practice to use Schedule 14A rather than Form N-14 when soliciting proxies for a shareholder meeting at which the shareholders of a registered fund are being asked to approvethe reorganization of the registered fund into a newly createdseries of another registrant, which series has no assets and operating history (i.e., a “shell”).The Registrant refers you to a 1992 academic article on reorganizations and acquisitions of investment companies, which was prepared by certain, at the time, staff of the Commission’s Division of Investment Management, and which states on page 236 that “Form N-14 need not be used when the securities issued in the transaction do not represent a new investment, for example, when an existing fund reorganizes into a shell.”1 1. The article was authored by Thomas S. Harman, Chief Counsel; Mary S. Podesta, Associate Director; Max Berueffy, Senior Special Counsel; Kevin M. Broadwater, Attorney; and Robert R. Tait, Attorney. 1 Rule 145 under the 1933 Act generally requires the use of Form N-14 to register securities issued in connection with certain reclassifications, mergers, consolidations and transfers of assets.However, the preliminary note to Rule 145 explains that these transactions are subject to the registration requirements of the 1933 Act only when a plan or agreement is submitted to shareholders under which they must “elect, on the basis of what is in substance a new investment decision, whether to accept a new or different security in exchange for their existing security.”Rule 145(a)(2), as interpreted by the staff of the Commission (the “Staff”), provides an exception to the registration requirements of Rule 145 for certain mergers involving investment companies. Many investment company reorganizations are structural in nature and do not fundamentally require investors to make a “new investment decision” (the “no-sale theory”). Such reorganizations can, and have been, implemented through the use of a Schedule 14A proxy statement and not through the registration of new securities via Form N-14 in reliance on Rule 145(a)(2).The Staff has recognized the applicability of the no-sale theory to certain investment company combinations and has issued a series of no-action letters providing its view of applicability of Rule 145(a)(2) in various circumstances. For example, the Staff has taken "no action" positions in a number of cases involving corporate reorganizations without any change in domicile.2 In some instances, these corporate reorganizations have been accompanied by unrelated changes in fund structure or manner of investment.3 The policies underlying Rule 145(a)(2) have been applied broadly by the Staff to exempt from registration transactions in which there is a change in domicile and it is accompanied by "incidental" changes in legal form, structure and voting arrangements.4Rule 145(a)(2) has also been interpreted to permit changes in domicile with accompanying management and structural changes that go beyond those "incidental" to a change in domicile. 5 2 See, e.g., Lazard Freres Institutional Fund, Inc. (pub avail. Feb. 26, 1987) (reorganization of three Maryland corporations into newly-created shell series of two existing Maryland corporations); Massachusetts Financial Development Fund, Inc. (pub. avail. Jan. 10, 1985) (reorganization of five Massachusetts business corporations into Massachusetts business trusts). 3 See, e.g., Scudder Common Stock Fund, Inc. (pub. avail. Oct. 10, 1984) (reorganizations from two Massachusetts corporations to Massachusetts business trusts with proposed changes in investment objectives and fundamental investment restrictions). 4 See, e.g., Frank Russell Investment Company (pub. avail. Dec. 3, 1984)(reorganization of Maryland corporation into Massachusetts business trust); John Hancock Bond Fund, Inc. (pub. avail. Nov. 29, 1984) (reorganization of Maryland and Delaware corporations into Massachusetts business trusts); United Gold Shares, Inc. (pub. avail. Sept. 17, 1984) (reorganization of Texas corporation with one series of common shares and Maryland corporation with five series of common shares into Massachusetts business trust with eight series of shares, including two newly-created series of shares). 5 See, e.g., PEMCO (pub. avail. May 31, 1988) (reorganization of New York limited partnership into Maryland corporation where the directors of the successor corporation were different persons from the general partners of the predecessor partnership, new investment policies, restrictions and operations were introduced, and the custodian and independent certified accountants were changed); Aetna Variable Fund, Inc. (pub. avail. Jan 23, 1984) (reorganization of three Maryland corporations into Massachusetts business trusts where changes would be made to "standardize" the advisory, distribution, custodian and transfer agent agreements among the three new entities, and the new advisory agreements would effect changes requiring the payment of certain expenses by the new trusts rather than by the adviser, resulting in an 10 -15 basis point increase in fund expenses). 2 In the Registrant’s view, the Reorganization does not involve a new investment decision.As described more fully in the Proxy Statement, the New Fund will have the same investment objective, limitations and restrictions, and principal investment strategies and risks as the Existing Fund.Additionally, the investment adviser currently providing investment advice to the Existing Fund will serve as the investment adviser to the New Fund after the Reorganization is consummated.Further, the Reorganization does not involve the combination of existing funds with existing assets, shareholders and operating histories.Rather, prior to the Reorganization, the New Fund will have had no assets or operating history and simply will serve as a shell into which the Existing Fund will be reorganized and all of its assets transferred.Upon consummation of the Reorganization, the New Fund will assume the accounting and performance history of the Existing Fund.At the effective time of the Reorganization, the net asset value of the New Fund’s shares will be the same as the net asset value of the Existing Fund’s shares.Thus, shares of the New Fund will represent a continuation of the same investment and economic interests that are presently represented by shares of the Existing Fund. A condition precedent to the Reorganization will be receipt by the Registrant (of which the Existing Fund is a series) and World Funds Trust (of which the New Fund is a series) of an opinion of counsel to the effect that the Reorganization will not result in the recognition of any gain or loss for federal income tax purposes to the Existing Fund, the New Fund or the shareholders of the Existing Fund. In the Registrant’s view, the Reorganization does not involve a new investment decision and can be implemented, consistent with Rule 145(a)(2), through the use of Schedule 14A. The Trust believes that this is consistent with the announced positions of the Staff.The Trust further notes that all material information necessary to make an informed judgment about the Reorganization will be contained in the definitive proxy statement to be furnished to Existing Fund shareholders in soliciting their approval.Such information will include, among other things, a description of World Funds Trust, a discussion of the effect of the Reorganization on the investment strategy and fee structure of the Existing Fund and a description of the investment adviser to the Existing Fund and the New Fund.Finally, the Registrant notes that a registration statement on Form N-1A relating to the offering of the New Fund’s shares has been filed with the Commission.The Reorganization will not be consummated before the registration of the offering of the New Fund’s shares is effective. 3 2. Comment:Throughout the Proxy Statement, as applicable, disclose the effect of the Reorganization on total New Fund expenses without the impact of the expense waiver.Also, disclose the effect on New Fund expenses after the fee waiver expires after one year. Response:The Registrant has made the requested revisions. Comments to Questions & Answers Section and Proxy Statement 3. Comment:In the response to the question “How will the Reorganization affect the fees and expenses I pay as a shareholder of the Existing Fund?” please clarify the following sentence to specify the circumstances in which the expense ratio will increase: “The expense ratio may increase after the one-year period if the Adviser terminates or modifies the expense limitation undertaking.” Please make the same changes in the second paragraph of the Proxy Statement. Response:The Registrant has revised the specified disclosures as set forth below: “The expense ratio will increase after July 31, 2016, if the Adviser terminates the expense limitation undertaking and the assets of the New Fund have not increased to a level at which the gross expenses of the New Fund fall below the level of the expense limitation.” 4. Comment:Under the headings “Proposal 1 - Summary of Proposal,” please revise the following disclosure to clarify that the Existing Fund’s expense cap includes Rule 12b-1 distribution fees while the New Fund’s expense cap excludes Rule 12b-1 distribution fees. “At the Existing Fund’s current asset level, however, the total net annual expense ratio of the New Fund (as a percentage of average annual net assets) will be the same as that of the Existing Fund, because the Adviser has agreed to limit the operating expenses for Class A shares of the New Fund, excluding the New Fund’s Rule 12b-1 distribution fee of 0.25%,to 1.55% of the New Fund’s average daily net assets pursuant to an expense limitation agreement that will be effective for at least one year from the date of the New Fund’s prospectus.When the Rule 12b-1 distribution fee is added to the New Fund’s contractual expense limitation, the effective expense limitation will be 1.80%, which is the current expense limitation for the Existing Fund.” Response:The Registrant has revised the specified disclosure as set forth below (emphasis added): 4 “At the Existing Fund’s current asset level, however, the total net annual expense ratio of the New Fund (as a percentage of average annual net assets) will be the same as that of the Existing Fund, because the Adviser has agreed to limit the operating expenses for Class A shares of the New Fund, excluding the New Fund’s Rule 12b-1 distribution fee of 0.25%,to 1.55% of the New Fund’s average daily net assets pursuant to an expense limitation agreement that will be effective until July 31, 2016.When the Rule 12b-1 distribution fee is added to the New Fund’s contractual expense limitation, the effective expense limitation will be 1.80%, which is the current expense limitation for the Existing Fund (which expense limitation includes Rule 12b-1 distribution fees).” 5. Comment:Under the headings “Proposal 1 - Reasons for the Reorganization,” please note that the expiration date of the expense limitation for the New Fund must be effective for at least one year from the effective date of the New Fund’s registration statement. Response:The Registrant has revised the specified disclosure as set forth below (emphasis added): “In considering the proposed reorganization, the Trustees discussed, among other things, the terms of the reorganization, including the following factors: … That (i) the advisory fee for the New Fund will be equal to the advisory fee currently paid by the Existing Fund; and (ii) the Adviser has contractually agreed for a period of at least one year after the reorganization, to waive the New Fund’s advisory fees and/or reimburse expenses (excluding certain expenses) in order to ensure that the New Fund’s total annual fund operating expenses do not exceed 1.55%, excluding the Rule 12b-1 distribution fee of 0.25%, which equates to the level of the Existing Fund’s current expense limitation.” 6. Comment:Under the headings “Proposal 1 - Comparison of the Existing Fund and the New Fund,” in the “Table of Fees and Expenses”, please explain what footnote 1 to the number in the “Redemption Fee…” line and “New Fund (Pro Forma)” column relate to. Response:The Registrant confirms that the footnote was included error and has been deleted. 7. Comment:Under the headings “Proposal 1 - Comparison of the Existing Fund and the New Fund,” in the “Table of Fees and Expenses”, footnote 1 to the fee table indicates that the Existing Fund’s expense cap expires on July 31, 2014.If that is the case, the references to the expense cap should be deleted. Response:The adviser to the Existing Fund has extended the expense limitation for the Existing Fund to July 31, 2015, and the disclosure has been updated accordingly. 8. Comment:Under the headings “Proposal 1 - Comparison of the Existing Fund and the New Fund,” consider whether the heading “Sales Charge Reductions and Waivers” should be moved down three paragraphs (to precede the paragraph beginning with “To receive a reduction or waiver…”). Response: The Registrant has made the requested revision. 5 9. Comment:Under the headings “Proposal 1 - Comparison of the Existing Fund and the New Fund,” certain disclosures under the heading “Sales Charge Reductions and Waivers” are inconsistent with the information presented in the fee table.Please correct as appropriate. Response:The Registrant has deleted the paragraphs including the disclosures that are inconsistent with the fee table. ***** The Registrant acknowledges that the adequacy and accuracy of the disclosure in the filing is the responsibility of the Registrant.The Registrant acknowledges that any comments or changes to disclosure in the filing provided by the Commission staff, acting pursuant to delegated authority, do not foreclose the Commission from taking any action with respect to the filing and the Registrant represents that it will 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. If you have any questions or additional comments, please contact me at (714) 830-0679.Thank you. Sincerely, /s/ Laurie A. Dee Laurie A. Dee, Esq. Bingham McCutchen LLP 6
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Title: (TN) I violated an order of protection, need some help to see what I can do to stay out of jail.
Question:Long story short, an ex of mine put an order of protection into place against me, and I foolishly violated after two weeks after she used a friend to contact me and passed messages between the two of us. I spent a night in jail and made my bail and have been out for a month waiting on our court date. Now tomorrow at 9 am I go in front of a judge and I am worried about going to jail for this. I do not have a lawyer, as I cannot afford one. What should I do? Should I go in and apologize and beg to not go to jail? Or fight it out and see what happens?
Answer #1: > I do not have a lawyer, as I cannot afford one. What should I do?
Ask for a court-appointed lawyer. |
DELAWARE POOLED® TRUST The Large-Cap Value Equity Portfolio (the “Portfolio”) Supplement to the Portfolio’s Prospectus dated February 27, 2015 Effective as of the date of this supplement, the following replaces the information in the section entitled “Portfolio summaries: The Large-Cap Value Equity Portfolio– Who manages the Portfolio? – Investment manager”: Investment manager Delaware Management Company, a series of Delaware Management Business Trust. Portfolio managers Title with Delaware Management Company Start date on the Portfolio Kristen E. Bartholdson Vice President, Senior Portfolio Manager December 2008 Nikhil G. Lalvani, CFA Vice President, Senior Portfolio Manager October 2006 D. Tysen Nutt Jr. Senior Vice President, Senior Portfolio Manager, Team Leader April 2006 Robert A. Vogel Jr., CFA Vice President, Senior Portfolio Manager April 2006 Effective as of the date of this supplement, the following replaces and/or supplements the biographical information for certain portfolio managers in the section entitled, "Management of the Trust – Portfolio Managers" beginning on page 51: Kristen E. Bartholdson, Vice President, Senior Portfolio Manager Kristen E. Bartholdson is a senior portfolio manager for the firm’s Large-Cap Value team. Prior to joining the firm in 2006 as an associate portfolio manager, she worked at Susquehanna International Group from 2004 to 2006, where she was an equity research salesperson. From 2000 to 2004, she worked in equity research at Credit Suisse, most recently as an associate analyst in investment strategy. Bartholdson earned her bachelor’s degree in economics from Princeton University. Nikhil G. Lalvani, CFA, Vice President, Senior Portfolio Manager Nikhil G. Lalvani is a senior portfolio manager for the firm’s Large-Cap Value team. At Delaware Investments, Lalvani has worked as both a fundamental and quantitative analyst. Prior to joining the firm in 1997 as an account analyst, he was a research associate with Bloomberg. Lalvani holds a bachelor’s degree in finance from The Pennsylvania State University. He is a member of the CFA Institute and the CFA Society of Philadelphia. D. Tysen Nutt Jr., Senior Vice President, Senior Portfolio Manager, Team Leader D. Tysen Nutt Jr. is senior portfolio manager and team leader for the firm’s Large-Cap Value team. Before joining Delaware Investments in 2004 as senior vice president and senior portfolio manager, Nutt led the U.S. Active Large-Cap Value team within Merrill Lynch Investment Managers, where he managed mutual funds and separate accounts for institutions and private clients. He departed Merrill Lynch Investment Managers as a managing director. Prior to joining Merrill Lynch Investment Managers in 1994, Nutt was with Van Deventer & Hoch where he managed large-cap value portfolios for institutions and private clients. He began his investment career at Dean Witter Reynolds, where he eventually became vice president, investments. Nutt earned his bachelor’s degree from Dartmouth College, and he is a member of the New York Society of Security Analysts and the CFA Institute. Robert A. Vogel Jr., CFA, Vice President, Senior Portfolio Manager Robert A. Vogel Jr. is a senior portfolio manager for the firm’s Large-Cap Value team. Prior to joining Delaware Investments in 2004 as vice president and senior portfolio manager, he worked at Merrill Lynch Investment Managers for more than seven years, where he rose to the position of director and portfolio manager within the U.S. Active Large-Cap Value team. He began his career in 1992 as a financial consultant at Merrill Lynch. Vogel graduated from Loyola University Maryland, earning both bachelor’s and master’s degrees in finance. He also earned an MBA with a concentration in finance from The Wharton School of the University of Pennsylvania. Vogel is a member of the New York Society of Security Analysts, the CFA Institute, and the CFA Society of Philadelphia. Neither Delaware Management Company nor its affiliates noted in this document are authorized deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of Macquarie Bank Limited (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities, unless noted otherwise. Please keep this supplement for future reference. This Supplement is dated February 10, 2016.
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT:January 22, 2016 BREATHE ECIG CORP. (Exact Name of Registrant as Specified in its Charter) Nevada 333-178624 37-1640902 (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (COMMISSION FILE NO.) (IRS EMPLOYEE IDENTIFICATION NO.) 322 Nancy Lynn Lane, Suite 7, Knoxville, TN 37919 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (917) 796-9926 (REGISTRANT’S TELEPHONE NUMBER) (FORMER NAME, IF CHANGES SINC LAST REPORT Check the appropriate box below if the FORM8-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 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 13c-4(c) under the Exchange Act Item 5.02Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers Shaw Appointment On January 22, 2016, Breathe Ecig Corp., a Nevada corporation (the “Company”), appointed Seth M. Shaw as the Chairman of the Board of Directors (the “Board”) and its new Chief Executive Officer and Chief Financial Officer Mr. Shaw, age 36, started his career at American International Group (AIG) Global Investment Group, and furthered his growth capital experience working at Harvest Capital Management,Manhattan-based hedge fund. In 2005, he founded Novastar Resources Ltd, a natural resources exploration company focused on the exploration and acquisition of mineral properties containing the element thorium. During this period, Mr. Shaw secured more than $17 million in financing from top tier institutional investors and was an integral stakeholder in the completion of the merger between Novastar Resources and Thorium Power. During this period, he held the position of Director of Strategic Planning until mid-2007. Subsequently, the company changed its name to Lightbridge Inc. and currently trades on the NASDAQ (NASDAQ: LTBR). Following the merger, Mr. Shaw has assisted several other companies in securing value added capital from institutional investors as well as providing management consulting. Among those, Mr. Shaw was instrumental in securing $12,000,000 from Tudor Investment Corp. for NASDAQ listed flat panel display developer Uni-Pixel Inc. (NASDAQ:UNXL). In addition, Mr. Shaw served as the founding CFO of Los Angeles based Biotech firm Physician Therapeutics LLC (“PTL”) in 2004. Subsequently PTL merged with Targeted Medical Pharma (“TMP”) (OTCQB: TRGM). Mr. Shaw also continues to serve as a member of the Board of Directors and Chief Executive Officer of Tauriga Sciences, Inc. (OTCBB:TAUG) (“Tauriga”), positions he has held since July 9, 2015.Additionally, Mr. Shaw had previously served as the Chief Exeuctive Officer and as a member of the Board of Directors of Tauriga from August 22, 2012 through February 26, 2014. Mr. Shaw graduated from Cornell University in 2001 with a bachelor's degree in Policy Analysis Management and a concentration in Econometrics. Family Relationships There are no family relationships between any of the Company’s directors or officers and Mr. Shaw. Related Party Transactions There are no related party transactions with respect to Mr. Shaw reportable under Item 5.02 of Form 8-K and Item 404(a) of Regulation S-K. Compensatory Arrangements The Company has not yet entered into any compensatory agreements or plan with Mr. Shaw with respect his new appointment as the Company’s Chief Executive Officer, Chief Financial Officer and member of the Board.The Company will announce the terms of any compensatory plans when such plans are adopted. As of the date of the filing of this Current Report on Form 8-K (this “Form 8-K”), Mr. Shaw owns 3,250,000 shares of the Company’s common stock.All such shares are “restricted securities” as defined by the Securities Act of 1933, as amended. Resignation On January 22, 2016 and simulatenous with the appointment of Mr. Shaw discussed above, Joshua Kimmel submitted his resignation as a member of the Board of the Company and as the Company’s Chief Executive Officer and Chief Financial Officer.Mr. Kimmel did not hold any positions on any committees of the Board at the time of his resignation.The resignation was not the result of any disagreements with the Company.A copy of Mr. Kimmel’s resignation letter is attached as Exhibit 99.1 to this Form 8-K. Additionally, Anthony Danieli has resigned as a member of the Board of the Company effective as of November 24, 2015.Mr. Danieli did not hold any positions on any committees of the Board at the time of his resignation.The resignation was not the result of any disagreements with the Company. A copy of Mr. Danieli’s resignation letter is attached as Exhibit 99.2 to this Form 8-K. As of January 22, 2016, Mr. Shaw is the sole member of the Board.However, the Company does intend to appoint an additional two members to the Board in the near-tem. A copy of the press release issued on January 25, 2016 by the Company regarding the mangagement changes is attached hereto as Exhibit 99.3 to this Form 8-K Item 9.01 Financial Statements and Exhibits Exhibit No. Description of Exhibit 99.1* Letter of resignation of Mr. Kimmel. 99.2* Letter of resignation of Mr. Danieli. 99.3* Press release dated January 25, 2016. *filed herewith 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. Dated:January 28, 2016 BREATHE ECIG CORP. /s/ Seth M. Shaw By: Chief Executive Officer
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Exhibit 3.01 STATE OF SOUTH CAROLINA SECRETARY OF STATE ARTICLES OF AMENDMENT TYPE OR PRINT CLEARLY IN BLACK INK Pursuant to Section 33-10-106 of the 1976 South Carolina Code of Laws, as amended, the undersigned corporation adopts the following Articles of Amendment to its Articles of Incorporation: 1.The name of the corporation is South Carolina Electric & Gas Company 2. Date of IncorporationJuly 19, 1924 3.Agent's Name and AddressC T Corporation System, 75 Beattie Place, Greenville, SC 4. On August 28, 2008, the corporation adopted the following Amendment(s) of its Articles of Incorporation: (Type or attach the complete text of each Amendment) See the attached Exhibit A. 5. The manner, if not set forth in the Amendment, in which any exchange, reclassification, or cancellation of issued shares provided for in the Amendment shall be effected, is as follows: (if not applicable, insert “not applicable” or “NA”). Not applicable 6.Complete either "a" or "b", whichever is applicable. a.Amendment(s) adopted by shareholder action. At the date of adoption of the Amendment, the number of outstanding shares of each voting group entitled to vote separately on the Amendment, and the vote of such shares was: Number of Number of Number of Votes Number of Undisputed* Voting Outstanding Votes Entitled Represented at Shares Group Shares to be Cast the Meeting FororAgainst *NOTE: Pursuant to Section 33-10-106(6)(i) of the 1976 South Carolina Code of Laws, as amended, the corporation can alternatively state the total number of undisputed shares cast for the amendment by each voting group together with a statement that the number cast for the amendment by each voting group was sufficient for approval by that voting group. b. x The Amendment(s) was duly adopted by the incorporators or board of directors without shareholder approval pursuant to Section 33-6-102(d), 33-10-102 and 33-10-105 of the 1976 South Carolina Code of Laws, as amended, and shareholder action was not required. 7. Unless a delayed date is specified, the effective date of these Articles of Amendment shall be the date of acceptance for filing by the Secretary of State (See Section 33-1-230(b) of 1976 South Carolina Code of Laws, as amended). Date:August 28, 2008South Carolina Electric & Gas Company Name of Corporation /s/Gina Champion Signature Gina Champion, Corporate Secretary Type or Print Name and Office FILING INSTRUCTIONS 1. Two copies of this form, the original and either a duplicate original or a conformed copy must be filed. 2. If the space in this form is insufficient, please attach additional sheets containing a reference to the appropriate paragraph in this form. 3. Filing fees and taxes payable to the Secretary of State at time of filing application. Filing Fee $10.00 Filing tax 100.00 Total $110.00 Return to: Secretary of State P.O. Box 11350 Columbia, SC 29211 EXHIBIT A TO ARTICLES OF AMENDMENT OF SOUTH CAROLINA ELECTRIC & GAS COMPANY 4. On August 28, 2008, the corporation adopted the following Amendment(s) of its Articles of Incorporation: (Type or attach the complete text of each
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Exhibit 10.27
FLIR SYSTEMS, INC.
2012 EXECUTIVE BONUS PLAN
1.PURPOSE
The purpose of this Plan is to attract, retain and motivate key executives by
providing cash performance awards. The Plan is intended to ensure that the
Awards paid under the Plan are deductible without limitation under Code
Section 162(m).
2. DEFINITIONS
Unless the context otherwise requires, the follow terms have the meanings set
forth below:
a. “Award” means the total Performance Award as determined under the Plan.
b. “Board” means the Board of Directors of the Company.
c. “Code” means the Internal Revenue Code of 1986, as amended and any
successor thereto.
d. “Committee” means the Compensation Committee of the Board or such other
committee as the Board may appoint to administer the Plan, all of whose members
will satisfy the requirements to be “outside directors,” as defined under Code
Section 162(m) and Treasury Regulations Section 1.162-27(e)(3), and is comprised
of at least two members.
e. “Company” means FLIR Systems, Inc. and any successor by merger,
consolidation or otherwise.
f. “Eligible Employee” means the Company’s Chief Executive officer and any
other employees of the Company or its Subsidiaries that are “covered employees”
as defined in Code Section 162(m)(3).
g. “Employee Target Award” means the targeted performance award for a
Performance Period specified by the Committee as provided in Section 5 hereof.
h. “Exchange Act” means the Securities Exchange Act of 1934, as amended and
any successor thereto.
i. “Participant” means an Eligible Employee selected, in accordance with
Section 4 hereof, to be eligible to receive an Award for a specific Performance
Period.
j. “Performance Award” means the amount paid or payable under Section 6
hereof.
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k. “Performance Goal” means the objective performance goals, formulae or
standards that the Committee will establish in accordance with Section 6(b)
hereof.
l. “Performance Period” means a period of time as determined by the Committee
over which the Performance Goal is measured. The Performance Period need not be
identical for all Awards or Participants and the Committee may establish
multiple Performance Periods within one fiscal or calendar year or different
Performance Periods for individual Participants.
m. “Plan” means this FLIR Systems, Inc. 2012 Executive Bonus Plan.
n. “Subsidiary” means, other than the Company, (i) any corporation in an
unbroken chain of corporations beginning with the Company which owns stock
classes of stock in one of the other corporations in such chain; (ii) any
corporation or trade or business (including, without limitation, a partnership
or limited liability company) which is controlled fifty percent (50%) or more
(whether by ownership of stock, assets or an equivalent ownership interest or
voting interest) by the Company or one of its Subsidiaries; or (iii) any other
entity in which the Company or any of its Subsidiaries has a material equity
interest and which is designated as a “Subsidiary” by resolution of the
Committee.
3. ADMINISTRATION OF THE PLAN
a. The Plan will be administered by the Committee. The Committee will have
the exclusive authority and responsibility to: (i) interpret the Plan; (ii)
select Participants; (iii) set the Employee Target Awards and Performance Goals
for Awards within the Plan guidelines; (iv) certify attainment of Performance
Goals and other material terms; (v) reduce Awards as provided herein;
(vi) authorize the payment of all Awards and expenses of the Plan as they become
payable under the Plan; (vii) adopt, amend and rescind rules and regulations
relating to the Plan and its operation; and (viii) make all other determinations
and take all other actions necessary or desirable for the Plan’s administration
including, without limitation, correcting any defect, supplying any omission or
reconciling any inconsistency in this Plan in the manner and to the extent it
will deem necessary to carry this Plan into effect, but only to the extent any
such action would be permitted under Code Section 162(m).
b. Decisions of the Committee will be made by a majority of its members. All
decisions of the Committee on any question concerning the Plan, including
selection of Participants, the amount and criteria for an Award and the
interpretation and administration of the Plan will be final, conclusive and
binding upon all parties. The Committee may rely on information, and consider
recommendations, provided by the Board or the executive officers of the Company.
The Plan is intended to comply with Code Section 162(m), and all provisions
contained herein will be limited, construed and interpreted in a manner to
comply therewith.
c. No member of the Committee will be liable for any action, omission, or
determination relating to the Plan, and the Company will indemnify and hold
harmless each member of the Committee and each other director or employee of the
Company or its affiliates to whom any duty or power relating to the
administration or interpretation of the Plan has been
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delegated against any cost or expense (including counsel fees, which fees will
be paid as incurred) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of or in connection with
any action, omission or determination relating to the Plan, unless, in each
case, such action, omission or determination was taken or made by such member of
the Committee in bad faith and without reasonable belief that it was allowed or
required by the Plan. The foregoing provisions are in addition to and will not
be deemed to limit or modify, any exculpatory rights or rights to
indemnification or the advancement of expenses that any such persons may now or
hereafter have, whether under the Company’s articles or bylaws, the Oregon
Business Corporation Act, or otherwise.
4. ELIGIBILITY AND PARTICIPATION
a. For each Performance Period, the Committee will select the Eligible
Employees who are to participate in the Plan.
b. No person will be entitled to participate in this Plan or receive any
Award under this Plan for any Performance Period unless he or she is so
designated as a Participant for that Performance Period. The Committee may add
to or delete Eligible Employees from the list of designated Participants at any
time and from time to time, in its sole discretion, subject to any limitations
required to comply with Code Section 162(m). Selection of an Eligible Employee
to participate in the Plan for one Performance Period will not entitle the
Eligible Employee to participate in any other Performance Period.
5. EMPLOYEE TARGET AWARD
a. For each Performance Period, the Committee may specify a targeted
performance award for each Participant, which will be referred to herein as an
Employee Target Award. The Employee Target Award may be expressed, at the
Committee’s discretion, as a fixed dollar amount, a percentage of base pay or
total pay (excluding payments made under this Plan), or an amount determined
pursuant to an objective formula or standard. Establishment of a Participant’s
Employee Target Award for a Performance Period will not imply or require that
the same level or any Employee Target Award be set for any subsequent
Performance Period or for any other Participant. At the time the Performance
Goals are established (as provided in Section 6(b) below), the Committee will
prescribe a formula to determine the percentages (which, subject to Section 6(d)
hereof, may be greater than one-hundred percent (100%)) of the Employee Target
Award which may be payable based upon the degree of attainment of the
Performance Goals during the Performance Period. The Committee may impose terms
and conditions attached to the Award, such as employment on the payment date.
Terms and conditions need not be uniform between Awards and may reflect
distinctions based upon the Committee’s discretion.
b. Notwithstanding anything else herein, unless otherwise specified by the
Committee with respect to an Employee Target Award, the Committee may, in its
sole discretion, elect to pay a Participant an amount (including zero) that is
less than the Participant’s Employee Target Award (or attained percentage
thereof) regardless of the degree of attainment of the Performance Goals.
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6. PERFORMANCE AWARD PROGRAM
a. Performance Awards. Subject to Section 7 hereof, each Participant is
eligible to receive up to the achieved percentage of their Employee Target Award
for a Performance Period (or, subject to Section 5(b), such lesser amount as
determined by the Committee in its sole discretion) based upon the attainment of
the objective Performance Goals established pursuant to Section 6(b) below and
the formula established pursuant to Section 5. Except as specifically provided
in Section 7, no Performance Award will be made to a Participant for a
Performance Period unless the minimum Performance Goals for such Performance
Period are attained.
b. Performance Goals. The Committee will establish the objective performance
goals, formulae or standards and the Employee Target Award (if any) applicable
to each Participant or class of Participants for a Performance Period in writing
before (i) the earlier of 90 days after commencement of the Performance Period
or expiration of 25% of the Performance Period, provided that the achievement of
the Performance Goals is substantially uncertain at such time, or (ii) such
later date as permitted under Code Section 162(m). Such Performance Goals may
incorporate, if and only to the extent permitted under Code Section 162(m),
provisions for disregarding (or adjusting for) changes in accounting methods,
corporate transactions (including, without limitation, dispositions and
acquisitions) and other similar type events or circumstances. To the extent any
such provision would create impermissible discretion under Code
Section 162(m) or otherwise violate Code Section 162(m), such provision will be
of no force or effect. These Performance Goals will be based on one or more of
the following criteria with regard to the Company (or a Subsidiary, division,
other operational unit or administrative department of the Company): (i) the
attainment of certain target levels of, or a specified increase in, enterprise
value or value creation targets; (ii) the attainment of certain target levels
of, or a percentage increase in after-tax or pre-tax profits, including without
limitation that attributable to continuing and/or other operations; (iii) the
attainment of certain target levels of, or a specified increase in, operational
cash flow; (iv) the attainment of a certain level of reduction of, or other
specified objectives with regard to limiting the level of increase in all or a
portion of, the Company’s bank debt or other long-term or short-term public or
private debt or other similar financial obligations of the Company, which may be
calculated net of cash balances and/or other offsets and adjustments as may be
established by the Committee; (v) the attainment of certain target levels of, or
a specified percentage increase in, earnings per share or earnings per share
from continuing operations; (vi) the attainment of certain target levels of, or
a specified percentage increase in, net sales, revenues, net income or earnings
before income tax or other exclusions; (vii) the attainment of certain target
levels of, or a specified increase in, return on capital employed (including,
without limitation, return on invested capital or return on committed capital);
(viii) the attainment of certain target levels of, or a percentage increase in,
after-tax or pre-tax return on stockholder equity; (ix) the attainment of
certain target levels of, or a percentage increase in, market share; (x) the
attainment of certain target levels of, or a percentage increase in, the fair
market value of the shares of the Company’s common stock; (xi) the growth in the
value of an investment in the Company’s common stock assuming the reinvestment
of dividends; (xii) the attainment of a certain level of, reduction of, or other
specified objectives with regard to limiting the level of or increase in, all or
a portion of controllable expenses or costs or other expenses or costs; or
(xiii) the attainment of certain target levels of, or a specified increase in,
4
economic value added targets based on a cash flow return on investment formula.
In addition, such Performance Goals may be based upon the attainment of
specified levels of Company (or Subsidiary, division, other operational unit or
administrative department of the Company) performance under one or more of the
measures described above relative to the performance of other corporations. To
the extent permitted under Code Section 162(m), but only to the extent permitted
under Code Section 162(m) (including, without limitation, compliance with any
requirements for shareholder approval), the Committee may: (i) designate
additional business criteria on which the Performance Goals may be based or
(ii) adjust, modify or amend the aforementioned business criteria.
c. Determination of Performance. Except as otherwise provided herein or
specified by the Committee at the time the Performance Goals are established,
the measures used in Performance Goals set under the Plan will be determined in
accordance with generally accepted accounting principles (“GAAP”) and in a
manner consistent with the methods used in the preparation of the financial
statements included with the Company’s regular reports on Forms 10-K and 10-Q.
To the extent any objective Performance Goals are expressed using any measures
that require deviations from GAAP, such deviations will be at the discretion of
the Committee as exercised at the time the Performance Goals are set.
d. Maximum Performance Award. The maximum Performance Award payable to a
Participant for any Performance Period is $5,000,000, which shall be
proportionately increased for Performance Periods that are longer than one year
and decreased for Performance Periods that are shorter than one year.
e. Payment Date; Committee Certification. Performance Awards will be paid in
cash as soon as administratively feasible after the Performance Period in which
they are earned is completed, but not before the Committee certifies in writing
that the Performance Goals specified pursuant to Section 6(b) above (except to
the extent permitted under Code Section 162(m) and provided in Section 7 with
regard to death, disability or certain other termination situations) were, in
fact, satisfied. The Committee will certify satisfaction of the Performance
Goals and, except as otherwise provided by the Committee or payable under a
deferred compensation arrangement, make Award payments within two and one-half
(2½) months after the end of each Performance Period.
7. EMPLOYMENT ON AWARD DATE GENERALLY REQUIRED FOR AWARD
No Award will be made to any Participant who is not an active employee of the
Company or one of its Subsidiaries or affiliates on the date Awards for the
Performance Period are generally paid to Participants; provided, however, that
the Committee, in its sole and absolute discretion, may make Awards to
Participants for a Performance Period in circumstances that the Committee deems
appropriate including, but not limited to, a Participant’s death, disability,
retirement or other termination of employment during such Performance Period.
All such Awards will be based on achievement of the Performance Goals for the
Performance Period, except that, to the extent permitted under Code
Section 162(m), in the case of death or disability during the Performance Period
(or such other termination or change in control situations as permitted under
Code Section 162(m)) an amount equal to or less than the Employee Target
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Awards may be made by the Committee either during or after the Performance
Period without regard to actual achievement of the Performance Goals.
8. NON-ASSIGNABILITY
No Award under this Plan nor any right or benefit under this Plan will be
subject to anticipation, alienation, sale, assignment, pledge, encumbrance,
garnishment, execution or levy of any kind or charge, and any attempt to
anticipate, alienate, sell, assign, pledge, encumber and to the extent permitted
by applicable law, charge, garnish, execute upon or levy upon the same will be
void and will not be recognized or given effect by the Company or the Plan.
9. NO RIGHT TO EMPLOYMENT
Nothing in the Plan or in any notice of award pursuant to the Plan will confer
upon any person the right to continue in the employment of the Company or one of
its Subsidiaries or affiliates nor affect the right of the Company or any of its
Subsidiaries or affiliates to terminate the employment of any Participant, all
without incurring liability under this Plan.
10. TERM; AMENDMENT OR TERMINATION; CODE SECTION 409A
a. This Plan shall be effective February 27, 2012. Notwithstanding the
foregoing, this Plan shall terminate unless it is approved at the next annual
meeting of the Company’s shareholders following the date the Board adopts this
plan. Once approved by the Company’s shareholders, this Plan shall continue in
effect until the Plan is terminated under Section 10(b).
b. The Board (or a duly authorized committee thereof) may, in its sole and
absolute discretion, amend, suspend or terminate the Plan or adopt a new plan in
place of this Plan at any time; provided, however, that no such amendment will,
without the prior approval of the shareholders of the Company entitled to vote
thereon in accordance with the laws of the State of Oregon to the extent
required under Code Section 162(m): (i) materially alter the Performance Goals
as set forth in Section 6(b); (ii) increase the maximum amount set forth in
Section 6(d); (iii) change the class of Eligible Employees set forth in
Section 4(a); or (iv) implement any change to a provision of the Plan requiring
shareholder approval in order for the Plan to continue to comply with the
requirements of Code Section 162(m). Furthermore, no amendment, suspension or
termination will, without the consent of the Participant, alter or impair a
Participant’s right to receive payment of an Award for a Performance Period
otherwise payable hereunder.
c. Notwithstanding anything herein to the contrary, any provision in this
Plan that is inconsistent with Code Section 409A is deemed to be amended to
comply with Code Section 409A and to the extent such provision cannot be amended
to comply therewith, such provision will be void. The Board (or a duly
authorized committee thereof) may at any time and from time to time amend, in
whole or in part, any or all of the provisions of this Plan to comply with Code
Section 409A and the regulations thereunder or any other applicable law without
Participant consent.
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11. SEVERABILITY
In the event that any one or more of the provisions contained in the Plan will,
for any reason, be held to be invalid, illegal or unenforceable, in any respect,
such invalidity, illegality or unenforceability will not affect any other
provision of the Plan and the Plan will be construed as if such invalid, illegal
or unenforceable provisions had never been contained therein.
12. WITHHOLDING
The Company will have the right to withhold or make such provisions as it deems
necessary or appropriate to satisfy any obligations it may have to withhold
federal, state or local income or other taxes incurred by reason of payments
pursuant to the Plan.
13. GOVERNING LAW
This Plan and any amendments thereto will be construed, administered, and
governed in all respects in accordance with the laws of the State of Oregon
(regardless of the law that might otherwise govern under applicable principles
of conflict of laws).
7 |
EXHIBIT 10.4
ESSENDANT INC.
MANAGEMENT INCENTIVE PLAN
Performance-Based Cash Award Agreement
This Award Agreement (this “Agreement”), dated March 15, 2018 (the “Award
Date”), is by and between [[FIRSTNAME]] [[LASTNAME]] (the “Participant”), and
Essendant Inc., a Delaware corporation (the “Company”). Any term capitalized but
not defined in this Agreement will have the meaning set forth in the Company’s
Management Incentive Plan (the “Plan”).
In the exercise of his discretion to grant awards under the Plan, the President
and Chief Executive Officer has determined that Participant should receive an
award of cash under the Plan, on the following terms and conditions:
1.
Grant. The Company hereby grants to Participant an award (the “Award”)
consisting of dollar amount granted (the “Target Number”), subject to adjustment
as provided in the Plan, and subject to possible increase to as many as one and
one half times the adjusted Target Number, or decrease to as low as zero,
depending on the degree to which the Company has satisfied the performance goals
specified in Appendix A to this Agreement. The Award will be subject to the
terms and conditions of the Plan and this Agreement.
2.
Vesting; Effect of Date of Termination. For purposes of this Agreement, “Vesting
Date” means the earlier of March 1, 2021, or such other date upon which a
vesting event occurs pursuant to this Section 2.
(a)
The Award will vest on the Vesting Date (i) if the Participant’s Date of
Termination (as defined below) has not occurred before the Vesting Date, and
(ii) only to the extent the Award has been earned as provided in Section 3
during the period (the “Performance Period”) from January 1, 2018 to
December 31, 2018 (the “Determination Date”). The period from the Award Date
through the Vesting Date is referred to as the “Vesting Period.” Except as
provided in paragraphs 2(b) through 2(f), if Participant’s date of termination
of employment with the Company and its subsidiaries (the “Date of Termination”)
occurs for any reason prior to the Vesting Date, the Award will be forfeited as
of the Participant’s Date of Termination.
(b)
If the Participant’s Date of Termination occurs during the Vesting Period, but
prior to a Change of Control, by reason of the Participant’s death or Permanent
and Total Disability (as defined in paragraph 2(f)), then (i) if such Date of
Termination occurs on or prior to the Determination Date, a portion of the Award
will become vested as of the Participant’s Date of Termination equal to an
amount determined by multiplying the Target Number by a fraction, the numerator
of which shall be the number of whole months elapsed from the beginning of the
Performance Period through the Date of Termination, and the denominator of which
shall be 12, and (ii) if such Date of Termination occurs after the Determination
Date, the amount of the Earned Award (as defined in Section 3) will be vested as
of the Participant’s Date of Termination. Any remaining portion of the Award
that does not vest as provided in this paragraph shall be forfeited as of the
Participant’s Date of Termination.
(c)
prior to a Change of Control, by reason of the Participant’s Retirement (as
defined in paragraph 2(h)), then except as provided in paragraph 2(d), the Award
will remain outstanding until the Vesting Date, at which point all or a prorated
portion of the Award will vest to the extent that it has been earned as provided
in Section 3 during the Performance Period, but only if the following conditions
have been satisfied: (i) the Participant has provided the Company with written
notice of his or her intent to retire at least 3 months prior to the
Participant’s Date of Termination (but such advance notice shall not be required
if Retirement occurs as a result of the Participant’s involuntary Separation
from Service (as defined in paragraph 2(g)) without Cause or the Participant’s
Separation from Service for Good
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Reason (as defined in the Company’s 2015 Long Term Incentive Plan, as amended));
and (ii) the Participant executes a release of claims and an agreement not to
compete in such forms as the Company may prescribe, and such release and
agreement have become fully effective within 60 days following the Participant’s
Date of Termination. If the conditions described in the preceding sentence are
not satisfied, the Award shall be forfeited as of the Participant’s Date of
Termination. The potential proration described in this paragraph 2(c) shall be
accomplished as follows: (A) if the Participant’s Date of Termination in
connection with the Participant’s Retirement occurs on or prior to the
Determination Date, then the amount payable to the Participant hereunder as of
the Vesting Date shall equal (I) the amount of the Earned Award, multiplied by
(II) a fraction, the numerator of which is the number of whole months that
elapsed during the period beginning on the first day or the Performance Period
and ending on the Date of Termination, and the denominator of which shall be 12;
and (B) if the Participant’s Date of Termination occurs after the Determination
Date, then the amount payable to the Participant hereunder as of the Vesting
Date shall equal the entire amount of the Earned Award.
(d)
If (i) a Change of Control occurs during the Performance Period and prior to the
Participant’s Date of Termination, or (ii) a Change of Control occurs after the
Participant’s Retirement, but prior to the Determination Date, then in either
such case the Award will become fully vested with respect to the Target Number
as of the date of such Change of Control. If (A) a Change of Control occurs
after the Performance Period and prior to the Participant’s Date of Termination,
or (B) a Change of Control occurs after both (I) the Performance Period, and
(II) the Participant’s Retirement, but prior to the Vesting Date, then in either
such case the Award will become fully vested with respect to the amount of the
Earned Award as of the date of such Change of Control. For the avoidance of
doubt, the provisions of this paragraph 2(d) will apply after the Participant’s
Retirement only if the conditions set forth in paragraph 2(c)(i) and (ii) have
been satisfied in connection with such Retirement.
(e)
If (i) the Participant’s Date of Termination occurs during the Vesting Period,
but prior to a Change of Control, as a result of the Participant’s involuntary
Separation from Service without Cause or the Participant’s Separation from
Service for Good Reason (but excluding the Participant’s Retirement if the
conditions in paragraph 2(c)(i) and (ii) are satisfied in connection with such
Retirement), (ii) a Change of Control then occurs within six months following
the Participant’s Date of Termination, and (iii) the President and Chief
Executive Officer determines that there is clear evidence that the Participant’s
termination of employment was made in contemplation of the Change of Control,
then an amount determined pursuant to the following sentence will become vested
hereunder. For purposes of the preceding sentence, (A) if the Change of Control
occurs on or prior to the Determination Date, the relevant amount is the Target
Amount, and (B) if the Change of Control occurs after the Determination Date,
the relevant amount shall be the amount of the Earned Award.
(f)
For purposes of this Agreement, the term “Permanent and Total Disability” means
the Participant’s inability, due to illness, accident, injury, physical or
mental incapacity or other disability, effectively to carry out his or her
duties and obligations as an employee of the Company or its Subsidiaries or to
participate effectively and actively as an employee of the Company or its
Subsidiaries for 90 consecutive days or shorter periods aggregating at least 180
days (whether or not consecutive) during any twelve-month period.
Notwithstanding the foregoing, to the extent necessary to cause the Award to
comply with the requirements of Section 409A of the Internal Revenue Code, as
amended (the “Code”), “Permanent and Total Disability” shall mean a “disability”
as described in Treasury Regulations Section 1.409A-3(i)(4).
(g)
For purposes of this Agreement, a Date of Termination shall be deemed to have
occurred only if on such date the Participant has also experienced a “separation
from service” as defined in the regulations promulgated under Code Section 409A
(a “Separation from Service”).
(h)
For purposes of this Agreement, “Retirement” means the Participant’s Separation
from Service occurring after the Participant has reached age 60 and, as of the
applicable Date of Termination, has completed at least five years of continuous
service with the Company and its Subsidiaries.
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(i)
For purposes of this Agreement, a Change of Control shall be deemed to have
occurred only if such event would also be deemed to constitute a “change in
control event” (as described in Treasury Regulation Section 1.409A-3(i)(5)(i))
with respect to the Company.
Except as otherwise specifically provided, the Company will not have any further
obligations to the Participant under this Agreement if the Award is forfeited as
provided herein.
3.
Earned Award. Except as specifically provided in Section 3, the maximum
potential value of an award (the “Earned Award”) that is eligible for vesting as
of the Vesting Date will be determined by the extent to which the Company and
Participant have satisfied the performance goals for the Performance Period
ending on the Determination Date as set forth in Appendix A to this Agreement.
Any portion of the Award that is not earned and will not vest as of the Vesting
Date will be forfeited effective as of the Determination Date. Notwithstanding
any contrary provision of this Agreement, the Award may be subject to adjustment
as provided in the Plan.
4.
Settlement. Except as set forth in the Plan, Payments due in respect of
Participant’s Award shall be made after the Vesting Date, but no later than
March 15, 2021, or promptly following the vesting date otherwise described in
Section 2. All payments made hereunder shall be subject to applicable tax
withholding.
5.
Restrictive Covenants; Recovery of Payments. Notwithstanding any contrary
provision of this Agreement, the Company may recover amounts paid in respect of
an award granted or paid under this Agreement to the extent required by the
terms of any clawback or compensation recovery policy adopted by the Company.
Furthermore, and in consideration of the grant of Participant’s award under the
terms of this Agreement and in recognition of the fact that Participant has
received and will receive Confidential Information (as defined in paragraph
5(e)(iv)) during Participant’s Service (as defined in paragraph 5(e)(v)),
Participant agrees to be bound by the restrictive covenants set forth in
paragraphs 5(a), 5(b), 5(c), and 5(d), below (the “Restrictive Covenants”). In
addition, but subject to the last sentence of this paragraph, Participant agrees
that if Participant violates any provision of such Restrictive Covenants, then
(i) the unvested portion of this award shall immediately become null and void,
and (ii) any amount paid to Participant hereunder at any time during the
three-year period immediately preceding the date on which such violation
occurred shall, upon demand from the Company at any time after discovery of the
violation of a Restrictive Covenant or other imposition of a claw back, be
repaid to the Company. Subject to the last sentence of this paragraph and any
applicable limitations of Code Section 409A, by accepting this Agreement,
Participant consents to a deduction from any amounts the Company owes
Participant from time to time (including amounts owed to Participant as wages or
other compensation, fringe benefits, or vacation pay, as well as any other
amounts owed to Participant by the Company), to the extent of the amounts
Participant owes the Company under this Section 5. Whether or not the Company
elects to make any set-off in whole or in part, if the Company does not recover
by means of set-off the full amount Participant owes pursuant to this Section 5,
Participant hereby agrees to pay immediately the unpaid balance to the Company.
Notwithstanding the foregoing, if and to the extent that a violation of a
Restrictive Covenant is curable at the time of discovery by the Company,
Participant will not be deemed to have violated such Restrictive Covenant unless
and until the Company gives Participant written notice of such violation and
Participant fails to cure such violation within 30 calendar days after receipt
of such written notice.
(a)
Confidential Information. Participant acknowledges that during the course of his
or her Service, he or she has received and will receive Confidential
Information. Participant further acknowledges that he or she has received a copy
of the Company’s Confidentiality and Nondisclosure Policy. Participant
acknowledges and agrees that it is his or her responsibility to protect the
integrity and confidential nature of the Confidential Information, both during
and after his or her Service, and Participant shall not directly or indirectly
use, disclose, disseminate, or otherwise make available any such Confidential
Information, either during or after the term of his or her Service, except as
necessary for the performance of his or her duties to the Company or as
expressly permitted in writing by the Company.
A-3
(b)
Competitive Activities. During Participant’s Service and for two years after the
termination of Participant’s Service for any reason whatsoever (including
Retirement), Participant shall not engage in any Competitive Activity (as
defined in paragraph 5(e)(iii)). Participant’s obligations under this paragraph
5(b) shall apply in any geographic territory in which the Company conducts its
business during the term of Participant’s Service. In the event that any portion
of this paragraph 5(b) shall be determined by any court of competent
jurisdiction to be unenforceable because it is unreasonably restrictive in any
respect, it shall be interpreted to extend over the maximum period of time for
which it reasonably may be enforced and to the maximum extent for which it
reasonably may be enforced in all other respects, and enforced as so
interpreted, all as determined by such court in such action. Participant
acknowledges the uncertainty of the law in this respect and expressly stipulates
that this Agreement is to be given the construction that renders its provisions
valid and enforceable to the maximum extent (not exceeding its express terms)
possible under applicable law.
(c)
Non-Solicitation. During Participant’s Service and for two years after the
termination of Participant’s Service for any reason whatsoever, Participant
shall not:
(i)
solicit, induce or attempt to solicit or induce any employee, consultant, or
independent contractor of the Company (each, a “Service Provider”) to leave or
otherwise terminate such Service Provider’s relationship with the Company, or in
any way interfere adversely with the relationship between any such Service
Provider and the Company;
(ii)
solicit, induce or attempt to solicit or induce any Service Provider to work
for, render services to, provide advice to, or supply Confidential Information
or trade secrets of the Company to any third person, firm, or entity;
(iii)
employ, or otherwise pay for services rendered by, any Service Provider in any
business enterprise with which Participant may be associated, connected or
affiliated;
(iv)
call upon, induce or attempt to induce any current or potential customer,
vendor, supplier, licensee, licensor or other business relation of the Company
for the purpose of soliciting or selling products or services in direct
competition with the Company or to induce any such person to cease or refrain
from doing business with the Company, or in any way interfere with the
then-existing or potential business relationship between any such current or
potential customer, vendor, supplier, licensee, licensor or other business
relation and the Company;
(v)
call upon any entity that is a prospective acquisition candidate that
Participant knows or has reason to know was called upon by the Company or for
which the Company made an acquisition analysis for the purpose of acquiring such
entity; or
(vi)
assist, solicit, or encourage any other person, directly or indirectly, in
carrying out any activity set forth above that would be prohibited by any of the
provisions of this Agreement if such activity were carried out by Participant.
In particular, Participant will not, directly or indirectly, induce any Service
Provider of the Company to carry out any such activity.
(d)
Other Restricted Activities. During Participant’s Service and for two years
after the later of (i) termination of Participant’s Service for any reason
whatsoever or (ii) the Vesting Date, Participant shall not engage in any other
activity that is inimical, contrary or harmful to the interests of the Company
including, but not limited to, (i) conduct related to Participant’s Service for
which either criminal or civil penalties against Participant may be sought, (ii)
violation of Company policies, including, without limitation, the Company’s
insider trading policy, or (iii) participating in a hostile takeover attempt.
(e)
Definitions. For purposes of this Section 5, the following terms shall have the
following definitions:
A-4
(i)
The term “Company” shall include any Subsidiary of the Company that may exist at
a given time.
(ii)
The term “Competing Business” shall mean any business activities that are
directly or indirectly competitive with the business conducted by the Company or
its Subsidiaries at or prior to the date of the termination of Participant’s
Service, all as described in the Company’s periodic reports filed pursuant to
the Exchange Act (e.g., the Company’s Annual Report on Form 10-K) or other
comparable publicly disseminated information.
(iii)
The term “Competitive Activity” shall mean directly or indirectly investing in,
owning, operating, financing, controlling, or providing services to a Competing
Business if the nature of such services are the same as or similar in position
scope and geographic scope to any position held by Participant during the last
two years of his or her employment with the Company, such that Participant’s
engaging in such services on behalf of a Competing Business does or may pose
competitive harm to the Company, provided that passive investments of less than
a 2% ownership interest in any entity that is a Competing Business will not be
considered to be a “Competitive Activity.”
(iv)
The term “Confidential Information” has the meaning set forth in the Company’s
Confidentiality and Nondisclosure Policy. Confidential Information includes not
only information contained in written or digitized Company documents but also
all such information that Participant may commit to memory during the course of
his or her Service. “Confidential Information” does not include information that
is available in reasonably similar form to the general public through no fault
of Participant, or that was received by Participant outside of the Company,
without an obligation of confidentiality.
(v)
Participant will be deemed to be in “Service” to the Company so long as he or
she renders continuous services on a periodic basis to the Company in the
capacity of an employee, director, consultant, independent contractor, or other
advisor (but, in the case of Participant’s continued Service as a consultant,
independent contractor, or other advisor, only as determined by the Committee
(as defined in the Company’s 2015 Long Term Incentive Plan, as amended) or the
Board, in its sole and absolute discretion, following Participant’s initial
Service as an employee or director).
(f)
Equitable Relief; Enforceability. By accepting this Agreement and the award
granted hereby, Participant agrees that the Restrictive Covenants set forth in
this Section 5 are reasonable and necessary to protect the legitimate interests
of the Company. In the event a violation of any of the restrictions contained in
this Section 5 is established, the Company shall be entitled to seek enforcement
of the provisions of this Section 5 through proceedings at law or in equity in
any court of competent jurisdiction, including preliminary and permanent
injunctive relief. In the event of a violation of any provision of subsection
(b), (c), or (d) of this Section 5, the period for which those provisions would
remain in effect shall be extended for a period of time equal to that period
beginning when such violation commenced and ending when the activities
constituting such violation have been finally terminated in good faith.
Participant is aware that there may be defenses to the enforceability of the
Restrictive Covenants set forth in this Section 5, based on time or territory
considerations, and Participant knowingly, consciously, intentionally, entirely
voluntarily, and irrevocably waives any and all such defenses and agrees that he
or she will not assert the same in any action or other proceeding brought by the
Company for the purpose of enforcing the Restrictive Covenants.
(g)
DTSA Disclosure. Participant is hereby advised of the following protections
provided by the Defend Trade Secrets Act of 2016, 18 U.S. Code § 1833(b), and
nothing in this Agreement shall be deemed to prohibit the conduct expressly
protected by 18 U.S. Code § 1833(b):
(i)
An individual shall not be held criminally or civilly liable under any Federal
or State trade secret law for the disclosure of a trade secret that (A) is made
(1) in confidence to a Federal, State,
A-5
or local government official, either directly or indirectly, or to an attorney;
and (2) solely for the purpose of reporting or investigating a suspected
violation of law; or (B) is made in a complaint or other document filed in a
lawsuit or other proceeding, if such filing is made under seal.
(ii)
An individual who files a lawsuit for retaliation by an employer for reporting a
suspected violation of law may disclose the trade secret to the attorney of the
individual and use the trade secret information in the court proceeding, if the
individual (A) files any document containing the trade secret under seal; and
(B) does not disclose the trade secret, except pursuant to court order.
6.
No Right to Employment. Nothing herein confers upon Participant any right to
continue in the employ of the Company or any Subsidiary.
7.
Nontransferability. Except as otherwise provided by the Committee or as provided
in Section 2, and except with respect to cash delivered in settlement of the
vested award, Participant’s interests and rights in and under this Agreement may
not be assigned, transferred, exchanged, pledged or otherwise encumbered other
than as designated by Participant by will or by the laws of descent and
distribution. Issuance of cash in settlement of the award will be made only to
Participant; or, if the Company has been provided with evidence acceptable to it
that Participant is legally incompetent, Participant’s personal representative;
or, if Participant is deceased, to the designated beneficiary or other
appropriate recipient in accordance with the Company’s applicable
procedures. The Company may require personal receipts or endorsements of a
Participant’s personal representative, designated beneficiary or alternate
recipient provided for herein. Any effort to otherwise assign or transfer any
Award or any rights or interests therein or thereto under this Agreement will be
wholly ineffective, and will be grounds for termination by the Committee of all
rights and interests of Participant and his or her beneficiary in and under this
Agreement.
8.
Administration and Interpretation. The President and Chief Executive Officer has
the authority to control and manage the operation and administration of the Plan
and to make all interpretations and determinations necessary or appropriate for
the administration of the Plan and this Agreement, including the enforcement of
any recovery of payments pursuant to Section 5 or otherwise. Any interpretations
of the Plan or this Agreement by the President and Chief Executive Officer and
any decisions made by him under the Plan or this Agreement are final and binding
on Participant and all other persons. Any inconsistency between this Agreement
and the Plan shall be resolved in favor of the Plan except to the extent such
resolution would result in a violation of Code Section 409A. The President and
Chief Executive Officer shall have the right to exercise negative discretion to
reduce the value of the amount to be paid hereunder below the amount that might
otherwise be payable hereunder.
9.
Governing Law. This Agreement and the rights and obligations hereunder shall be
governed by and construed in accordance with the laws of the state of Illinois,
without regard to principles of conflicts of law of Illinois or any other
jurisdiction.
10.
Sole Agreement. Notwithstanding anything in this Agreement to the contrary, the
terms of this Agreement shall be subject to all of the terms and conditions of
the Plan (as the same may be amended in accordance with its terms), a copy of
which may be obtained by Participant from the office of the Secretary of the
Company. In addition, this Agreement and Participant’s rights hereunder shall be
subject to all interpretations, determinations, guidelines, rules and
regulations adopted or made by the President and Chief Executive Officer from
time to time pursuant to the Plan. This Agreement is the entire agreement
between the parties to it with respect to the subject matter hereof, and
supersedes any and all prior oral and written discussions, commitments,
undertakings, representations or agreements (including, without limitation, any
terms of any employment offers, discussions or agreements between the parties).
11.
Binding Effect. This Agreement will be binding upon and will inure to the
benefit of the Company and Participant and, as and to the extent provided herein
and under the Plan, their respective heirs, executors, administrators, legal
representatives, successors and assigns.
A-6
12.
Amendment and Waiver. This Agreement may be amended in accordance with the
provisions of the Plan, and may otherwise be amended by written agreement
between the Company and Participant without the consent of any other person. No
course of conduct or failure or delay in enforcing the provisions of this
Agreement will affect the validity, binding effect or enforceability of this
Agreement.
A-7
IN WITNESS WHEREOF, the Company and Participant have duly executed this
Agreement as of the Award Date.
ESSENDANT INC.
PARTICIPANT
By:
___________________________
___________________________
Richard D. Phillips
[[FIRSTNAME]] [[LASTNAME]]
A-8
APPENDIX A
Vesting Period: [To be described}
The determination of the Cash Award that will be earned and vested as of the
Vesting Date as provided in Section 2 of the Agreement will be determined as
follows:
1.
The Company’s Adjusted EBIT (as defined below), Free Cash Flow (as defined
below) and the Participant’s performance against Personal Performance Goals (as
defined below) for the Performance Period beginning on January 1, 2018 and
ending on the Determination Date of December 31, 2018 will be calculated.
2.
[Performance-based objectives to be described]
A-9
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EXHIBIT 32.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION -OXLEY ACT OF 2002 In connection with the Quarterly Report of MOCON, Inc. on Form 10-Q for the quarter ended June 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert L. Demorest, Chief Executive Officer of MOCON, Inc., hereby 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: 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 MOCON, Inc. Date: August 9, 2016 /s/ Robert L. Demorest Robert L. Demorest Chief Executive Officer
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1 Commission File Number - REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ZRHO BEVERAGES, INC. (Exact name of registrant as specified in its charter) Nevada (State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) 46-5662800 (I.R.S. Employer Identification Number) 15720 N. Greenway-Hayden Loop #2 Scottsdale, AZ 85260 (Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices) Edward C. Orr III, President ZRHO Beverages, Inc. 15720 N. Greenway-Hayden Loop #2 Scottsdale, AZ 85260 (480) 219-8564 (Name, address, including zip code, and telephone number, including area code, of agent for service) Approximate date of commencement of proposed sale to the public:As soon as practicable after the registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box:x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.¨ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.¨ If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. Indicate by check mark whether the registrant is a large accelerated file, 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. Large accelerated filer¨ Accelerated filer¨ Non-accelerated filer¨ (Do not check if a smaller reporting company) Smaller reporting companyx Calculation of Registration Fee Title of Each Class of Securities to be Registered Amount to be Registered Proposed Offering Price Per Share Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common Stock, $0.001 par value TOTAL Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended. A Registration Statement relating to these securities has been filed with the Securities Exchange Commission.The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. The information in this prospectus is not complete and may be changed.We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective.This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”), and will therefore be subject to reduced public company reporting requirements. Investing in our securities involves a high degree of risk. See Risk Factors, beginning on page 5. Prospectus (Subject to Completion) Dated , 20 PROSPECTUS ZRHO Beverages, Inc. 550,000 Shares of Common Stock Offered by ZRHO Beverages, Inc. Per Share Total Public Offering Price sold by the Company … $ $ Underwriting discounts and Commissions… $ $ Proceeds to ZRHO Beverages, Inc… $ $ Net Proceeds to ZRHO Beverages, Inc. (1)… $ Total reflects an estimate of expenses including: accounting and audit $2,500, legal $10,000, copy and printing $600, $2,500 EDGAR services and $1,000 for transfer agent setup and initial certificate issuances. We are offering to the public 550,000 shares of common stock, at $0.10 per share for a total of $55,000, in a “direct public offering” on an “all-or-none” basis through our sole officer and director, Mr. Edward Orr III. Assuming we complete the sale of the 550,000, raising the full $55,000; after payment of offering expenses of $16,600 as disclosed in “Summary of the Offering” on page 3 of this prospectus, our net proceeds will be $38,400. This offering terminates in 12 months after commencement of this offering, on , 20. If we do not sell all of the 550,000 shares being offered prior to the termination date, we intend to promptly return all money paid for shares to the purchasers within 24 hours of the termination date, without interest and without deduction, although all the money may not be returned because it may be subject to creditors’ claims. At this time we do not have any outstanding creditor claims. This is our initial public offering, and no public market currently exists for our Shares. The securities being registered in this offering may not be liquid since they are not listed on any exchange or quoted through an OTC market, and a market for these securities may not develop. The offering price may not reflect the market price of our Shares after the offering. Because there is currently no active trading market, selling stockholders will sell at the stated fixed price of $0.05 until securities are quoted through an OTC market. There is a $500 minimum purchase requirement for prospective stockholders.All funds will be placed into a separate corporate account, not in an escrow or trust account, and as such, it may be subject to creditor’s claims. At this time we do not have any outstanding creditor claims. An investment in our common stock involves a high degree of risk. You should purchase our common stock only if you can afford a complete loss of your purchase. We urge you to read carefully the “Risk Factors” section beginning on page 4 where we describe specific risks associated with an investment in ZRHO Beverages, Inc., and these securities before you make your investment decision. We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”), and will therefore be subject to reduced public company reporting requirements. Investing in our securities involves a high degree of risk. See Risk Factors, beginning on page 5. We are considered a “shell company” under applicable securities rules and subject to additional regulatory requirements as a result, including the inability of our shareholders to sell our shares in reliance on Rule 144 promulgated pursuant to the Securities Act of 1933, as well as additional restrictions. Accordingly, investors should consider our shares to be significantly risky and illiquid investments. See Risk Factors, beginning on Page 5. Our auditors have substantial doubt about our ability to continue as a going concern. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities, or determined if this prospectus is truthful or complete.Any representation to the contrary is a criminal offense. THE DATE OF THIS PROSPECTUS IS , 201. TABLE OF CONTENTS PAGE Prospectus Summary 1 The Offering 3 Summary Financial Information 4 Risk Factors 5 Special Note Regarding Forward-Looking Information 12 Capitalization 13 Use of Proceeds 13 Determination of Offering Price 14 Dilution 15 Plan of Distribution and Terms of the Offering 16 Legal Proceedings 17 Director, Executive Officers, Promoters and Control Persons 17 Security Ownership of Certain Beneficial Owners and Management 17 Description of Securities 19 Interest of Named Experts and Counsel 19 Disclosure of Commission Position on Indemnification for Securities Act Liabilities 20 Description of Business 23 Reports to Stockholders 23 Management’s Discussion and Analysis of Financial Condition and Results of Operations 27 Facilities 28 Certain Relationships and Related Party Transactions 28 Market for Common Equity and Related Stockholders Matters 28 Dividends 29 Executive Compensation 29 Shares Eligible for Future Sale 31 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 32 Index to Financial Statements Report of Independent Certified Public Accountant F-1 Balance Sheet F-2 Statement of Operations F-3 Statement of Stockholders’ Equity F-4 Statement of Cash Flows F-5 Notes to Financial Statements F-6 PROSPECTUS SUMMARY This summary contains basic information about us and the offering. Because it is a summary, it does not contain all the information that you should consider before investing. You should read the entire prospectus carefully, including the risk factors and our financial statements and the related notes to those statements included in this prospectus. Except as otherwise required by the context, references in this prospectus to "we," "our," "us" and “ZRHO” refer to ZRHO Beverages, Inc. ZRHO Beverages, Inc. is a development stage company incorporated in the State of Nevada on May 12, 2014. We intend to commence operations in the business of developing, marketing, selling and distributing an alternative beverage category beverage, which is intended to prevent the effects of a hangover. To date, we have primarily been involved in organizational activities and analyzing the viability of our business plan, and establishing our business model, including researching the items needed to secure a trademark and develop relationships with outlets for sale and distribution. We are a development stage company and have not earned any revenues.We cannot state with certainty whether we will achieve profitability. Since our inception on May 12, 2014 through October 31, 2014, we have not generated any revenues and have incurred a net loss of $10,186. Throughout May 12, 2014 and October 31, 2014 our only business activity was the formation of our corporate entity and the development of our business model. We anticipate the commencement of generating revenues in the next twelve months, of which we can provide no assurance. The capital raised in this offering has been budgeted to cover the costs associated with the offering, such as accounting services, as well as various filing fees and transfer agent fees. Additionally, capital raised in this offering will fund website and marketing development and working capital. We believe that with our lack of significant expenses, the working capital raised in this offering, and the possible advancement of funds which we may or may not receive from our President, Mr. Orr, we may have sufficient capital to support the limited costs associated with our initial ongoing operations for the next twelve months, assuming we are successful in the launching and implementation of our current business plan. However, there can be no assurance that the actual expenses incurred will not materially exceed our estimates or that the funds advanced by our president, if any, will be adequate to maintain our business. As a result, our independent auditors have expressed substantial doubt about our ability to continue as a going concern in the independent auditors’ report to the financial statements included in the registration statement. ZRHO is building a business based on developing, marketing, selling and distributing an alternative beverage category beverage, which is intended to prevent the effects of a hangover. At this time we are in the process of researching manufacturing companies that will help produce and bottle our product. Additionally, we are implementing our marketing plan which includes graphic design work, lead development and website. We have no intentions to be acquired or to merge with an operating company. Additionally, our shareholders have no intention of entering into a change of control or similar transaction. No member of our management or any of our affiliates have been previously involved in the management or ownership of a development stage company that has not implemented its business plan, engaged in a change of control or similar transaction or has generated no or minimal resources to date.We commenced operations in May 2014, since then we have been developing our website and marketing plan, researching manufacturing companies for the development of our product, establishing market contacts, and researching outlets for sale and distribution. 1 As of the date of this prospectus we have one officer who also serves as our sole director, our sole employee, and who we anticipate will devote 15 to 20 hours a week to the company going forward. Additionally, even with the sale of securities offered hereby, we will not have the financial resources needed to hire additional employees or meaningfully expand our business. Even though we intend to generate revenues upon the commencement of our marketing plan, it is possible we will sustain operating losses for at least the next 12 months. Even if we sell all the securities offered, a substantial portion of the proceeds of the offering will be spent for costs associated with the offering, fees associated with SEC reporting requirements, and website development. Investors should realize that following this offering we will be required to raise additional capital to cover the costs associated with our plan of operation. ZRHO’s address and phone number are: ZRHO Beverages, Inc. 15720 N. Greenway-Hayden Loop #2 Scottsdale, Arizona 85260 (480) 219-8564 2 Summary of the Offering New Securities Offered…(1) 550,000 shares of common stock, $0.001 par value per share. Price Per Share…(2) Minimum Purchase… $500/5,000 shares of common stock Common Stock Outstanding before Offering… 1,075,000 shares of common stock Common Stock Outstanding after Offering… 1,625,000 shares of common stock Estimated Total Proceeds… Offering Expenses…(3) Net Proceeds after Offering Expenses… Use of Proceeds… Other than the expenses of the offering, the proceeds of the offering will be used for; accounting, graphic design, marketing, product development, legal, and general working capital. Subscriptions… Subscriptions are to be made payable to “ZRHO Beverages, Inc.” Management may not, and will not purchase any shares in this offering. Currently there is no trading market for our stock.We intend to apply for quotation on the OTCQB and will require assistance of a market-maker to apply for quotation and there is no guarantee that a market-maker will agree to assist us. Total reflects an estimate of costs including: accounting and audit $2,500, legal $10,000, copy and printing $600, $1,000 for transfer agent setup and initial certificate issuances, and 2,500 for EDGAR/XBRL services. 3 SUMMARY FINANCIAL INFORMATION The following table sets forth summary financial data derived from our financial statements. The data should be read in conjunction with the financial statements, related notes and other financial information included in this prospectus. Income Statement Data: (Inception) May 12, 2014 to October 31, 2014 (audited) Revenue $ - Expenses: General and administrative expenses Professional fees Total expenses ) Net loss $ ) Net loss per share – basic $ ) Balance Sheet Data: As at October 31, 2014 (audited) Total Assets… $ Total Liabilities… $ Total Stockholders’ Equity… $ Rule 419 – “Blank Check Company” We are not a “blank check company” as defined by Rule 419 of the Securities Act of 1933, as amended, and therefore the registration statement need not comply with the requirements of Rule 419. Rule 419 defines a “blank check company” as a company that: (1) is a development stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person; and (2) is issuing "penny stock," as defined in Rule 3a51-1 under the Securities Exchange Act of 1934. We have a very specific business purpose and a bona fide plan of operations. Our business plan and purpose is to develop, market, sell and distribute an alternative beverage category beverage, which is intended to prevent the effects of a hangover At this time we are in the process of researching manufacturing companies that will help produce and bottle our product. Additionally, we are implementing our marketing plan which includes graphic design work, lead development and website.We do not presently have a market-ready product, and we currently do not have any customers and thus have generated no revenues nor do we anticipate generating any material revenue for at least twelve months from the date we close this offering, assuming we are able to place a sufficient amount of this offering. Upon receipt of adequate funding from this offering we intend to (i) expand and improve our website, (ii) contract a manufacturer to produce, bottle and label our product, and (iii) produce prototype samples of our product and distribute the samples for testing. Lastly, we do not have any plans or intentions to engage in a merger or acquisition with an unidentified company or companies or other entity or person. 4 RISK FACTORS Investors in ZRHO should be particularly aware of the inherent risks associated with our business. As of the date of this filing our management is aware of the following material risks. We are a development stage company organized in May 2014 and have recently commenced operations, making an evaluation of us extremely difficult. At this stage, even with our good faith efforts, there is nothing on which to base an assumption that we will become profitable or generate any significant amount of revenues. We were incorporated in May 2014 as a Nevada corporation. As a result of our start-up operations we have; (i) generated no revenues, (ii) accumulated deficit of $10,186 for the period ended October 31, 2014, and (iii) we have incurred losses of $10,186 for the period ended October 30, 2014. We have been focused on organizational, start-up activities and business plan development since we incorporated. Although we have commenced the development of our website and marketing strategy, there is nothing at this time on which to base an assumption that our business operations will prove to be successful or that we will ever be able to operate profitably. Our future operating results will depend on many factors, including our ability to raise adequate working capital, demand for our product, the level of our competition and our ability to attract and maintain key management and employees. We do not presently have a market-ready product and we currently do not have any customers. As such, we have generated no revenues. Until our common stock is registered under the Exchange Act, we will not be a fully reporting company. We are not yet a registered company and will not be so until this S-1 is effective. Until then we will only be subject to the reporting requirements imposed by Section 15(d) of the Exchange Act which state that we will be required to file supplementary and periodic information, documents, and reports.However, after effectiveness of this S-1 we intend to file Form 8-A registering a class of securities under Section 12, subjecting us to the full reporting requirements. Until then, and as long as our common stock is not registered under the Exchange Act, we will not be subject to Section 14 of the Exchange Act, which, among other things, prohibits companies that have securities registered under the Exchange Act from soliciting proxies or consents from shareholders without furnishing to shareholders and filing with the SEC a proxy statement and form of proxy complying with the proxy rules. In addition, so long as our common stock is not registered under the Exchange Act, our directors and executive officers and beneficial holders of 10% or more of our outstanding common stock will not be subject to Section 16 of the Exchange Act. Section 16(a) of the Exchange Act requires executive officers and directors, and persons who beneficially own more than 10% of a registered class of equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of common shares and other equity securities, on Forms 3, 4 and 5 respectively. Such information about our directors, executive officers, and beneficial holders will only be available through this (and any subsequent) registration statement, and periodic reports we file thereafter. Furthermore, so long as our common stock is not registered under the Exchange Act, our obligation to file reports under Section 15(d) of the Exchange Act will be automatically suspended if, on the first day of any fiscal year (other than a fiscal year in which a registration statement under the Securities Act has gone effective), we have fewer than 300 shareholders of record. This suspension is automatic and does not require any filing with the SEC. In such an event, we may cease providing periodic reports and current or periodic information, including operational and financial information, may not be available with respect to our results of operations. 5 We are an “emerging growth company” under the JOBS Act of 2012, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors. We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates. We will remain an “emerging growth company” for up to five years, although we will lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three year period, or if the market value of our common stock that is held by non-affiliates exceeds $700 million.” Even if we no longer qualify as an “emerging growth company”, we may still be subject to reduced reporting requirements so long as we are considered a “Smaller Reporting Company.” Many of the exemptions available for emerging growth companies are also available to smaller reporting companies like us that have less than $75 million of worldwide common equity held by non-affiliates.So, although we may no longer qualify as an emerging growth company, we may still be subject to reduced reporting requirements. Shareholders who hold unregistered shares of our common stock are subject to resale restrictions pursuant to Rule 144, due to our status as a “Shell Company.” Pursuant to Rule 144 of the Securities Act of 1933, as amended (“Rule 144”), a “shell company” is defined as a company that has no or nominal operations; and, either no or nominal assets; assets consisting solely of cash and cash equivalents; or assets consisting of any amount of cash and cash equivalents and nominal other assets. As such, because we have nominal assets, we are considered a “shell company.” The Company’s shell company status results in the following consequences: (i) the Company is ineligible to file a registration of securities using Form S-8; and (ii) pursuant to Rule 144, sales of our securities pursuant to Rule 144 are not able to be made until we have ceased to be a “shell company” and we are subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, and have filed all of our required periodic reports for at least the previous one year period prior to any sale pursuant to Rule 144; and a period of at least twelve months has elapsed from the date “Form 10 information” (i.e., information similar to that which would be found in a Form 10 Registration Statement filing with the SEC) has been filed with the Commission reflecting the Company’s status as a non-“shell company.” 6 Because none of our non-registered securities can be sold pursuant to Rule 144, until one year after filing Form 10 like information with the SEC, any non-registered securities we sell in the future or issue to consultants or employees, in consideration for services rendered or for any other purpose will have no liquidity until and unless such securities are registered with the Commission and/or until 12 months after we cease to be a “shell company” and have complied with the other requirements of Rule 144, as described above. As a result, it may be harder for us to fund our operations and pay our consultants with our securities instead of cash. Furthermore, it will be harder for us to raise funding through the sale of debt or equity securities unless we agree to register such securities with the Commission, which could cause us to expend additional resources in the future. Our status as a “shell company” could prevent us from raising additional funds, engaging consultants, and using our securities to pay for any acquisitions (although none are currently planned), which could cause the value of our securities, if any, to decline in value or become worthless. Our auditor’s report reflects the fact that the ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately the achievement of significant operating revenues. If we are unable to continue as a going concern, you will lose your investment. Our auditor’s report reflects that the ability of ZRHO to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues. If we are unable to continue as a going concern, you will lose your investment. You should not invest in this offering unless you can afford to lose your entire investment. As a result of placing your invested funds into a separate corporate account as opposed to an escrow account, the funds are subject to attachment by creditors of the company and would become part of the bankruptcy estate in the event that we file for bankruptcy or our creditors file an involuntary bankruptcy petition against us, thereby subjecting you to a potential loss of the funds. Because the funds are being placed in a separate corporate account during the entire offering period, rather than an escrow account, management will have immediate and direct access to the funds during the entire offering period. Thus creditors of the company could try to attach, and ultimately be successful in obtaining or attaching the funds before the offering closes. Additionally, the funds in the corporate account will become part of the bankruptcy estate in the event we file for bankruptcy or our creditors file an involuntary bankruptcy petition against us. Investors would lose all or part of their investments, regardless of whether or not the offering closes. Because management has no experience in the alternative beverage business, our business has a higher risk of failure. Our sole officer and director has no experience in developing, marketing and selling alternative beverages. In addition, we do not have any employees with experience in this business sector. As a result, we may not be able to recognize and take advantage of product, related service and market trends in the sector and we may be unable to accurately predict consumer demand. In addition, our director’s decisions and choices may not be well thought out and our operations, earnings and ultimate financial success may suffer irreparable harm as a result. If we are unable to generate a substantial customer base for our products, our business will fail. The success of our business requires that we sell our product to consumers at a profit. Since our revenue will be generated exclusively from our sale, we need to attract enough people to buy our product to cover our costs. If we are unable to attract enough customers to purchase our products, we will generate losses and cause our business to fail. 7 The sale of ingested products involves product liability and other risks. Like other distributors of products that are ingested, the Company faces an inherent risk of exposure to product liability claims if the use of its products results in illness or injury. The product that the Company intends to sell in the U.S. are subject to laws and regulations, including those administered by the USDA and FDA that establish manufacturing practices and quality standards for food products. Product liability claims could have a material adverse effect on the Company’s business. Distributors of vitamins, nutritional supplements and minerals, have been named as defendants in product liability lawsuits from time to time. The successful assertion or settlement of an uninsured claim, a significant number of insured claims or a claim exceeding the limits of the Company’s insurance coverage would harm the Company by adding costs to its business and by diverting the attention of senior management from the operation of its business. The Company may also be subject to claims that its products contain contaminants, are improperly labeled, include inadequate instructions as to use or inadequate warnings covering interactions with other substances. Product liability litigation, even if not meritorious, is very expensive and could also entail adverse publicity for the Company and reduce its revenue. In addition, the products the Company distributes, or certain components of those products, may be subject to product recalls or other deficiencies. Any negative publicity associated with these actions would adversely affect the Company’s brand and may result in decreased product sales and, as a result, lower revenues and profits. Significant additional labeling or warning requirements may inhibit sales of affected products. Various jurisdictions may seek to adopt significant additional product labeling or warning requirements relating to the content or perceived adverse health consequences of the Company’s product. If these types of requirements become applicable to the Company’s product under current or future environmental or health laws or regulations, they may inhibit sales of such products. We will be competing with better establihed companies. We will not be the first company to attempt to develop a beverage intended to prevent the effects of a hangover. There are other companies whose contacts and expertise may be more advanced than ours, and whose methods of marketing and resale may be more cost-effective. Further, we will be facing competition from better establihed companies, which may have better local, regional and national connections, and whose efforts produce larger sales and revenues. We may face intense competition and expect competition to increase in the future, which could prohibit us from developing a customer base and generating revenue. The beverage industry is highly competitive, with low barriers to entry and we expect more companies to enter the sector and a wider range of and related products to be introduced. These companies may already have an establihed market in our industry.Most of these companies have significantly greater financial and other resources than us and have been developing their products longer than we have been developing ours. Our present limited operations have not yet proven profitable. To date we have not shown a profit in our operations. We do not presently have a market-ready product, and we currently do not have any customers. We cannot assure that we will achieve or attain profitability in 2015 or at any other time. If we cannot achieve operating profitability, we may not be able to meet our working capital requirements, which will have a material adverse effect on our business operating results and financial condition 8 We are significantly dependent on our sole officer and director, who lacks experience running a public company. The loss or unavailability to ZRHO of Mr. Orr’s services would have an adverse effect on our business, operations and prospects in that we may not be able to obtain new management under the same financial arrangements, which could result in a loss of your investment. Our business plan is significantly dependent upon the abilities and continued participation of Edward C. Orr III, our president. It would be difficult to replace Mr. Orr at such an early stage of development. The loss by or unavailability to ZRHO of Mr. Orr’s services would have an adverse effect on our business, operations and prospects, in that our inability to replace Mr. Orr could result in the loss of one’s investment. There can be no assurance that we would be able to locate or employ personnel to replace Mr. Orr, should his services be discontinued. In the event that we are unable to locate or employ personnel to replace Mr. Orr, we would be required to cease pursuing our business opportunity, which would result in a loss of your investment. Mr. Orr has no experience in running a public company. The lack of experience in operating a public company could impact our return on investment, if any. As a result of our reliance on Mr. Orr, and his lack of experience in operating a public company, our investors are at risk in losing their entire investment. Mr. Orr intends to hire personnel in the future, when sufficiently capitalized, who would have the experience required to manage our company, such management is not anticipated until the occurrence of future financing. Since this offering will not sufficiently capitalize our company, future offerings will be necessary to satisfy capital needs. Until such a future offering occurs, and until such management is in place, we are reliant upon Mr. Orr to make the appropriate management decisions. Mr. Orr is involved with other businesses and there can be no assurance that he will continue to provide services to us. Mr. Orr’s limited time devotion to ZRHO could have the effect on our operations of preventing us from being a successful business operation, which ultimately could cause a loss of your investment. As compared to many other public companies, we do not have the depth of managerial or technical personnel. Mr. Orr is currently and may continue to be involved with other businesses. Mr. Orr is an installation manager for Bluemedia, Inc.This business is Mr. Orr’s main source of income and therefore requires approximately 30 to 40 hours a week of his time.Mr. Orr is planning on allocating an additional 15 to 20 hours a week to the affairs of ZRHO Beverages; however there can be no assurance that he will continue to provide services to us. Mr. Orr will devote only a portion of his time to our activities. Since one stockholder, upon completion of the offering will beneficially own the majority of our outstanding common shares, a single stockholder will retain the ability to control our management and the outcome of corporate actions requiring stockholder approval notwithstanding the overall opposition of our other stockholders. Mr. Orr will own approximately 66.15% of our outstanding common shares after completion of the offering. As a consequence of her stock ownership position, Mr. Orr will retain the ability to elect a majority of our board of directors, and thereby control our management. These individuals will also initially have the ability to control the outcome of corporate actions requiring stockholder approval, including mergers and other changes of corporate control, going private transactions, and other extraordinary transactions. The concentration of ownership by these individuals could discourage investments in our company, which might have a negative impact on the value of our securities. 9 As a result of Mr. Orr’ majority ownership of our outstanding common shares after this offering, Mr. Orr will control our issuance of securities after the offering. As a consequence of Mr. Orr’s controlling stock ownership position, acting alone he will be able to authorize the issuance of securities that may dilute and otherwise adversely affect the rights of purchasers of stock in the offering, including preferred stock. Additionally, he may authorize the issuance of these securities to anyone he wishes, including himself and his affiliates at prices significantly less than the offering price. Upon completion of this offering there will be an immediate and substantial dilution to purchasers of our securities. The public offering price of the Shares may be substantially higher than the net tangible book value of our Common Stock. Investors participating in this offering will incur immediate and substantial dilution in theper sharenet tangible book value of their investment from the initial public offering price of approximately $0.08 or 80% in the offering. See “Dilution” We will require additional financing in order to implement our business plan. In the event we are unable to acquire additional financing, we may not be able to implement our business plan resulting in a loss of revenues and ultimately the loss of your investment. Due to our start-up nature, we will have to incur the costs of website and marketing development, and all other associated fees. To fully implement our business plan we will require additional funding. This offering, if successful, will enable us to commence making investment purchases, and will not assist us in further developing our initial business operations. Additionally, since the net offering proceeds have been earmarked for website development, accounting, legal, and minimal working capital, we will not be capitalized sufficiently to hire or pay employees. Following this offering we will need to raise additional funds to expand our operations. We plan to raise additional funds through private placements, registered offerings, debt financing or other sources to maintain and expand our operations. Adequate funds for this purpose on terms favorable to us may not be available, and if available, on terms significantly more adverse to us than are manageable. Without new funding, we may be only partially successful or completely unsuccessful in implementing our business plan, and our stockholders will lose part or all of their investment. There is no current public market for our common stock; therefore you may be unable to sell your securities at any time, for any reason, and at any price, resulting in a loss of your investment. As of the date of this prospectus, there is no public market for our common stock. Although we plan, in the future, to contact an authorized OTC market maker for sponsorship of our securities on an Over-the-Counter market, there can be no assurance that our attempts to do so will be successful. Furthermore, if our securities are not quoted on an OTC market, or elsewhere, there can be no assurance that a market will develop for the common stock or that a market in the common stock will be maintained. As a result of the foregoing, investors may be unable to liquidate their investment for any reason. We have not originated contact with a market maker at this time, and do not plan on doing so until completion of this offering. 10 Because our common stock is deemed a low-priced “Penny” stock, an investment in our common stock should be considered high risk and subject to marketability restrictions. Since our common stock is a penny stock, as defined in Rule 3a51-1 under the Securities Exchange Act, it will be more difficult for investors to liquidate their investment even if and when a market develops for the common stock. Until the trading price of the common stock rises above $5.00 per share, if ever, trading in the common stock is subject to the penny stock rules of the Securities Exchange Act specified in rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting transactions in any penny stock, to: · Deliver to the customer, and obtain a written receipt for, a disclosure document; · Disclose certain price information about the stock; · Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer; · Send monthly statements to customers with market and price information about the penny stock; and · In some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer with information specified in the rules. Consequently, the penny stock rules may restrict the ability or willingness of broker-dealers to sell the common stock and may affect the ability of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities. These additional procedures could also limit our ability to raise additional capital in the future. About this Prospectus You should only rely on the information contained in this prospectus. We have not authorized anyone to provide information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, shares of our common stock on a “direct public offering,” “all or nothing,” basis only in jurisdictions where offers and sales are permitted. Offers and sales of our securities are only permitted in those jurisdictions where statutes exist, “blue sky statutes” allowing for such offers and sales. Available Information We are not subject to the informational requirements of the Securities Exchange Act of 1934, as amended. Once our securities are registered under the Securities Act of 1933, we will file reports and other information with the Securities and Exchange Commission. Once our registration statement becomes effective we shall file supplementary and periodic information, documents and reports that are required under section 13(a) of the Exchange Act, as amended. All of our reports will be able to be reviewed through the SEC’s Electronic Data Gathering Analysis and Retrieval System (EDGAR) which is publicly available through the SEC’s website (http://www.sec.gov). 11 We intend to furnish to our stockholders annual reports containing financial statements audited by our independent certified public accountants and quarterly reports containing reviewed unaudited interim financial statements for the first three-quarters of each fiscal year. You may contact the Securities and Exchange Commission at 1-(800) SEC-0330 or you may read and copy any reports, statements or other information that ZRHO Beverages, Inc., files with the Securities and Exchange Commission at the Securities and Exchange Commission’s public reference room at the following location: Public Reference Room 100 F. Street, N.E. Washington, D.C. 20549-0405 Telephone 1(800)-SEC-0330 We have filed with the Commission a registration statement on Form S-1 under the Securities Act of 1933, as amended with respect to the securities offered in this prospectus. This prospectus does not contain all the information set forth in the registration statement, certain parts of which are omitted in accordance with the rules and regulations of the SEC. For further information, with respect to us and the common stock offered in this prospectus, reference is made to such registration statement, exhibits and schedules. A copy of the registration statement, including the exhibits and schedules can be reviewed through EDGAR. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Some of the statements under “Prospectus Summary”, “Risk Factors”, “Plan of Operation”, “Our Business”, and elsewhere in this prospectus constitute forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimated”, “predicts”, “potential”, or “continue” or the negative of such terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. These factors include, among other things, those listed under “Risk Factors” and elsewhere in this prospectus. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We undertake no obligation to update or revise any of the forward-looking statements after the date of this prospectus to conform forward-looking statements to actual results, except as required by the Federal securities laws or as required to meet our obligations set forth in the undertakings to this registration statement. 12 CAPITALIZATION The following table sets forth our capitalization at October 31, 2014, after giving effect to and as adjusted to give effect to the sale of the 550,000 common shares offered in this prospectus. As of October 31, 2014 (Audited) AS ADJUSTED For the Offering Proceeds Total Liabilities: $
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Name: Commission Regulation (EEC) No 3234/92 of 5 November 1992 laying down detailed rules for the application of the specific aid arrangements for the continued cultivation of vines for the production of quality wines psr in the Canary islands
Type: Regulation
Subject Matter: agricultural policy; regions of EU Member States; agricultural structures and production; beverages and sugar; cooperation policy
Date Published: nan
Avis juridique important|31992R3234Commission Regulation (EEC) No 3234/92 of 5 November 1992 laying down detailed rules for the application of the specific aid arrangements for the continued cultivation of vines for the production of quality wines psr in the Canary islands Official Journal L 321 , 06/11/1992 P. 0016 - 0017 Finnish special edition: Chapter 3 Volume 45 P. 0170 Swedish special edition: Chapter 3 Volume 45 P. 0170 COMMISSION REGULATION (EEC) No 3234/92 of 5 November 1992 laying down detailed rules for the application of the specific aid arrangements for the continued cultivation of vines for the production of quality wines psr in the Canary islandsTHE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Economic Community, Having regard to Council Regulation (EEC) No 1601/92 of 15 June 1992 concerning specific measures for the Canary Islands with regard to certain agricultural products (1), and in particular Article 19 (3) thereof, Having regard to Council Regulation (EEC) No 1676/85 of 11 June 1985 on the value of the unit of account and the conversion rates to be applied for the purposes of the common agricultural policy (2), as last amended by Regulation (EEC) No 2205/90 (3), and in particular Article 12 thereof, Whereas Article 19 of Regulation (EEC) No 1601/92 introduces a system of aid per hectare for the continued cultivation of vines for the production of quality wines psr in the traditional production areas in the Canary Islands; whereas provision should be made for the detailed rules necessary to administer that scheme and for verifying compliance with the conditions laid down by the Council; whereas the detailed rules must cover the information which is to appear in aid applications to permit in particular areas under such vines to be identified and checks to be carried out; Whereas the measures provided for in Regulation (EEC) No 1601/92 apply from 1 July 1992; whereas provision should be made for the application of detailed rules laid down in this Regulation to apply from that date; Whereas the measures provided for in this Regulation are in accordance with the opinion of the Management Committee for Wine, HAS ADOPTED THIS REGULATION: Article 1 The flat-rate aid per hectare for the continued cultivation of vines for the production of quality wine psr provided for in Article 19 of Regulation (EEC) No 1601/92 shall be granted on application by wine-growers or groups or organizations of wine-growers in respect of areas under vine varieties suitable for the production of quality wines psr which: (a) have been fully cultivated and harvested and are subjected to all normal cultivation work; (b) have been covered by harvest and production declarations as provided for in Commission Regulation (EEC) No 3929/87 (4); (c) comply with the maximum yields laid down by the Member State as referred to in Article 19 (1) of Regulation (EEC) No 1601/92. Article 2 1. Applications for aid per hectare shall be lodged by the party concerned with the competent authority during the period laid down by the latter and by no later than 15 May of each year in respect of the following wine year. However, for the 1992/93 wine year, applications shall be submitted by 15 January 1993 at the latest. 2. Aid applications shall state at least the following: (a) the name, first name and address of the wine-grower or group or organization of winegrowers; (b) the areas cultivated for the production of quality wines psr in hectares and areas with the land register reference to those areas or a reference recognized as equivalent by the body responsible for verifying such areas; (c) the grape variety used; (d) the estimated production. Article 3 After ascertaining that the harvest has taken place and determining the yields of the areas concerned, the Member State shall pay the aid before 1 April of the wine year in respect of which the aid is granted. Article 4 The Member State in question shall notify the Commission by 30 April of the areas which have been covered by aid applications and in respect of which aid has actually been paid. Article 5 The rate to be used for converting the flat-rate aid per hectare provided for in Article 1 into currency shall be the agricultural conversion rate applying on the first day of the wine year in respect of which the aid is paid. Article 6 1. Spain shall verify the accuracy of the information provided in support of aid applications by enquiries and on-the-spot inspections. 2. Where aid has been paid unduly, the competent authorities shall recover the amounts paid plus interest accruing from the date of payment of the aid until its actual recovery. The rate of interest applying shall be that in force for similar recovery operations under national law. 3. Aid recovered and any interest due shall be paid to the paying agencies or bodies and deducted by the latter from expenditure defrayed by the European Guidance and Guarantee Fund in proportion to the Community contribution. Article 7 This Regulation shall enter into force on the day of its publication in the Official Journal of the European Communities. It shall apply from 1 July 1992. This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 5 November 1992. For the Commission Ray MAC SHARRY Member of the Commission (1) OJ No L 173, 27. 6. 1992, p. 13. (2) OJ No L 164, 24. 6. 1985, p. 1. (3) OJ No L 201, 31. 7. 1990, p. 9. (4) OJ No L 369, 29. 12. 1987, p. 59. |
Exhibit 10.1
CONFIDENTIAL SEPARATION AND RELEASE AGREEMENT
This Confidential Separation and Release Agreement (“Agreement”) is made and
entered into by and between William Acevedo (“Employee”) on the one hand, Zale
Delaware, Inc. (“Zale” or the “Company”) on the other, hereinafter collectively
referred to as the “Parties.”
RECITALS
WHEREAS, Employee has resigned as an employee of Zale;
WHEREAS, Employee’s last day of employment was January 11, 2010 (the “Separation
Date”);
NOW, THEREFORE, in consideration of the Recitals and the mutual promises,
covenants, and agreements set forth herein, the receipt and sufficiency of which
are hereby acknowledged, the Parties covenant and agree as follows:
1. RELEASE OF CLAIMS
(a) Employee, individually and on behalf of Employee’s attorneys, heirs,
assigns, successors, executors, and administrators, hereby GENERALLY RELEASES,
ACQUITS, AND DISCHARGES Zale and its respective current and former parent
(including, but not limited to Zale Corporation), subsidiary, affiliated, and
related corporations, firms, associations, partnerships, and entities, their
successors and assigns, and the current and former owners, shareholders,
directors, officers, employees, agents, attorneys, representatives, and insurers
of said corporations, firms, associations, partnerships, and entities, and their
guardians, successors, assigns, heirs, executors, and administrators
(hereinafter collectively referred to as the “Releasees” and individually as a
Releasee”) from and against any and all claims, complaints, grievances,
liabilities, obligations, promises, agreements, damages, causes of action,
rights, debts, demands, controversies, costs, losses, and expenses (including
attorneys’ fees and expenses) whatsoever, under any municipal, local, state, or
federal law, common or statutory -- including, but in no way limited to, claims
arising under the United States and Texas Constitutions, Age Discrimination in
Employment Act of 1967 (“ADEA”), as amended, Title VII of the Civil Rights Act
of 1964, as amended (including the Civil Rights Act of 1991), the Americans with
Disabilities Act of 1990 as amended by the Americans with Disabilities Amendment
Act. the Employee Retirement Income Security Act of 1974, (“ERISA”), as
amended, the Labor Management Relations Act, as amended, the Occupational Safety
and Health Act, as amended, the Racketeer Influenced and Corrupt Organizations
Act (RICO), as amended, the Sarbanes Oxley Act of 2002, the Sabine Pilot
Doctrine, the American Jobs Creation Act of 2004,the Texas Commission on Human
Rights Act, the Texas Pay Day Act, the Worker Adjustment and Retraining
Notification Act (“WARN”), the Family and Medical Leave Act (“FMLA”), the
Consolidated Omnibus Budget Reconciliation Act (“COBRA”), claims of retaliatory
discharge under the Texas Workers’ Compensation Act , or any other claims,
including claims in equity or common law claims -- for any actions or omissions
whatsoever, whether known or unknown and whether connected with the employment
relationship between Employee and Zale, the cessation of Employee’s employment
with Zale which existed or may have existed prior to, or contemporaneously with,
the execution of this Agreement (collectively, the “Released
Claim(s)”). Employee agrees that this Agreement includes a release of any and
all negligence claims, contractual claims (express and implied), wrongful
discharge claims, fraud, misrepresentation, and claims of discrimination,
harassment, or retaliation of every possible kind.
(b) Employee agrees not to assert any claims released above in a class or
collective action and further agrees not to become, and promises not to consent
to become, a member (including a representative class plaintiff) of any class in
a case brought in court or in arbitration in which claims are asserted against
any of the Releasees that are related in any way to Employee’s employment with
or termination from Company and/or that involve events which have occurred as of
the Effective Date of this Release. If Employee, without Employee’s prior
knowledge and consent, is made a member of a class in any proceeding, whether in
court or in arbitration, Employee will opt out of the class at the first
opportunity afforded to him after learning of Employee’s inclusion. In this
regard, Employee agrees that Employee will execute, without objection or delay,
an “opt-out” form presented to him either by the court or the arbitral forum in
which such proceeding is pending or by counsel for the Company.
(c) Employee understands that nothing in this Agreement is intended to
interfere with or deter Employee’s right to challenge the waiver of an ADEA
claim or state law age discrimination claim or the filing of an ADEA charge or
ADEA complaint or state law age discrimination complaint or charge with the EEOC
or any state discrimination agency or commission or to participate in any
investigation or proceeding conducted by those agencies. Further, Employee
understands that nothing in this Agreement would require Employee to tender back
the money received under this Agreement if Employee seeks to challenge the
validity of the ADEA or state law age discrimination waiver. Further, nothing
in this Agreement is intended to require the payment of damages, attorneys’ fees
or costs to Zale should Employee challenge the waiver of an ADEA or state law
age discrimination claim or file an ADEA or state law age discrimination suit
except as authorized by federal or state law. Notwithstanding the foregoing two
sentences, as provided above Employee also waives any right to recover from any
Releasee in a civil suit brought by any governmental agency or any other
individual on his behalf with respect to any Released Claim.
(d) This release excludes any claim which cannot be released by private
agreement, such as workers’ compensation claims, claims after the Effective Date
of this Agreement, and the right to file administrative charges with certain
government agencies. Nothing in this Agreement shall be construed to prohibit
Employee from filing a charge with or participating in any investigation or
proceeding conducted by the Equal Employment Opportunity Commission, National
Labor Relations Board, or a comparable state or local agency. Notwithstanding
the previous two paragraphs, Employee agrees to waive any right to recover
monetary damages in any charge, complaint, or lawsuit against Zale filed by
Employee or by anyone else on Employee’s behalf.
(e) This general release covers both claims that Employee knows about and
those that Employee may not know about, except that it does not waive any rights
or claims, including claims under the ADEA, that may arise after the Effective
Date of this Agreement (as defined below). Employee further represents and
warrants that: (i) Employee has been fully and properly paid for all hours
worked, (ii) Employee has received all leave to which Employee is entitled in
accordance with applicable law; and (iii) Employee has not suffered any on the
job injury for which Employee has not already filed a claim. Employee further
acknowledges, agrees and hereby stipulates that: (i) during Employee’s
employment with the Company, Employee was allowed to take all leave and afforded
all other rights to which Employee was entitled under the Family and Medical
Leave Act (“FMLA”); and (ii) the Company has not in any way interfered with,
restrained or denied the exercise of (or attempt to exercise) any FMLA rights,
nor terminated or otherwise discriminated against Employee for exercising (or
attempting to exercise) any such rights.
2. Employee acknowledges and agrees that Employee will keep the
terms, amount, and facts of, and any discussions leading up to, this Agreement
STRICTLY AND COMPLETELY CONFIDENTIAL, and that Employee will not communicate or
otherwise disclose to any employee of Zale (past, present, or future), or to any
member of the general public, the terms, amounts, copies, or fact of this
Agreement, except as may be required by law or compulsory process; provided,
however, that Employee may make such disclosures to Employee’s tax/financial
advisors or legal counsel as long as they agree to keep the information
confidential. If asked about any of such matters, Employee’s response shall be
that Employee may not discuss any of such matters. In the event of a breach of
the confidentiality provisions set forth in this paragraph of the Agreement by
Employee, Zale may suspend any payments due under this Agreement pending the
outcome of litigation and/or arbitration regarding such claimed breach of this
Agreement by Employee. The Parties agree that this paragraph is a material
inducement to Zale entering into this Agreement. Additionally, the Parties
agree that a breach of this paragraph by Employee will cause Zale irreparable
harm and that Zale may enforce this paragraph without posting a bond.
3. Employee expressly acknowledges, agrees, and covenants that
Employee will not make any public or private statements, comments, or
communications in any form, oral, written, or electronic, which in any way could
constitute libel, slander, or disparagement of Zale or any other Releasee or
which may be considered to be derogatory or detrimental to the name or business
reputation of Zale or any other Releasee; provided, however, that the terms of
this paragraph shall not apply to communications between Employee and Employee’s
spouse, clergy, or attorneys, which are subject to a claim of privilege existing
under common law, statute, or rule of procedure. The Parties agree that this
provision is a material inducement to Zale entering into this
Agreement. Additionally, the Parties agree that a breach of this paragraph by
Employee will cause Zale irreparable harm and that Zale may enforce this
paragraph without posting a bond.
4. In exchange for the general release set forth in this
Agreement and other valuable consideration given and received by the Parties,
(a) $337,500.00, less all applicable taxes and withholding, representing nine
(9) months (the “Severance Period”) of Employee’s final base salary, which
constitutes Employee’s “Severance Pay.” This Severance Pay is payable in one
lump sum to be paid on the later of February 15, 2010, or the Effective Date (as
defined in Section 15 below) of this Agreement.
(b) During the Severance Period, Employee may elect to continue medical and
other health benefits in effect as of the separation date by completing and
submitting the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) election
forms to the Zale COBRA Administrator, provided that Employee is in compliance
with this Agreement. As further consideration for the release provided in this
Agreement, during the Severance Period, Zale will provide supplemental payments
to the COBRA carrier such that Employee’s premiums for coverage will be equal to
the amount that the then current Zale employees pay for the same level of
coverage and such premiums will be submitted by Employee directly to the Zale
COBRA Administrator. Thereafter, Employee will have the right to elect to
continue such medical benefits for the remainder of the COBRA eligibility period
by paying the full cost of such coverage to the Zale COBRA
Administrator. Employee will be provided with a notice of the interaction of
the extended medical insurance benefits under this Agreement and Employee’s
COBRA rights following the Separation Date. The provisions of this paragraph
4(b) will not prohibit Zale from changing the terms of any medical benefit
programs, provided that any such changes apply to all employees of Zale (e.g.,
Zale may switch premium rates, insurance carriers or preferred provider
organizations or change coverage). Employee acknowledges that the continuation
and/or contribution of benefits described in this paragraph does not affect the
date on which the Employee’s COBRA period begins, and that the period that
Employee’s COBRA period begins/began on the Separation Date. In other words,
this continuation of benefits shall count against Employee’s continuation of
coverage period required under COBRA.
(c) Employee acknowledges and agrees that the Severance Pay referenced in
paragraph 4(a) constitutes new and adequate consideration to support the release
set forth in this paragraph 1 of this Agreement and fully compensates Employee
for the claims Employee is releasing. For purposes of this Agreement,
“Consideration” means something of value to which Employee is not already
entitled.
(d) Employee agrees to immediately return to Zale employee identification
badge, keys, and all Company-owned equipment and documents (paper and
electronic) and will not maintain copies of the same in any form, whether
tangible or intangible.
(e) Employee agrees to reconcile Employee’s outstanding expenses and advances
with Zale and to pay Zale any outstanding balance owed after all agreed offsets
are taken within ten (10) days of the Effective Date of this Agreement (as
defined below); provided however, that, by signature to this Agreement, Employee
authorizes Zale to make any deductions from Employee’s compensation, including
the Consideration, that are deemed necessary by Zale to comply with state or
federal laws on withholdings, to compensate Zale for property damaged or
property not returned by Employee, to recover advances paid to Employee, and/or
to pay Zale for expenses owed by Employee to the Company.
(f) Employee agrees that during the applicable Severance Period, Employee will
not, on his own behalf or on behalf of any other person, partnership,
association, corporation, or any other entity, (a) directly or indirectly, or
through a third person hire, cause to be hired or solicit any employees of the
Company or its Affiliates, or (b) in any manner attempt to influence or induce
any employee of the Company or its Affiliates to leave the employment of the
Company or its Affiliates, nor will he use or disclose to any person,
partnership, association, corporation or other entity any information concerning
the names and addresses of any employees of the Company or its Affiliates. The
restrictions contained in this subpart (f) will be tolled on a day-for-day basis
for each day during which Employee participates in any activity in violation of
such restriction. The Parties agree that the restrictions in this subpart (f) on
solicitation of employees are supported by good and valuable consideration. The
Parties further agree that any invalidity or unenforceability of any one or more
of the restrictions on solicitation will not render invalid or unenforceable any
remaining restrictions on solicitation. Additionally, should an arbitrator or a
court of competent jurisdiction determine that the scope of any provision of
this subpart (f) is too broad to be enforced as written, the Parties intend that
the arbitrator or court reform the provision to such narrower scope as it
determines to be reasonable and enforceable.
(g) Employee agrees that during the applicable Severance Period, he will not,
directly or indirectly, as an employee, consultant, or otherwise, compete with
the Company by providing services related to retail or non-retail sales of
jewelry to any other person, partnership, association, corporation or any other
entity that is in a “Competing Business” with the Company. As used herein,
“Competing Business” is any business that, in whole or material part, in the
United States, Canada, and/or Puerto Rico (a) engages in the retail sales of
jewelry, including but not limited to, specialty jewelry retailers and other
retailers having jewelry divisions or departments, or (b) operates as a vendor
of jewelry, including but not limited to, as wholesaler, manufacturer, or direct
importer of jewelry. The restrictions contained in this subpart (g) will be
tolled on a day-for-day basis for each day during which Employee participates in
any activity in violation of such restriction. The Parties agree that the
restrictions in this subpart (g) on competition are supported by good and
valuable consideration. The Parties further agree that any invalidity or
unenforceability of any one or more of the restrictions on competition will not
render invalid or unenforceable any remaining restrictions on
solicitation. Additionally, should an arbitrator or a court of competent
jurisdiction determine that the scope of any provision of this subpart (g) is
too broad to be enforced as written, the Parties intend that the arbitrator or
court reform the provision to such narrower scope as it determines to be
reasonable and enforceable.
5. Employee agrees to cooperate fully with Zale, specifically
including any attorney or other consultant retained by Zale, in connection with
any pending or future litigation, arbitration, business, or investigatory
matter. The Parties acknowledge and agree that such cooperation may include,
but shall in no way be limited to, Employee being available for interview by
Zale, or any attorney or other consultant retained by Zale, and providing to
Zale any documents in Employee’s possession or under Employee’s control. Zale
agrees to provide Employee with reasonable notice of the need for assistance
when feasible.
6. Employee acknowledges that during Employee’s employment,
Employee has had access to and become familiar with various trade secrets and
proprietary and confidential information of Zale, its subsidiaries and
affiliates, including, but not limited to: identities, responsibilities, contact
information, performance and/or compensation levels of employees, costs and
methods of doing business, systems, processes, computer hardware and software,
compilations of information, third-party IT service providers and other Company
vendors, records, sales reports, sales procedures, financial information,
customer requirements, pricing techniques, customer lists, price lists,
information about past, present, pending and/or planned Company transactions,
and other confidential information (collectively, referred to as “Trade
Secrets”) which are owned by Zale, its subsidiaries and/or affiliates and
regularly used in the operation of its business, and as to which Zale, its
subsidiaries and/or affiliates take precautions to prevent dissemination to
persons other than certain directors, officers and employees. Employee
acknowledges and agrees that the Trade Secrets (1) are secret and not known in
the industry; (2) give the Company or its subsidiaries and/or affiliates an
advantage over competitors who do not know or use the Trade Secrets; (3) are of
such value and nature as to make it reasonable and necessary to protect and
preserve the confidentiality and secrecy of the Trade Secrets; and (4) are
valuable and special and unique assets of Zale or its subsidiaries and/or
affiliates, the disclosure of which could cause substantial injury and loss of
profits and goodwill to Zale or its subsidiaries and/or affiliates.
(a) Regardless of whether Employee signs this Agreement, Employee shall
not use in any way or disclose any of the Trade Secrets, directly or indirectly,
at any time in the future. All files, records, documents, information, data,
and similar items relating to the business of Zale, whether prepared by Employee
or otherwise coming into Employee’s possession, will remain the exclusive
property of Zale, and in any event must be promptly delivered to Zale upon the
Separation Date.
(b) Employee agrees that upon receipt of any formal or informal request,
requirement, subpoena, process, or other action seeking Employee’s direct or
indirect disclosure or production of any Trade Secrets to any entity, agency,
tribunal, or person, or in connection with a judicial, administrative or other
proceeding, Employee shall promptly and timely notify Zale, and promptly and
timely provide a description and, if applicable, hand deliver a copy of such
request, requirement, subpoena, process or other action to Zale. In all such
instances, Employee irrevocably nominates and appoints Zale (including any
attorney retained by Zale) as Employee’s true and lawful attorney-in-fact to act
in Employee’s name, place and stead to perform any act that Employee might
perform to defend and protect against any disclosure of any Trade Secret. For
purposes of this paragraph 6, this Agreement shall be considered a Trade Secret.
(c) Employee agrees and acknowledges that the agreements in this paragraph are
in addition to, and do not limit, Employee’s obligations and responsibilities
under and Employee Handbook, Code of Business Conduct and Ethics or other
similar document with whose terms Employee previously agreed to abide.
7. By entering into this Agreement, the Company does not admit,
and specifically denies, any violation of any contract (express or implied),
local, state, or federal law, common or statutory. Neither the execution of
this Agreement nor compliance with its terms, nor the consideration provided for
herein shall constitute or be construed as an admission by Zale (or any of its
agents, representatives, attorneys, or employers) of any fault, wrongdoing, or
liability whatsoever, and Employee acknowledges and understands that all such
liability is expressly denied. This Agreement has been entered into in release
and compromise of claims as stated herein and to avoid the expense and burden of
dispute resolution.
8. If any provision or term of this Agreement is held to be
illegal, invalid, or unenforceable, such provision or term shall be fully
severable; this Agreement shall be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised part of this Agreement;
and the remaining provisions of this 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. Furthermore, in lieu of each
such illegal, invalid, or unenforceable provision or term there shall be added
automatically as a part of this Agreement another provision or term as similar
to the illegal, invalid, or unenforceable provision as may be possible and that
is legal, valid, and enforceable.
9. This Agreement constitutes the entire Agreement of the
Parties regarding the subject matter hereof, and supersedes all prior and
contemporaneous negotiations and agreements, oral or written, express or
implied, regarding the subject hereof, save for the Zale Code of Business
Conduct and Ethics, which survives Employee’s separation and which is
incorporated herein by reference in full for all purposes as though restated in
this Agreement. All prior and contemporaneous negotiations and agreements
regarding the subject hereof are deemed incorporated and merged into this
Agreement and are deemed to have been abandoned if not so incorporated. No
representations, oral or written, are being relied upon by any party in
executing this Agreement other than the express representations of this
Agreement. This Agreement cannot be changed or terminated without the express
written consent of the Parties. The rights under this Agreement may not be
assigned by Employee, unless Zale consents in writing to said
assignment. Employee represents that Employee has not assigned any of the
claims related to the matters set forth herein.
10. This Agreement shall be exclusively governed by and
construed in accordance with the laws of the State of Texas without regard to
the conflicts of laws provisions of Texas law, or of any other jurisdiction,
except where preempted by federal law. The Parties hereby agree that any action
to enforce an arbitrator’s award pursuant to paragraph 11 shall be filed
exclusively in a state or federal court of competent jurisdiction in Dallas
County, Texas and the Parties hereby consent to the exclusive jurisdiction of
such court; provided, however, that nothing herein shall preclude the Parties’
rights to conduct collection activities in the courts of any jurisdiction with
respect to the order or judgment entered upon the arbitrator’s award by the
Texas court.
11. Subject to the terms and any exceptions provided in this
Agreement, the Parties each waive the right to a jury trial and waive the right
to adjudicate their disputes arising under this Agreement outside the
arbitration forum provided for in this Agreement. The arbitration shall be
administered by a single neutral arbitrator admitted to practice law in Texas
for a minimum of ten (10) years and agreed upon by both Parties. Any such
arbitration proceeding shall take place in Dallas County, Texas and shall be
administered by the American Arbitration Association (“AAA”)-Dallas office in
accordance with its then-current applicable rules and procedures, including the
National Rules for the Resolution of Employment Disputes of the AAA. The
arbitrator will 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 will be final and binding. This provision
can be enforced under the Federal Arbitration Act.
(a) As the sole exception to the exclusive and binding nature of the
arbitration commitment set forth above, the Employee and the Company agree that
the Company shall have the right to initiate an action in a court of competent
jurisdiction to request temporary, preliminary and permanent injunctive or other
equitable relief, including specific performance, to enforce the terms of
paragraphs 2, 3, 4(f), 4(g), 5, 6, and 11 of this Agreement without the
necessity of proving inadequacy of legal remedies or irreparable harm or posting
bond. Nothing herein shall prevent the Company from pursuing the same
injunctive and equitable relief in the arbitration proceedings. Moreover,
nothing in this paragraph should be construed to constitute a waiver of the
Parties' rights and obligations to arbitrate regarding matters other than those
specifically addressed in this paragraph.
(b) Should a court of competent jurisdiction determine that the scope of
the arbitration and related provisions of this Agreement are too broad to be
enforced as written, the Parties intend that the court reform the provision in
question to such narrower scope as it determines to be reasonable and
enforceable, and enforce the Parties’ agreement to arbitrate.
(c) In the event of arbitration under the terms of this Agreement, the
fees charged by AAA and/or the individual arbitrator shall be allocated such
that Employee will not incur any costs other than that which would be incurred
to file a civil action in the courts for the State of Texas or other court with
proper jurisdiction over the dispute. The Parties shall each bear their own
costs and attorneys’ fees incurred in arbitration; provided, however, that
should a party to this Agreement sue in court or bring an arbitration action
against the other party to this Agreement for a breach of any provision of this
Agreement or regarding a dispute arising from the subject matter of this
Agreement, the prevailing party shall, to the extent permitted by law, be
entitled to recover its attorneys’ fees, court costs, arbitration expenses, and
its portion of the fees charged by AAA and/or the individual arbitrator, as
applicable, regardless of which Party initiated the proceedings.
(d) Once the arbitration has commenced, both Zale and Employee shall have
the right to conduct normal civil discovery, the extent and quantity of such
shall be subject to the discretion of the selected arbitrator. The arbitrator
shall have the exclusive authority to resolve any issues relating to the
arbitrability of the dispute or the validity or interpretation of this
arbitration provision, to rule on motions to dismiss and/or motions for summary
judgment applying the standards governing such motions under the Texas Rules of
Civil Procedure, and shall be empowered to award either party any remedy at law
or in equity that the prevailing party would otherwise have been entitled to had
the matter been litigated in court, including attorneys’ fees and costs The
arbitrator shall issue a decision or award in writing, stating the essential
findings of fact and conclusions of law. Judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction. Costs shall be
allocated such that Employee will not incur any costs other than that which
would be incurred to file a civil action in the courts for the State of Texas or
other court with proper jurisdiction over the dispute.
(e) The Parties further agree that Zale may suspend any payments due under
this Agreement pending the outcome of litigation and/or arbitration regarding a
breach of any provision of this Agreement or regarding a dispute arising from or
related to the subject matter of this Agreement.
12. One or more waivers of a breach of any covenant, term, or
provision of this Agreement by any party shall not be construed as a waiver of a
subsequent breach of the same covenant, term, or provision, nor shall it be
considered a waiver of any other then existing or subsequent breach of a
different covenant, term, or provision.
13. Important Notice Regarding Release of Claims Under the Age
Discrimination in Employment Act of 1967 (“ADEA”): Without in any way limiting
the generality or scope of the Release of Claims set forth in paragraph 1,
Employee hereby acknowledges that Employee knowingly and voluntarily enters into
this Agreement with the purpose of waiving and releasing any age discrimination
claims he may have under the Age Discrimination in Employment Act of 1967
("ADEA"), and acknowledges and agrees that:
(1) This Agreement is written in a manner in which Employee fully understands;
(2) Employee specifically waives any rights or claims arising under the ADEA;
(3) This Agreement does not waive rights or claims under the ADEA that may
arise after the date this Agreement is executed;
(4) The rights and claims waived in this Agreement are in exchange for
consideration over and above anything to which Employee is already entitled
(5) Employee has been advised in writing to consult with an attorney prior to
executing this Agreement, and has, in fact had an opportunity to do so;
(6) Employee has been given a period of up to at least twenty-one (21) days, if
desired, within which to consider this Agreement;
(7) Once executed, the Employee has a period of seven (7) days within
which he can revoke this Agreement, and the Agreement shall not be effective
until the seven-day revocation period has been exhausted. Thus, the Effective
Date of this Agreement is the eighth day after this Agreement has been executed,
provided it was not revoked. The last day on which this Agreement can be
revoked is called the "Last Revocation Day." If Employee chooses to revoke this
Agreement, he must do so in writing, and the revocation must be addressed and
delivered to Theo Killion, President, at 901 W. Walnut Hill Lane, Irving Texas
75038 before the expiration of the seven (7) day revocation period. If Employee
delivers the revocation by hand or facsimile, the revocation will be considered
timely if delivered or faxed to the Company’s Human Resources Department at the
above address and/or fax number within 7 days of his execution of this
Agreement. If he delivers the revocation by mail, the revocation will be
considered timely if it is mailed to the Company’s Human Resources Department at
the above address and postmarked within seven (7) days of Employee’s execution
of this Agreement.
(8) Any changes made to this Agreement, whether material or immaterial, will
not restart the running of this 21-day period.
14. The Parties represent that they have the sole and exclusive
right and full capacity to execute this Agreement.
15. The “Effective Date” of this Agreement is the date that is
eight (8) days following the date on which Employee signs this Agreement, so
long as Employee has not revoked acceptance of this Agreement before such date.
16. By executing this Agreement, Employee also acknowledges that
Employee: (a) is not relying upon any statements, understandings,
representations, expectations, or agreements other than those expressly set
forth in this Agreement; (b) has made Employee’s own investigation of the facts
and is relying solely upon Employee’s own knowledge and the advice of Employee’s
own legal counsel; and (c) knowingly waives any claim that this Agreement was
induced by any misrepresentation or nondisclosure and any right to rescind or
avoid this Agreement based upon presently existing facts, known or unknown. The
Parties stipulate that each Party is relying upon these representations and
warranties in entering into this Agreement. These representations and
warranties shall survive the execution of this Agreement.
17. All terms and provisions of this Agreement, and the drafting
of this Agreement, have been negotiated by the Parties at arm’s length and to
mutual agreement, with consideration by and participation of each, and no party
shall be deemed the scrivener of this Agreement.
PLEASE READ CAREFULLY. THIS CONFIDENTIAL SEPARATION AGREEMENT AND RELEASE
INCLUDES THE RELEASE OF ALL CLAIMS AGAINST THE COMPANY, KNOWN OR UNKNOWN, THAT
MAY HAVE OCCURRED AS OF THE DATE OF THIS AGREEMENT. THIS AGREEMENT ALSO CONTAINS
A PROVISION REQUIRING THE PARTIES TO RESOLVE ANY DISPUTES BY ARBITRATION.
The Parties have signed this Agreement on the dates written by the signatures
below, to be effective on the Effective Date. Notwithstanding any other
provision in this Agreement, if Employee does not sign and deliver this
Agreement to Theo Killion at 901 W. Walnut Hill Lane, Irving, Texas 75038 on or
before 21 days following Employee’s receipt of this Agreement, then this
Agreement will be null and void, and Employee will not be entitled to the
Consideration described in this Agreement.
EXECUTED in Jersey City, NJ on this 05 day of February, 2010
EMPLOYEE
/s/ William Acevedo
William Acevedo
EXECUTED in Irving, Texas on this 8th day of February, 2010
ZALE DELAWARE, INC.
By:
/s/ Theo Killion
Theo Killion
Its:
President
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Law Department The Lincoln National Life Insurance Company 350 Church Street Hartford, Connecticut Scott C. Durocher Counsel Phone: 860-466-1222 [email protected] January 25, 2012 U.S. Securities and Exchange Commission treet, NE Washington DC 20549 Re:The Lincoln National Life Insurance Company Lincoln Life Variable Annuity Account N (File No. 811-08517) CIK No. 0001048606 Lincoln InvestmentSolutionsSM Variable Annuity (File No. 333-172328) SEC Accession No. 0000726865-11-000981 Request for Withdrawal of Post-Effective Amendment No. 2 Pursuant to Rule 477 Dear Sir or Madam: Pursuant to Rule 477(a) of the Securities Act of 1933, as amended (the “1933 Act”), The Lincoln National Life Insurance Company (the “Company”) and Lincoln Life Variable Annuity Account N (the “Separate Account”) hereby request the withdrawal of the above-referenced post-effective amendment to their registration statement on Form N-4, filed with the Securities and Exchange Commission on December 23, 2011 (the “Amendment”). The Amendment has not yet become effective, but was to become effective on February 21, 2011. No securities were sold in connection with the Amendment. Therefore, the Company and the Separate Account respectfully request that an order be issued granting their request for withdrawal of the Amendment as soon as is practicable. The information that was filed in the Amendment will be re-filed under a different registration statement. If you have any questions regarding this matter, please contact the undersigned at (860) 466-1222. Sincerely, Scott C. Durocher Counsel Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates.
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As filed with the Securities and Exchange Commission on July 29, 2009 1933 Act File No. 333- 1940 Act File No. 811-21088 UNITED STATES SECURITIES
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Exhibit 10.21
[Date]
[Name]
[Address]
Dear [Name]:
TODCO (the “Company”) hereby awards to you effective as of
, 200___ (the “Award Date”)
Deferred Performance Units in accordance with the TODCO
2005 Long Term Incentive Plan (the “Plan”). Each Deferred Performance Unit
represents the opportunity for you to receive one share of TODCO common stock
(“Common Stock”). Your award of Deferred Performance Units is more fully
described in Appendix A, Terms and Conditions of Employee Deferred Performance
Unit Award. This letter and the attached Appendix A shall be referred to and
defined herein as the “Award Letter.”
The exact amount of the shares of Common Stock you may earn will be determined
based upon the Company’s achievement of a performance standard during the
Performance Cycle as described in Appendix A. Your Deferred Performance Unit
Award will become Earned Shares on the Determination Date and will be issued in
Common Stock thereafter, or in certain circumstances upon a Change in Control in
restricted shares of Common Stock, in accordance with Appendix A.
Your Deferred Performance Units are subject to the terms and conditions set
forth in the enclosed Plan, the Prospectus for the Plan, this Award Letter and
any rules and regulations adopted by the Executive Compensation Committee of the
Company’s Board of Directors in accordance with the terms of the Plan.
This Award Letter, the Plan, and any other attachments should be retained in
your files for future reference.
Congratulations on your award.
Very truly yours,
Jan Rask
Enclosures
Appendix A
Terms and Conditions of
Employee Deferred Performance Unit Award
[Date]
The Deferred Performance Unit Award by TODCO (the “Company”) to you effective as
of the Award Date provides for the opportunity for you to receive, if certain
conditions are met, shares of TODCO common stock (“Common Stock”) subject to the
terms and conditions set forth in the TODCO 2005 Long Term Incentive Plan (the
“Plan”), the enclosed Prospectus for the Plan, any rules and regulations adopted
by the Executive Compensation Committee of the Company’s Board of Directors (the
“Committee”), and this Award Letter. Any terms used and not defined in the Award
Letter shall have the meanings set forth in the Plan. In the event there is an
inconsistency between the terms of the Plan and the Award Letter, the terms of
the Plan will prevail.
1. Determination of Earned Shares
(a) Earned Shares. The exact number of shares of Common Stock that will actually
be earned by and awarded to you (the “Earned Shares”) out of the total maximum
number of the Deferred Performance Units awarded to you in this Award Letter
will be based upon the level of achievement by the Company of the performance
standard described below over the three-year period commencing January 1, 2007
(the “Performance Cycle”). The determination by the Committee with respect to
the achievement of such performance standards will be made in the first quarter
of 2010 after all necessary Company and peer information is available. The
specific date on which such determination is formally made and approved by the
Committee is referred to as the “Determination Date.” After the Determination
Date, the Company will notify you of the number of Earned Shares, if any, to be
actually awarded to you. The delivery of the Earned Shares will be made no later
than 2 1/2 months after the Determination Date.
The calculation of Earned Shares shall be based on the Company’s Total
Shareholder Return ranking compared to a defined peer group at the end of the
Performance Cycle as determined by the Committee in its sole discretion. “Total
Shareholder Return” is defined for a given company as the change in share price
plus cumulative dividends paid, assuming dividend reinvestment during the
Performance Cycle, over share price at the beginning of the Performance Cycle of
the applicable company. Earned Shares will be calculated by multiplying the
maximum number of Deferred Performance Units granted by the following
percentages for the percentile rank achieved. For Total Shareholder Return
performance between the percentile ranks noted below, linear interpolation will
be used to calculate the exact number of Earned Shares:
2
Percentile Rank Percentage
100th
100 %
92
91.67
84
83.33
75
75.00
68
66.67
62
58.33
56
50.00
50
40.00
44
30.00
38
20.00
32
10.00
25th or lower
ZERO
The Company’s defined “Peer Group” shall consist of TODCO and the following
companies: Atwood Oceanics Inc., ENSCO International Incorporated, Global
Industries Ltd., Grant Prideco, Inc., Grey Wolf, Inc., Helmerich & Payne, Inc.,
Hercules Offshore, Helix Energy, Newpark Resources, Inc., Parker Drilling
Company, Patterson — UTI Energy Inc., Pride International Inc., Rowan Companies,
Inc. and Tidewater, Inc.
(b) Committee Determinations. In accordance with the provisions of the
Plan, the Committee shall have the exclusive authority to make all
determinations hereunder, including but not limited to the ranking of TODCO and
its Peer Group. Without limiting the foregoing, the Committee shall have
absolute discretion to determine the number of Earned Shares to which you are
entitled, if any, including without limitation such adjustments as may be
necessary in the opinion of the Committee to account for changes since the date
of the Award Letter. Notwithstanding the foregoing, the Committee shall be
precluded from increasing the amount that would otherwise be obtainable upon the
achievement of the performance goals described in Section 1(a) above to the
extent prescribed by Section 162(m) of the Internal revenue Code of 1986 as
amended (the “Code”) and the applicable regulations rulings and notices
thereunder. The Committee’s determination shall be final, conclusive and binding
upon you. You will not have any right or claim with respect to any shares other
than Earned Shares to which you become entitled in accordance herewith.
(c) You will not be required to pay any purchase price for the Earned
Shares; however tax withholding is required pursuant to Section 8.
2. Vesting
(a) Unless vested on an earlier date as provided in this Appendix A, the
Earned Shares will vest on the Determination Date. The Deferred Performance
Units will only become Earned Shares, if at all, on the Determination Date.
3
(b) As described in Section 7 below, in the event of a Change in Control,
your Deferred Performance Units may become Earned Shares and payable in Common
Stock, or in certain circumstances, restricted shares of Common Stock.
3. Restrictions
Until and unless Earned Shares become vested, you do not own any of the Common
Stock potentially subject to the Deferred Performance Units awarded to you in
this Award Letter and you may not attempt to sell, transfer, assign or pledge
the Deferred Performance Units or the Common Stock that may be awarded
hereunder. Your Earned Shares, if any, will be registered in your name as of the
Determination Date. The Deferred Performance Units awarded hereunder shall be
accounted for by the Company on your behalf on a ledger. Promptly after the
Determination Date (but no later than 2 1/2 months after the Determination
Date), the net shares (total vested Earned Shares minus any Earned Shares
retained to satisfy the tax withholding obligation of the Company, as described
in Section 8 if applicable), will be delivered in street name to your brokerage
account (or, in the event of your death, to a brokerage account in the name of
your beneficiary in accordance with the Plan) or, at the Company’s option, a
certificate for such shares will be delivered to you.
4. Dividends and Voting
The Deferred Performance Units granted herein do not give you any rights as a
stockholder of the Company including, but not limited to, voting and dividend
rights.
5. Termination of Employment Prior to a Change in Control
If your employment is terminated prior to the Determination Date and prior to a
Change in Control due to death, “Disability” (as defined below), “Retirement”
(as defined below) or at the convenience of the Company (as determined by the
Committee), you will be entitled to receive Earned Shares representing a “Pro
Rata Share” of your Deferred Performance Units, if any become payable, on the
Determination Date. The calculation of your Pro- Rata Share is determined by
multiplying the number of Earned Shares calculated as of the Determination Date
which would have otherwise been earned had your employment not been terminated,
by a fraction, the numerator of which is the number of calendar days you were
employed during the Performance Cycle after the Award Date and the denominator
of which is the total number of calendar days in the Performance Cycle after the
Award Date. Retirement is defined for the purpose of this section of Appendix A
as meeting the “Rule of 70”, which requires a minimum age of 55, combined with
years of service to total 70 or more. If you retire after the age of 55, yet
your age and years of service do not lead to a combined 70, you will not be
entitled to any Earned Shares. Retirement also means your retirement at the
convenience of the Company as determined by the Committee. Disability shall mean
you are unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected to
result in death, or last a continuous period of not less than twelve months or
by reason of either of the foregoing you are receiving income replacement
benefits for a period of not less than three months under an accident and health
plan covering employees of the Company. Except as provided under Section 7,
“Change in Control”, if your employment is terminated for any reason other than
death, Disability, Retirement, or termination for the
4
convenience of the Company, you will not be entitled to any Earned Shares. The
Committee shall have absolute discretion to determine the date and circumstances
of termination of your employment under this Section 5 and Section 7, including
without limitation whether as a result of death, Disability, Retirement, or
termination for the convenience of the Company, (good reason or without cause
under Section 7) or any other reason, and its determination shall be final,
conclusive and binding upon you.
6. Beneficiary
You may designate a beneficiary to receive any Earned Shares that become due to
you after your death, and may change your beneficiary from time to time.
Beneficiary designations should be filed with the Committee of the Plan. If you
fail to designate a beneficiary, Earned Shares due to you under the Plan will be
issued to the executor or administrator of your estate in the event of your
death.
7. Change in Control
(a) Acceleration of Vesting. If you are employed by the Company on the date
of a Change in Control, the Determination Date has not occurred and a successor
entity does not assume this Award Letter, you will receive Earned Shares in an
amount equal to 50% the amount of your Deferred Performance Units described in
this Award Letter to be paid no later that 2 1/2 months after the Change in
Control. If you are employed by the Company on the date of a Change in Control
of the Company, the Determination Date has not occurred and a successor entity
assumes this Award Letter, you will be entitled to receive 50% of your Deferred
Performance Units in restricted shares of Common Stock (“Restricted Stock”)
which shall become vested on the last day of the first quarter of 2010;
provided, however, that if you are terminated prior to the last day of the first
quarter of 2010 due to death, Disability, your retirement, or if within
18 months after a Change in Control, you are terminated without cause or for
good reason (as determined by the Committee in its sole discretion) you will be
100% vested in the Restricted Stock on your termination date. Such Restricted
Stock shall remain subject to the other terms of this Award Letter.
(b) Change in Control. A Change in Control of the Company shall be deemed
to have occurred as of the first day any one or more of the following conditions
shall have been satisfied:
(i) The acquisition by any individual, entity or group (within the meaning of
of shares representing 20% or more of the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting Securities”); provided,
however, that for purposes of this subsection (i), the following acquisitions
shall not constitute a Change in Control: (1) any acquisition directly from the
Company, (2) any acquisition by the Company (it being understood that an
acquisition by an acquiror of greater than 20% of the Outstanding Company Voting
Securities
5
directly from TODCO shall not prevent such acquiror from causing a subsequent
Change in Control if it thereafter acquires an additional 20% of the Outstanding
Company Voting Securities in a transaction that would otherwise constitute a
Change in Control), (3) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation or other entity
controlled by the Company, or (4) any acquisition by any corporation or other
entity pursuant to a transaction which complies with clauses (1), (2) and (3) of
Section 7(b)(iii); or
(ii) Individuals who, as of the effective date of the Plan (as defined in the
Plan), are members of the Board of Directors of the Company (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board of
Directors of the Company; provided, however, that for purposes of this
Section 7(b)(2)(ii), any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by the Company’s shareholders,
was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board, shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board of Directors of the Company; or
(iii) Consummation of a reorganization, merger, conversion or consolidation or
Company (a “Business Combination”), in each case, unless, following such
Business Combination, (1) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the then outstanding
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors of the corporation or other entity
resulting from such Business Combination (including, without limitation, a
corporation or other entity which as a result of such transaction owns the
ownership, immediately prior to such Business Combination of the Outstanding
Company Voting Securities, (2) no Person (excluding any corporation or other
entity resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation or other entity resulting from
such Business Combination) beneficially owns, directly or indirectly, 20% or
more of the combined voting power of the then outstanding voting securities of
the corporation or other entity resulting from such Business Combination except
to the extent that such ownership existed prior to the Business Combination and
(3) at least a majority of the members of the board of directors of the
corporation or other entity resulting from such Business Combination were
members of the Incumbent Board
6
at the time of the execution of the initial agreement, or of the action of the
Board of Directors of the Company, providing for such Business Combination; or
(iv) Approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company other than in connection with the transfer of all or
substantially all of the assets of the Company to an affiliate or a Subsidiary
of the Company and in connection with such transfer you are offered the
opportunity to continue your employment on substantially the same terms as
existed immediately prior to the transfer.
(c) Other Restricted Stock Provisions. The following provisions shall apply
to the Restricted Stock:
(i) Until the restrictions on your Restricted Stock have lapsed and your
shares have become vested in accordance with this Award Letter, you may not
sell, transfer, assign or pledge the shares. Stock certificates representing
your Restricted Stock will be registered in your name as of the award date after
the Change in Control, but will be held by the Company on your behalf until the
restrictions on such shares lapse. Each such stock certificate shall bear the
following legend:
The transferability of this certificate and the shares of stock represented
hereby are subject to the restrictions, terms and conditions (including
forfeiture and restrictions against transfer) contained in the Award Letter for
such Restricted Shares entered into between the registered owner of such shares
and TODCO. A copy of the Award Letter is on file in the office of the secretary
of TODCO, located at 2000 W. Sam Houston Parkway South, Suite 800, Houston,
Texas 77042.
When the restrictions on shares of your Restricted Stock lapse and the shares
become vested, a certificate representing such shares will be delivered to you
(or, in the event of your death, to your beneficiary in accordance with the
Plan.
(ii) You will have the right to vote your Restricted Stock, even if it
remains subject to forfeiture until it is forfeited. From the award date after
the Change in Control, all cash dividends payable with respect to your
Restricted Stock will be paid directly to you at the same time dividends are
paid with respect to all other shares of Common Stock unless and until any
shares of the Restricted Stock are forfeited.
(iii) This Award Letter is subject to your satisfaction of the income tax
withholding requirements. Unless the Committee in its sole discretion determines
otherwise, to satisfy any applicable federal, state or local withholding tax
liability arising from the grant of or lapse of the risk of forfeiture on your
Restricted Stock, the Company will retain a certain number of shares of Common
Stock having a value equal to the amount of your minimum statutory withholding
obligation from
7
the shares otherwise deliverable to you upon your Restricted Stock becoming free
of the risk of forfeiture. As a condition of this award, you agree to waive your
right to make an election under Code Section 83(b). Accordingly, no such
election will be recognized by the Company.
8. Tax Consequences and Income Tax Withholding
(a) You should review the Plan Prospectus for a general summary of the U.S.
federal income tax consequences to you from this award of Deferred Performance
Units and any Earned Shares based on currently applicable provisions of the Code
and related regulations. The summary does not discuss state and local tax laws
or the laws of any other jurisdiction, which may differ from U.S. federal tax
law. Neither the Company nor the Committee guarantees the tax consequences of
your award herein. You are advised to consult your own tax advisor regarding the
application of the tax laws to your particular situation.
(b) The award under the Award Letter is subject to your making of
arrangements satisfactory to the Company to satisfy any applicable U.S. federal,
state or local withholding tax liability arising from the vesting of the Earned
Shares. You can either make a cash payment to the Company of the required amount
or at the discretion of the Committee you can elect to satisfy your withholding
obligation by having the Company retain Common Stock having a value
approximately equal to the amount of your withholding obligation from the Earned
Shares otherwise deliverable to you upon the vesting of such shares. You may not
elect for such withholding to be greater than the minimum statutory withholding
tax liability arising from the vesting of the Earned Shares. If you fail to
satisfy your withholding obligation in a time and manner satisfactory to the
Company, no shares will be issued to you or the Company at its discretion shall
have the right to withhold the required amount from your salary or other amounts
payable to you prior to the delivery of the Common Stock to you.
(c) In addition, you must make arrangements satisfactory to the Company to
satisfy any applicable withholding tax liability imposed under the laws of any
other jurisdiction arising from the award hereunder. You may not elect to have
the Company withhold Earned Shares having a value in excess of the minimum
statutory withholding tax liability. If you fail to satisfy such withholding
obligation in a time and manner satisfactory to the Company, no shares will be
issued to you or the Company shall have the right to withhold the required
amount from your salary or other amounts payable to you prior to the delivery of
the Common Stock to you.
9. Restrictions on Resale
Other than the restrictions referenced in paragraph 3, there are no restrictions
imposed by the Plan on the resale of Earned Shares acquired under the Plan.
However, under the provisions of the Securities Act of 1933 (the “Securities
Act”) and the rules and regulations of the Securities and Exchange Commission
(the “SEC”), resales of shares acquired under the Plan by certain
8
officers and directors of the Company who may be deemed to be “affiliates” of
the Company must be made pursuant to an appropriate effective registration
statement filed with the SEC, pursuant to the provisions of Rule 144 issued
under the Securities Act, or pursuant to another exemption from registration
provided in the Securities Act. At the present time, the Company does not have a
currently effective registration statement pursuant to which such resales may be
made by affiliates. These restrictions do not apply to persons who are not
affiliates of the Company; provided, however, that all employees and the award
made hereby are subject to the Company’s policies against insider trading
(including black-out periods during which no sales are permitted) and to other
restrictions on resale that may be imposed by the Company from time- to- time if
it determines such restrictions are necessary or advisable to comply with
applicable law.
10. Effect on Other Benefits
Income recognized by you as a result of this award of the Deferred Performance
Units, vesting , or payment of Earned Shares or dividends on your Earned Shares
will not be included in the formula for calculating benefits under any of the
Company’s retirement and disability plans or any other benefit plans.
11. Compliance With Laws
This Award Letter, the Deferred Performance Units and any Earned Shares issued
hereunder shall be subject to all applicable federal and state laws and the
rules of the exchange on which shares of the Company’s Common Stock are traded.
12. Miscellaneous
(a) Not an Agreement for Continued Employment or Services. This Award
Letter will not, and no provision of this Award Letter will be construed or
interpreted to, create any right to be employed by or to provide services to or
continue your employment with or provide services to the Company, the Company’s
affiliates, parent, subsidiary or their affiliates.
(b) Community Property. Each spouse individually is bound by, and such
spouse’s interest, if any, in this award of Deferred Performance Units or in any
shares of Common Stock that may be awarded hereunder is subject to the terms of
this Award Letter. Nothing in this Award Letter shall create a community
property interest where none otherwise exists.
(c) Amendment for Code Section 409A. This award of Deferred Performance
Units is intended to be exempt from Code Section 409A. If the Committee
determines that this award of Deferred Performance Units is subject to Code
Section 409A, the Committee may, in its sole discretion, amend the terms and
conditions of this Award Letter to the extent necessary to comply with Code
Section 409A.
If you have any questions regarding your award of Deferred Performance Units or
would like to obtain additional information about the Plan or the Committee,
please contact the Company’s
9
General Counsel. Your Award Letter, the Plan and all attachments should be
retained in your files for future reference.
10 |
EMPLOYMENT AGREEMENT
This Agreement is entered into effective as of the 15th day of December, 2008,
by and between Sonic Corp. (the “Corporation”), a Delaware corporation, and
Clifford Hudson (the “Employee”).
RECITALS
Whereas, the Employee is currently serving as the Chief Executive Officer of the
Corporation and is an integral part of its management; and
Whereas, the Employee and the Corporation acknowledge that they previously
entered into an Employment Agreement dated August 20, 1996, which is hereby
canceled and superseded in its entirety by this Agreement; and
Whereas, the Corporation's Board of Directors (the “Board”) has determined that
it is appropriate to reinforce and encourage the continued attention and
dedication of certain key members of the Corporation's management, including
Employee, to their assigned duties without distraction and potentially
disturbing circumstances arising from the possibility of a Change in Control
(herein defined) of the Corporation; and
the Corporation are extremely valuable to the Corporation; and
the terms and conditions of the continued employment relationship of the
Corporation and Employee.
ARTICLE I
1.1 Term of Employment. The Corporation shall employ Employee for a
period of two years from the date hereof (the “Initial Term”).
1.2 Extension of Initial Term. Upon each anniversary date of this
Agreement, this Agreement shall be extended automatically for an additional one
year period to maintain successive terms of two years each, unless either the
Corporation or the Employee gives contrary written notice to the other not later
than the anniversary date. As used herein, “Term” shall mean the Initial Term
together with any renewal term(s) pursuant to this Section 1.2
1.3 Termination of Agreement and Employment. The Corporation may
terminate this Agreement and the Employee’s employment at any time effective
upon written notice to the Employee. The Employee may terminate this Agreement
and the Employee’s employment only after at least 30 days’ written notice to the
ARTICLE II
Duties of the Employee
Employee shall serve as the Chief Executive Officer of the
ARTICLE III
Compensation
3.1 Salary. For Employee's services to the Corporation as the Chief
Executive Officer, Employee shall be paid a salary at the annual rate of
$610,000 (herein referred to as “Salary”), payable in twenty-four equal
installments on the first and fifteenth day of each month. On the first day of
each calendar year during the term of this Agreement with the Corporation,
Employee shall be eligible for an increase in Salary based on an evaluation of
Employee’s performance during the past year with the Corporation. During the
term of this Agreement, the Salary of the Employee shall not be decreased at any
time from the Salary then in effect unless agreed to in writing by the Employee.
3.2 Bonus. The Employee shall be entitled to participate in an
equitable manner with other officers of the Corporation in discretionary cash
bonuses as authorized by the Board. Such bonuses shall be paid not later than
Corporation’s tax year or the Employee’s tax year in which the bonuses are no
longer subject to a substantial risk of forfeiture (within the meaning of
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)).
ARTICLE IV
Employee Benefits
4.1 Use of Automobile. The Corporation shall provide Employee with
either the use of an automobile for business and personal use or a cash car
allowance in accordance with the established company car policy of the
Corporation. The Corporation shall pay all expenses of operating, maintaining
and repairing the automobile and shall procure and maintain automobile liability
insurance in respect thereof, with such coverage insuring each Employee for
bodily injury and property damage. Reimbursement of automobile-related expenses
shall be made as soon as practicable after the request for reimbursement is
submitted, but in no event later than the last day of the calendar year next
following the calendar year in which such expense was incurred. Additionally,
neither the provision of in-kind benefits nor the reimbursement of expenses in
any one calendar year shall affect the level or amount of in-kind benefits to be
provided, or the expenses eligible for reimbursement, in any other calendar
year. The Employee’s right to reimbursement or in-kind benefits under this
Section 4.1 is not subject to liquidation or exchange for another benefit.
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4.2 Medical, Life and Disability Insurance Benefits. The Corporation
shall provide Employee with medical, life and disability insurance benefits in
4.3 Working Facilities. Employee shall be provided adequate office
space, secretarial assistance, and such other facilities and services suitable
to Employee’s position and adequate for the performance of Employee’s duties.
4.4 Business Expenses. Employee shall be authorized to incur
reasonable expenses for promoting the business of the Corporation, including
expenses for entertainment, travel, and similar items. The Corporation shall
reimburse Employee for all such expenses upon the presentation by Employee, from
time to time, of an itemized account of such expenditures. Reimbursement shall
be made as soon as practicable after the request for reimbursement is submitted,
for another benefit.
commensurate with the Corporation's established vacation policy for
officers. The timing of paid vacations shall be scheduled in a reasonable
manner by the Employee.
4.6 Disability. Upon disability (as defined herein) of the Employee,
the Employee shall be entitled to receive up to six months’ of Employee’s Salary
(less any deductions required by law) payable in twelve equal installments of
1/24 of the Salary, with the first installment occurring on the first regularly
period..
4.7 Term Life Insurance. The Corporation shall purchase term life
insurance on the life of the Employee having a face value of four times the
Employee’s Salary (to be changed as salary adjustments are made) or the face
value of life insurance that can be purchased based upon the Employee’s health
history with the Corporation paying the standard premium rate for term insurance
under its then current insurance program at the Employee’s age and assuming good
health, whichever amount is lesser; provided further that, such insurance can be
obtained by the Corporation in a manner which meets the requirements for
deductibility by the Corporation under Section 79 of the Internal Revenue Code
of 1986, or as hereafter amended.
4.8 Compensation Defined. Compensation shall be defined as all
monetary compensation and all benefits described in Articles III and IV
hereunder (as adjusted during the term hereof).
3
ARTICLE V
Termination
5.1 Separation from Service. For purposes of this Agreement, the
terms “terminate,” “terminated” and “termination” with respect to the Employee’s
“separation from service” within the meaning of the default rules of Section
409A of the Code.
5.2 Death. Employee's employment hereunder shall be terminated upon
the Employee's death.
5.3 Disability. The Corporation may terminate Employee's employment
hereunder in the event Employee is disabled and such disability continues for
more than 180 days. Disability shall be defined as the inability of Employee to
render the services required of him, with or without a reasonable accommodation,
under this Agreement as a result of physical or mental incapacity.
5.4 Cause.
(a) The Corporation may terminate Employee's employment hereunder for
cause. For the purpose of this Agreement, “Cause” shall mean (i) the willful
and intentional failure by Employee to substantially perform Employee’s duties
hereunder, other than any failure resulting from Employee's incapacity due to
(though not illegal) which is not in the ordinary course of the Employee's
Employee's part shall be considered to have met either of the preceding tests
unless done or omitted to be done by Employee not in good faith without a
reasonable belief that Employee’s action or omission was in the best interest of
the Corporation.
have been terminated for cause unless and until there shall have been delivered
to Employee a copy of a resolution, duly adopted by the affirmative vote of not
Employee was guilty of the conduct set forth in this Section 5.3.
5.5 Compensation Upon Termination for Cause or Upon Resignation By
Employee. Except as otherwise set forth in Section 5.7 hereof, if Employee's
employment shall be terminated for Cause or if Employee shall resign Employee’s
position with the Corporation, the Corporation shall pay Employee's Compensation
only through the last day of Employee's employment by the Corporation. The
Agreement.
5.6 Compensation Upon Termination Other Than For Cause Or
Disability. Except as otherwise set forth in Section 5.8 hereof, if the
Corporation shall terminate Employee's employment other than for Cause or
Disability, the Corporation shall continue to be obligated to pay two years of
4
Employee’s Salary (payable in forty-eight equal installments, with the first
installment occurring on the first regularly scheduled payroll date following
the date of termination, and the remaining installments occurring on a
semi-monthly basis thereafter), but shall not be obligated to provide any other
benefits described in Articles III and IV hereof, except to the extent required
by law.
5.7 Compensation Upon Non-Renewal of Agreement. Except as otherwise
set forth in Section 5.7 hereof, if the Company shall give notice to Employee in
Employee’s employment is not terminated, the Company shall continue to be
obligated to pay Employee’s Salary for a period of two years beginning on the
5.8 Termination of Employee or Resignation by Employee for Good
Reason. If at any time within the first twelve months subsequent to a Change in
Control, the Employee’s employment with the Corporation is terminated other than
as provided for in Section 5.1, 5.2 or 5.3 hereof, or the Corporation violates
any provision of this Agreement or Employee shall resign Employee's employment
for Good Reason (as defined herein), the Corporation shall be obligated to pay
to Employee a severance payment in an amount equal to one and one-half times the
Employee's compensation payable under paragraph 5.6 above, but in no event to
exceed an amount equal to $1.00 less than three (3) times the mean average
annual compensation paid to Employee by the Corporation and any of its
subsidiaries during the five calendar years ending before the date on which the
Change in Control occurred (or if Employee was not employed for that entire five
year period, then the mean average annual compensation paid to employee during
such shorter period, with the Employee's compensation annualized for any
calendar year during which the employee was not employed for the entire calendar
year); provided, however, that if the severance payment under this Section 5.7,
either alone or together with any other payments or compensation which Employee
has a right to receive from the Corporation, would constitute a “parachute
payment” (as defined in Section 280G (or any equivalent term defined in any
successor or equivalent provision) of the Code), then such severance payment
shall be reduced to the largest amount as will result in no portion of the
severance payment under this Section 5.8 being subject to the excise tax imposed
by Section 4999 (or any successor or equivalent provision) of the Code. For the
purpose of this Section 5.8, the Employee's annual compensation from the
Corporation and its subsidiaries for a given year shall equal Employee’s
compensation as reflected on Employee’s Form W-2 for that year (unless the
Employee was not employed for the entire calendar year, in which case Employee’s
Form W-2 compensation for such year shall be annualized). The determination of
any reduction in severance payment under this Section 5.8 pursuant to the
foregoing provision shall be conclusive and binding on the Corporation.
than not later than the 15th day of the third month following the later of the
end of the Corporation’s tax year or the Employee’s tax year in which occurs the
Employee’s effective date of termination under this Section 5.8. If the Change
in Control is not a “change in control event” within the meaning of the default
rules of the final
5
severance payment contemplated by this Section 5.8 shall be made in twelve
this Agreement without Employee's express written consent:
(a) the assignment to Employee of duties inconsistent with Employee's
position, office, duties, responsibilities and status with the Corporation
immediately prior to a Change in Control; or, a change in Employee's titles or
offices as in effect immediately prior to a Change in Control; or, any removal
of Employee from or any failure to reelect Employee to any such position or
office, except in connection with the termination of Employee’s employment by
the Corporation for Disability or Cause or as a result of Employee's death or by
Employee other than for Good Reason as set forth in this Section 5.7(a); or
(b) a reduction by the Corporation in Employee's Salary as in effect
as of the date of this Agreement or as the same may be increased from
time-to-time during the term of this Agreement or the Corporation's failure to
increase (within twelve months of the Employee's last increase in Salary)
Employee's Salary after a Change in Control in an amount which at least equals,
on a percentage basis, the highest percentage increase in salary for all
officers of the Corporation or any parent or affiliated company effected in the
preceding twelve months; or
fringe benefits (including, without limitation, life insurance plans, medical or
immediately prior to such Change in Control, is in Employee's sole judgment
(d) relocation of the Corporation's principal executive offices to a
location outside of Oklahoma City, Oklahoma, or Employee's relocation to any
place other than the location at which Employee performed Employee’s duties
prior to a Change in Control, except for required travel by Employee on the
Corporation's business to an extent substantially consistent with Employee's
business travel obligations at the time of the Change in Control; or
6
number of paid vacation days to which Employee is entitled at the time of the
obligation of this Agreement as set forth in Section 7.1 herein.
“change in control” shall mean any of the following events:
(a) Any consolidation or merger of the Corporation in which the
Corporation is not the continuing or surviving corporation or pursuant to which
shares of the Corporation’s capital stock would convert into cash, securities or
other property, other than a merger of the Corporation in which the holders of
the Corporation’s capital stock immediately prior to the merger have the same
proportionate ownership of capital stock of the surviving corporation
immediately after the merger;
transaction or a series of related transactions) of all or substantially all of
the assets of the Corporation;
(c) The stockholders of the Corporation approve any plan or proposal
for the liquidation or dissolution of the Corporation;
Securities and Exchange Act of 1934, as amended (the “Exchange Act”)) becomes
the beneficial owner (within the meaning of Rule 13D-3 under the Exchange Act)
of 50% or more of the Corporation’s outstanding capital stock;
beginning of that period constitute the entire Board of Directors of the
Corporation cease for any reason to constitute a majority of the Board of
Directors unless the election or the nomination for election by the
Corporation’s stockholders of each new director received the approval of the
Board of Directors by a vote of at least two-thirds of the directors then and
still in office and who served as directors at the beginning of the period; or
(f) The Corporation becomes a subsidiary of any other corporation.
ARTICLE VI
Obligation to Mitigate Damages; No Effect
on Other Contractual Rights
6.1 Mitigation. The Employee shall not have any obligation to
mitigate damages or the amount of any payment provided for under this Agreement
by seeking other employment or otherwise. However, all payments required under
the terms of this Agreement shall cease 30 days after the acceptance by the
Employee of employment by another employer; provided that, this limitation shall
not apply to payments due under paragraph 5.7, above.
7
6.2 Other Contractual Rights. The provisions of this Agreement, and
any payment provided for hereunder shall not reduce any amount otherwise
payable, or in any way diminish Employee's existing rights, or rights which
would accrue solely as a result of passage of time under any employee benefit
plan or other contract, plan or arrangement of which Employee is a beneficiary
or in which Employee participates.
ARTICLE VII
Successors to the Corporation
7.1 Assumption. The Corporation will require any successor or
assignee (whether direct or indirect, by purchase, merger, consolidation or
otherwise) of all or substantially all of the business and/or assets of the
Corporation, by agreement in form and substance reasonably satisfactory to
Employee, to expressly, absolutely and unconditionally assume and agree to
perform this Agreement in the same manner and to the same extent that the
Corporation would be required to perform it if no such succession or assignment
had taken place. Any failure by the Corporation to obtain such agreement prior
to the effectiveness of any such succession or assignment shall be a material
7.2 Employee's Successors and Assigns. This Agreement shall inure to
the benefit of and be enforceable by Employee's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Employee should die while any amounts are still
payable to Employee hereunder, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to
Employee's devisee, legatee or other designee or, if there is no such designee,
to Employee's estate.
ARTICLE VIII
Restrictions on Employee
8.1 Confidential Information. During the term of the Employee’s
employment and for a period of twelve months thereafter, the Employee shall not
divulge or make accessible to any party any Confidential Information, as defined
below, of the Corporation or any of its subsidiaries, except to the extent
authorized in writing by the Corporation or otherwise required by law. The
phrase “Confidential Information” shall mean the unique, proprietary and
confidential information of the Corporation and its subsidiaries, consisting of:
(1) confidential financial information regarding the Corporation or its
subsidiaries, (2) confidential recipes for food products; (3) confidential and
copyrighted plans and specifications for interior and exterior signs, designs,
layouts and color schemes; (4) confidential methods, techniques, formats,
systems, specifications, procedures, information, trade secrets, sales and
marketing programs; (5) knowledge and experience regarding the operation and
franchising of Sonic drive-in restaurants; (6) the identities and locations of
Sonic’s franchisees, Sonic drive-in restaurants, and suppliers to Sonic’s
franchisees and drive-in restaurants; (7) knowledge, financial information, and
other information regarding the development of franchised and company-store
restaurants; (8) knowledge, financial information, and other information
regarding potential acquisitions and dispositions; and (9) any other
confidential business information of the Corporation or any of its subsidiaries.
The Employee shall give the Corporation written notice of any circumstances in
which Employee has actual notice of any access, possession or use of the
Confidential Information not authorized by this Agreement.
8
8.2 Restrictive Covenant. During the term of Employee’s employment,
the Employee shall not engage in or have any interest, directly or indirectly,
in any business competing with the business being conducted by the Corporation
or any of its subsidiaries, without the Corporation’s prior written
consent. For the six month period immediately following the termination of
Employee’s employment, the Employee shall not engage in or have any interest,
directly or indirectly, in any fast food restaurant business that has a menu
similar to that of a Sonic drive-in restaurant (such as hamburgers, hot dogs,
onion rings and similar items customarily sold by Sonic drive-in restaurants),
or which has an appearance similar to that of a Sonic drive-in restaurant (such
as color pattern, use of canopies, use of speakers and menu housings for
ordering food, or other items that are customarily used by a Sonic drive-in
restaurant), and which operates such restaurants within a three mile radius of
any Sonic drive-in restaurant.
ARTICLE IX
Miscellaneous
shall authorize the payment of expenses incurred by or shall satisfy judgments
or fines rendered or levied against Employee in any action brought by a
third-party against Employee (whether or not the Corporation is joined as a
party defendant) to impose any liability or penalty on Employee for any act
alleged to have been committed by Employee while employed by the Corporation
unless Employee was acting with gross negligence or willful
misconduct. Payments authorized hereunder shall include amounts paid and
expenses incurred in settling any such action or threatened action.
9.2 Resolution of Disputes. The following provisions shall apply to
any controversy between the Employee and the Corporation and its subsidiaries
and the Employee (including any director, officer, employee, agent or affiliate
of the Corporation and its subsidiaries) whether or not relating to this
Agreement.
and binding arbitration in accordance with the Rules for Commercial Arbitration
(the “Rules”) of the American Arbitration Association in effect at the time of
the execution of this Agreement and pursuant to the following additional
provisions:
Act”), as supplemented by the Oklahoma Arbitration Act (to the extent not
inconsistent with the Federal Act), shall apply to the arbitration and all
procedural matters relating to the arbitration.
(2) Selection of Arbitrators. The parties shall select one
arbitrator within 10 days after the filing of a demand and submission in
accordance with the Rules. If the parties fail to agree on an arbitrator within
that 10-day period or fail to agree to an extension of that period, the
arbitration shall take place before an arbitrator selected in accordance with
the Rules.
9
Oklahoma City, Oklahoma, and the arbitrator shall issue any award at the place
of arbitration. The arbitrator may conduct hearings and meetings at any other
place agreeable to the parties or, upon the motion of a party, determined by the
arbitrator as necessary to obtain significant testimony or evidence.
(4) Discovery. The arbitrator shall have the power to authorize all
forms of discovery (including depositions, interrogatories and document
production) upon the showing of (a) a specific need for the discovery, (b) that
the discovery likely will lead to material evidence needed to resolve the
controversy, and (c) that the scope, timing and cost of the discovery is not
excessive.
(5) Authority of Arbitrator. The arbitrator shall not have the power
(a) to alter, modify, amend, add to, or subtract from any term or provision of
this Agreement; (b) to rule upon or grant any extension, renewal or continuance
of this Agreement; or (c) to grant interim injunctive relief prior to the award.
(6) Enforcement of Award. The prevailing party shall have the right
to enter the award of the arbitrator in any court having jurisdiction over one
or more of the parties or their assets. The parties specifically waive any
right they may have to apply to any court for relief from the provisions of this
Agreement or from any decision of the arbitrator made prior to the award.
(b) Attorneys' Fees and Costs. The prevailing party to the
arbitration shall have the right to an award of its reasonable attorneys' fees
and costs (including the cost of the arbitrator) incurred after the filing of
the demand and submission. If the Corporation or any of its subsidiaries
prevails, the award shall include an amount for that portion of the
administrative overhead reasonably allocable to the time devoted by the in-house
legal staff of the Corporation or any subsidiary.
use and protection of the trademarks, service marks, tradenames, copyrights,
patents, confidential information and trade secrets of the Corporation or its
subsidiaries to apply to any court of competent jurisdiction for appropriate
injunctive relief for the infringement of the rights of the Corporation or its
subsidiaries.
prevent the Corporation, its subsidiaries, or the Employee from exercising any
of their rights under this agreement, any other agreement, or under the common
law, including (without limitation) the right to terminate any agreement between
the parties or to end or change the party’s legal relationship.
10
9.3 Entire Agreement. This Agreement constitutes the entire agreement
of the parties with regard to the subject matter of this Agreement and replaces
and supersedes all other written and oral agreements and statements of the
parties relating to the subject matter of this Agreement.
Agreement shall be sufficient if in writing and sent by mail to Employee’s
residence, in the case of Employee, or to its principal office, in the case of
the Corporation.
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach by any party.
9.6 Amendment. No amendment or modification of this Agreement shall
be deemed effective unless or until executed in writing by the parties hereto.
9.7 Validity. This Agreement, having been executed and delivered in
the State of Oklahoma, its validity, interpretation, performance and enforcement
will be governed by the laws of that state.
9.8 Section Headings. Section and other headings contained in this
meaning or interpretation of this Agreement.
9.9 Counterpart Execution. This Agreement may be executed in two or
9.10 Exclusivity. Specific arrangements referred to in this Agreement
are not intended to exclude Employee's participation in any other benefits
available to executive personnel generally or to preclude other compensation or
benefits as may be authorized by the Board from time to time.
a court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
9.12 Section 409A of the Code.
of the Employee’s termination of employment with the Corporation, the Employee
is a “specified employee” within the meaning of Section 409A of the Code, as
11
Code, the Corporation and Employee intend all payments under this Agreement to
comply with the requirements of such section, and this Agreement shall, to the
extent reasonably practicable, be operated and administered to effectuate such
intent.
written.
The Corporation:
The Employee:
Sonic Corp.
By: /s/ W. Scott McLain
Name: W. Scott McLain
Title: President
/s/ Clifford Hudon
Name: Clifford Hudson
12
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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 8, 2007 ISCO INTERNATIONAL, INC. (Exact Name of Registrant as Specified in Charter) DELAWARE 001-22302 36-3688459 (State or Other Jurisdiction of Incorporation or Organization) (Commission File Number) (I.R.S. Employer Identification Number) 1001 Cambridge Drive, Elk Grove Village, ILLINOIS 60007 (Address of Principal Executive Offices) (Zip Code) (847) 391-9400 (Registrant’s Telephone Number, Including Area Code) Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: ¨ Written communications pursuant to Rule 425 under the Securities Act ¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act ¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act ¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act Item 7.01. Regulation FD Disclosure On June8, 2007, ISCO International, Inc. (the “Company”) held its Annual Meeting of Stockholders (the “Meeting”). Copies of slides presented at the Meeting relating to the Company’s operations are attached as Exhibit 99.1 to this Report. Item 8.01. Other Events At the Meeting, the following proposals were approved by the margins indicated: Number of Shares Voted For Withheld 1. To elect directors to the Board of Directors for a term of one (1)year and until his successor is duly elected and qualified. Mr.John Thode 161,755,904 5,046,778 Mr.Jim Fuentes 162,058,873 4,743,809 Dr.Amr Abdelmonem 161,539,830 5,262,852 Dr.George Calhoun 161,103,240 5,699,442 Mr.Mike Fenger 161,996,895 4,805,787 Mr.Ralph Pini 162,061,593 4,741,089 Number of Shares Voted For Against Abstain 2. To approve the appointment of Grant Thornton LLP as the independent auditors of the Company’s financial statements for the fiscal year ending December31, 2007 163,070,806 2,880,629 851,247 Item 9.01. Financial Statements, Pro Forma Financial Information and Exhibits The following exhibit is filed with this Form 8-K: (d) ExhibitNo. Description 99.1 Presentation Slides dated June 8, 2007. 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. ISCO INTERNATIONAL, INC. Date: June12, 2007 By: /s/FRANK CESARIO Frank Cesario Chief Financial Officer Index of Exhibits ExhibitNo. Description 99.1* Presentation Slides dated June 8, 2007. * Filed herewith
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EXHIBIT 32.1 CERTIFICATIONS OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION -OXLEY ACT OF 2002 (18 U.S.C 1350) Each of the undersigned officers of Cole Credit Property Trust III, Inc. (the “Company”) hereby certifies, for purposes of Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge: (i) the accompanying Quarterly Report on Form 10-Q of the Company for the period ended March 31, 2011 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Cole Credit Property Trust III, Inc. By: /s/ Christopher H. Cole Name: Christopher H. Cole Title: Chairman, Chief Executive Officer, President and Director (Principal Executive Officer) By: /s/ D. Kirk McAllaster, Jr. Name: D. Kirk McAllaster, Jr. Date: May 10, 2011 Title: Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) The foregoing certification is being furnished with the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2011 pursuant to 18 U.S.C. Section1350. It is not being filed for purposes of Section18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general information language in such filing, except to the extent that the Company specifically incorporates by reference. A signed original of this written statement required by Section906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
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Exhibit 10.5
THIRD AMENDMENT
THIS THIRD AMENDMENT dated as of September 5, 2008 (this “Amendment”) amends the
Reimbursement Agreement dated as of September 8, 2006 (as previously amended,
the “Reimbursement Agreement”) between Williams-Sonoma, Inc. (the “Parent”) and
U.S. Bank National Association (the “Bank”). Capitalized terms used but not
defined herein have the respective meanings given to them in the Reimbursement
Agreement.
WHEREAS, the Parent and the Bank have entered into the Reimbursement Agreement;
and
WHEREAS, the Parent and the Bank desire to amend the Reimbursement Agreement as
more fully set forth herein;
SECTION 1 Amendments. Subject to the satisfaction of the conditions precedent
set forth in Section 3, the Reimbursement Agreement is amended as follows:
(a) The references to “$20,000,000” in Recital A and Section 2.1 of the
Reimbursement Agreement are replaced with “$15,000,000”.
(b) The definition of “Maturity Date” is amended in its entirety to read
as follows:
“Maturity Date” means September 4, 2009.
(c) Section 5.2(d) is amended by replacing the reference to “January 28,
2007” with “February 3, 2008”.
(d) Section 6.2 is amended by (i) replacing the reference to “February 2,
2003, February 1, 2004, January 30, 2005, January 29, 2006 and January 28, 2007”
with “February 2, 2003, February 1, 2004, January 30, 2005, January 29,
2006, January 28, 2007 and February 3, 2008 “ and (ii) replacing the reference
to “January 28, 2007” in the third and fourth sentence thereof with “February 3,
2008”.
SECTION 2 Representations and Warranties. The Parent represents and warrants
to the Bank that, after giving effect to the effectiveness hereof:
(a) each representation and warranty set forth in Article 6 of the
Reimbursement Agreement, as amended hereby, is true and correct in all material
respects as of the date of the execution and delivery of this Amendment by the
Parent, with the same effect as if made on such date, except to the extent any
such representation or warranty relates specifically to another date (in which
case it was true and correct in all material respects as of such other date);
(b) the Parent has the power and authority to execute, deliver, and
perform its obligations under this Amendment;
(c) no Default exists; and
(d) there has not occurred a material adverse change since January 28,
2007 in the business, assets, liabilities (actual or contingent), operations,
condition (financial or otherwise), or prospects of the Parent (individually) or
the Parent and its Subsidiaries (taken as a whole).
SECTION 3 Effectiveness. The amendments set forth herein shall become
effective when the Bank has received the following:
(a) a counterpart of this Amendment executed by the Parent;
(b) a Confirmation, substantially in the form of Exhibit A, executed by
each Subsidiary Guarantor;
(c) evidence that the Parent has paid all accrued and invoiced Attorney
Costs of the Bank in connection with this Amendment; and
(d) such other documents as the Bank may reasonably request.
SECTION 4 Miscellaneous.
4.1 Continuing Effectiveness, etc. As amended hereby, the Reimbursement
Agreement shall remain in full force and effect and is hereby ratified and
confirmed in all respects. After the effectiveness of this Amendment, all
references in the Reimbursement Agreement and the other Transaction Documents to
“Reimbursement Agreement” or similar terms shall refer to the Reimbursement
Agreement as amended hereby.
4.2 Counterparts. This Amendment may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original but all such counterparts
shall together constitute one and the same Amendment. Delivery of a counterpart
hereof, or an executed signature hereto, by facsimile or by e-mail (in pdf or
similar format) shall be effective as delivery of a manually-executed
counterpart hereof.
4.3 Governing Law. This Amendment shall be a contract made under and
governed by the laws of the State of New York applicable to contracts made and
to be performed entirely within such state.
4.4 Successors and Assigns. This Amendment shall be binding upon the
Parent and the Bank and their respective successors and assigns, and shall inure
to the benefit of the Parent and the Bank and the successors and assigns of the
Bank.
-2-
Delivered as of the day and year first above written.
WILLIAMS-SONOMA, INC. By:
/s/ Sharon L. McCollam
Name: Sharon L. McCollam
Title:
Executive Vice President, Chief Operating
and Chief Financial Officer
U.S. BANK NATIONAL ASSOCIATION By: /s/ Janet Jordan Name: Janet E. Jordan
EXHIBIT A
FORM OF CONFIRMATION
Dated as of September 5, 2008
To: U.S. Bank National Association
Please refer to (a) the Reimbursement Agreement (as amended prior to the date
hereof, the “Reimbursement Agreement”) dated as of September 8, 2006 between
Williams-Sonoma, Inc. (the “Parent”) and U.S. Bank National Association (the
“Bank”), (b) the Guaranty Agreement dated as of September 8, 2006 executed by
the undersigned (the “Subsidiary Guaranty”) and (c) the Third Amendment dated as
of the date hereof to the Reimbursement Agreement (the “Third Amendment”).
Each of the undersigned hereby confirms to the Bank that, after giving effect to
the Third Amendment and the transactions contemplated thereby, the Subsidiary
Guaranty continues in full force and effect and is the legal, valid and binding
obligation of such undersigned, enforceable against such undersigned in
accordance with its terms, except as limited by bankruptcy, insolvency, or other
laws of general application relating to the enforcement of creditors’ rights and
WILLIAMS-SONOMA STORES, INC. WILLIAMS-SONOMA DIRECT, INC. WILLIAMS-SONOMA RETAIL
SERVICES, INC. POTTERY BARN, INC. POTTERY BARN KIDS, INC. POTTERY BARN TEEN,
INC. WILLIAMS-SONOMA HOME, INC. WILLIAMS-SONOMA PUBLISHING, INC. WEST ELM, INC.
WILLIAMS-SONOMA GIFT MANAGEMENT, INC. By:
Name: Sharon
L. McCollam Title: Executive Vice President, Chief Operating and Chief
Financial Officer WILLIAMS-SONOMA STORES, LLC By: WILLIAMS-SONOMA STORES, INC.
Its: Sole Member By:
Name: Sharon L. McCollam Title: Executive Vice
President, Chief Operating and Chief Financial Officer
-2- |
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 Otelco Inc. (the “Company”) on Form 10-Q for the period ended September30, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael D. Weaver, Chief Executive
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Exhibit 10.8
Fujian Jinjiang Chendai Ansheng Shoes and Clothing Co., Ltd.
Product Sales Contract
Contract No.:201005026
Date of Signing: 5/21/2010
Seller: Fujian Jinjiang Chendai Ansheng Shoes and Clothing Co., Ltd.
Buyer: Shenyang Yangyang Baijia Business &Trading Co., Ltd.
Based on mutual consultations, the Parties have agreed on the following:
1. Order List
Item
Type
Quantity
Unit Price
Amount
Skateboard shoes
A15056
2028
82
166,296.00
Skateboard shoes
A8608
1068
82
87,576.00
Skateboard shoes
A8610
4920
82
403,440.00
Skateboard shoes
A8613
2676
82
219,432.00
Skateboard shoes
A8615
2988
82
245,016.00
Skateboard shoes
A8622
4620
82
378,840.00
Skateboard shoes
A9367
396
82
32,472.00
Skateboard shoes
T88507
1320
80
105,600.00
Skateboard shoes
Z9367
1920
80
153,600.00
Hiking shoes
A9962
396
100
39,600.00
Hiking shoes
A9969
2676
85
227,460.00
Hiking shoes
A9972
2148
82
176,136.00
Retro-Skateboard shoes
A81003
756
93
70,308.00
Retro-Skateboard shoes
A81018
6636
94
623,784.00
Retro-Skateboard shoes
A81020
792
100
79,200.00
Retro-Skateboard shoes
A81022
1884
100
188,400.00
Retro-Skateboard shoes
A81026
468
100
46,800.00
Retro-Skateboard shoes
A82011
1548
89
137,772.00
Retro-Skateboard shoes
A82017
1308
87
113,796.00
Retro-Skateboard shoes
A86072
492
82
40,344.00
Retro-Skateboard shoes
A86076
10068
82
825,576.00
Retro-Skateboard shoes
A86106
660
82
54,120.00
Retro-Skateboard shoes
Z81003
2376
88
209,088.00
Retro-Skateboard shoes
Z81007
636
90
57,240.00
Retro-Skateboard shoes
Z81018
5136
88
451,968.00
Retro-Skateboard shoes
Z81019
1500
95
142,500.00
Retro-Skateboard shoes
Z81022
2520
94
236,880.00
Retro-Skateboard shoes
Z81026
492
98
48,216.00
Retro-Skateboard shoes
Z82002
948
87
82,476.00
Retro-Skateboard shoes
Z86072
3228
80
258,240.00
Retro-Skateboard shoes
Z86076
840
80
67,200.00
1
Retro-Running shoes
A86051
2400
94
225,600.00
Retro-Running shoes
A86052
4764
85
404,940.00
Retro-Running shoes
A86139
1332
95
126,540.00
Retro-Running shoes
A86151
1632
98
159,936.00
Retro-Running shoes
A86156
3108
95
295,260.00
Retro-Running shoes
A86160
3108
94
292,152.00
Retro-Running shoes
A86166
1284
93
119,412.00
Retro-Running shoes
Z86051
6576
83
545,808.00
Retro-Running shoes
Z86052
4536
83
376,488.00
Retro-Running shoes
Z86139
3312
97
321,264.00
Retro-Running shoes
Z86156
1680
93
156,240.00
Retro-Running shoes
Z86166
1764
90
158,760.00
Retro-Tennis shoes
A85003
3312
90
298,080.00
Retro-Tennis shoes
A85022
3768
91
342,888.00
Retro-Tennis shoes
A87002
2508
82
205,656.00
Retro-Tennis shoes
A87011
2208
85
187,680.00
Retro-Tennis shoes
Z85003
1476
88
129,888.00
Retro-Tennis shoes
Z85022
2136
89
190,104.00
Retro-Tennis shoes
Z87011
3636
84
305,424.00
Retro-Casual shoes
A86036
732
104
76,128.00
Retro-Casual shoes
A86038
5088
85
432,480.00
Retro-Casual shoes
A86050
4788
90
430,920.00
Retro-Casual shoes
A86060
6120
96
587,520.00
Retro-Casual shoes
A86061
2784
86
239,424.00
Retro-Casual shoes
A86063
10128
82
830,496.00
Retro-Casual shoes
A86065
2832
95
269,040.00
Retro-Casual shoes
A86068
10824
93
1,006,632.00
Retro-Casual shoes
A86080
8088
104
841,152.00
Retro-Casual shoes
A86081
1560
104
162,240.00
Retro-Casual shoes
A86085
5424
92
499,008.00
Retro-Casual shoes
A86092
7200
89
640,800.00
Retro-Casual shoes
A86099
6456
89
574,584.00
Retro-Casual shoes
A86101
9840
78
767,520.00
Retro-Casual shoes
A86105
5460
90
491,400.00
Retro-Casual shoes
A86109
4248
68
288,864.00
Retro-Casual shoes
A86111
5568
82
456,576.00
Retro-Casual shoes
A86115
8088
82
663,216.00
Retro-Casual shoes
A86120
7692
78
599,976.00
Retro-Casual shoes
A86121
1176
112
131,712.00
Retro-Casual shoes
A86125
6096
82
499,872.00
Retro-Casual shoes
A86130
4608
86
396,288.00
Retro-Casual shoes
A86133
6132
71
435,372.00
Retro-Casual shoes
A86137
1308
95
124,260.00
2
Retro-Casual shoes
A86181
1248
82
102,336.00
Retro-Casual shoes
Z86023
3780
76
287,280.00
Retro-Casual shoes
Z86063
1080
94
101,520.00
Retro-Casual shoes
Z86078
3828
89
340,692.00
Retro-Casual shoes
Z86080
3660
102
373,320.00
Retro-Casual shoes
Z86105
3192
86
274,512.00
Retro-Casual shoes
Z86117
5604
86
481,944.00
Retro-Casual shoes
Z86120
5904
76
448,704.00
Retro-Casual shoes
Z86125
6672
80
533,760.00
Retro-Casual shoes
Z86133
6936
66
457,776.00
Retro-Casual shoes
Z86181
1236
91
112,476.00
Cotton shoes
A90002
264
109
28,776.00
Cotton shoes
A90003
192
127
24,384.00
Cotton shoes
A91302
684
115
78,660.00
Cotton shoes
Z90002
636
107
68,052.00
Cotton shoes
Z90003
216
124
26,784.00
Cotton shoes
Z96300
1896
98
185,808.00
Running shoes
A51318
768
100
76,800.00
Running shoes
A51326
672
100
67,200.00
Running shoes
A8953
984
83
81,672.00
Running shoes
S56313
612
85
52,020.00
Running shoes
T57323
3312
77
255,024.00
Running shoes
T8953
4368
81
353,808.00
Running shoes
Z56313
1932
82
158,424.00
Running shoes
Z9299
4548
82
372,936.00
Tennis shoes
A31310
2496
105
262,080.00
Tennis shoes
A9550
3336
89
296,904.00
Tennis shoes
S37330
552
74
40,848.00
Tennis shoes
T31315
612
102
62,424.00
Tennis shoes
T88307
3624
80
289,920.00
Tennis shoes
Z9550
4428
86
380,808.00
Casual shoes
A15013
3960
65
257,400.00
Casual shoes
A22320
1344
60
80,640.00
Casual shoes
A22332
840
60
50,400.00
Casual shoes
A25020
1452
65
94,380.00
Casual shoes
A9663
2772
69
191,268.00
Casual shoes
A9672
7692
65
499,980.00
Casual shoes
A9927
4980
76
378,480.00
Casual shoes
S27331
552
61
33,672.00
Casual shoes
T25326
4056
63
255,528.00
Casual shoes
Z23319
312
76
23,712.00
Casual shoes
Z9265
4428
80
354,240.00
In Total
31,154,328.00
3
Note: The buyer shall make the payment according to the products actually
delivered.
2. Quality Requirement and Period for Objection: the quality requirement is
subject to the sample provided by the Seller. If the Buyer has objection to the
quality of the product, the Buyer shall notify the Seller within 7 days after
receipt of the product. The Seller shall not bear any liability if the Buyer
does not notify the objection within 7 days.
3. Time, Place and Method of Delivery: deliver the product in batches according
to the Buyer’s notifications within one(1) year, to the Buyer’s warehouse.
4. Method and Cost of Transportation: the Seller arranges road transportation on
behalf of the Buyer. The Buyer shall bear all transportation cost.
5. Method and Schedule of Payment: the Seller shall make the payment within 60
days after the Seller accepts each batch of product without any pre-condition.
6. Performance Place of the Contract: the Seller’s location
7. Breach of Contract: if the Buyer fails to make the payment on time, the Buyer
shall bear the liability to the Seller according to relevant laws.
8. Dispute Settlement: in the event there is any dispute relating to this
Agreement, the Parties may settle it by consultations. If fails, any of the
Parties may file a law suit with the people’s court.
9. There are two counterparts of this Agreement. Each of the Parties holds one.
This Agreement shall take effect upon execution.
10. Particular Provision: if the Buyer’s sales of product hereunder exceed RMB9
million within one (1) year, the Seller shall award the Buyer 3% of the Buyer’s
total yearly sales, in cash or by writing-down the same amount from the
accounting receivable at the end of the year.
Seller
Buyer
/s/ Shenyang Yangyang Baijia Business &Trading Co., Ltd
Company Name: Shenyang Yangyang Baijia Business &Trading Co., Ltd
/s/ Beijing LiSheng Sports Goods Market
Company Name: Beijing LiSheng Sports Goods Market
Adress:
Adress:
Legal Representative:
Legal Representative:
Agent:
Agent:
Tel:
Tel:
Bank Name:
Bank Name:
Bank Account:
Bank Account:
Post Code:
Post Code:
4
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington,D.C. 20549 FORM8-A FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF1934 PEMBINA PIPELINE CORPORATION (Exact name of Registrant as specified in its charter) Alberta, Canada (State or other jurisdiction of in Company or organization) Not applicable (I.R.S. Employer Identification No.) 3800, 525 – 8th Avenue S.W., Calgary, Alberta, Canada (Address of principal executive offices) T2P 1G1 (Zip Code) DL Services Inc. Columbia Center 701 Fifth Avenue, Suite 6100 (206) 903-8800 (Name, address, including zip code, and telephone number, including area code, of agent for service) Securities registered or to be registered pursuant to Section 12(b) of the Act:None Title of each class to be so registered Rights to Purchase common shares, no par value Name of each exchange on which each class is to be registered New York Stock Exchange If this form relates to the registration of a class of securities pursuant to Section 12(b) of the Exchange Act and is effective pursuant to General Instruction A.(c), check the following box ý If this form relates to the registration of a class of securities pursuant to Section 12(g) of the Exchange Act and is effective pursuant to General Instruction A.(c), check the following box ¨ Securities Act registration file number to which this form relates: Not Applicable Securities to be registered pursuant to Section 12(g) of the Act:None -2- Item 1.Description of Securities to be registered Background On March 4, 2010, the board of directors (the “Board”) of Pembina Pipeline Corporation (“Pembina”), approved the entering into of a Shareholder Rights Plan Agreement, dated effective as of October 1, 2010, between Pembina and Computershare Trust Company of Canada, as rights agent (the “Rights Agreement”), which agreement contained the terms of a shareholder rights plan applicable to Pembina’s shareholders (the “Rights Plan”).The Rights Plan was approved by the holders of trust units of Pembina Pipeline Income Fund (a predecessor of Pembina) on May 7, 2010. Summary of the Rights Agreement The following is a brief summary of the principal terms of the Rights Plan, which is qualified in its entirety by reference to the text of the Rights Agreement, which has been filed herewith as an Exhibit and incorporated by reference herein.This summary description of the Rights Plan does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement.All capitalized terms used but not defined herein are defined in the Rights Agreement. Term The Rights Plan was effective as of October 1, 2010 (the "Effective Date"), and will expire at the end of the annual meeting of shareholders of Pembina to be held in 2013, subject to earlier termination or expiration of the Rights (as defined below) as set out in the Rights Plan. Issuance of Rights Pursuant to the Rights Plan, on March 4, 2010, the Board authorized the issuance on the Effective Date of (i) one right (a "Right") in respect of each common share outstanding at the close of business on such date and (ii) one Right in respect of each common share issued after the such effective date and prior to the earlier of the Separation Time (as hereinafter defined) and the time at which the Rights expire and terminate.For purposes of this description, the term "common shares" includes both the common shares, no par value, of Pembina and any other securities of Pembina into which such common shares may be subdivided, reclassified or changed from time to time.As of the date hereof, the only "common shares" outstanding are the outstanding common shares of Pembina. The issuance of the Rights is not dilutive and will not affect reported earnings or cash flow per common share until the Rights separate from the underlying common shares and become exercisable or until the exercise of the Rights.The issuance of the Rights will not change the manner in which shareholders currently trade their common shares, and is not intended to interfere with Pembina’s ability to undertake equity offerings in the future. Certificates and Transferability Prior to the Separation Time, the Rights will be evidenced by a legend imprinted on -3- certificates for common shares issued after the Effective Date.Rights are also attached to common shares that were outstanding on the Effective Date, although share certificates issued prior to the Effective Date do not (and need not) bear such a legend.Shareholders are not required to return their certificates in order to have the benefit of the Rights.Prior to the Separation Time, Rights will trade together with Pembina’s common shares and will not be exercisable or transferable separately from common shares.From and after the Separation Time and prior to the expiration time of the Rights, the Rights will be transferable separately from the common shares, and will be evidenced by separate certificates or other written acknowledgement ("Rights Certificates"). Separation of Rights The Rights will become exercisable and begin to trade separately from the associated common shares at the "Separation Time", which is the close of business on the tenth trading day after the earliest of : (a) the date of public announcement that a person has become an "Acquiring Person", which is generally a person who acquires beneficial ownership (within the meaning of the Rights Agreement) of 20% or more of the outstanding common shares other than through certain types of acquisitions specified in the Rights Agreement; (b) the date of commencement of, or the first public announcement of an intention of any person (other than Pembina or any of its subsidiaries) to commence a takeover bid (other than a Permitted Bid for so long as such takeover bid continues to meet the requirements of a Permitted Bid) where the common shares subject to the bid, together with the common share into which any securities subject to the bid are convertible and the common shares beneficially owned by that person would constitute 20% of more of the outstanding common shares; (c) the date upon which a Permitted Bid ceases to qualify as such; and (d) such later time as the Board may determine. Promptly following the Separation Time, separate Rights Certificates will be mailed to the holders of record of the common shares as of the Separation Time and the Rights Certificates alone will evidence the Rights. Rights Exercise Privilege After the Separation Time, each Right entitles the holder thereof to purchase one common share at an initial "Exercise Price" equal to three times the "Market Price" at the Separation Time.The Market Price is defined as the average of the daily closing prices per common share on each of the 20 consecutive trading days (as such term is used in the Rights Agreement) through and including the trading day immediately preceding the Separation Time.For purposes of this determination, the closing price per common share on any date is: (a) the closing board lot sale price or, if that price is not available, the average of the -4- closing bid and asked prices for the common shares as reported by the principal Canadian stock exchange on which the common shares are listed or admitted to trading, or if for any reason neither of those prices is available on that day or the common shares are not listed or admitted to trading on a Canadian stock exchange, the closing board lot sale price or, if that price is not available, the average of the closing bid and asked price, for the common shares as reported by such other securities exchange or national securities quotation system on which the common shares are listed or admitted for trading on which the largest number of common shares were traded during the most recently completed calendar year; (b) if for any reason none of such prices is available on such date or the securities are not listed or admitted to trading on a Canadian stock exchange or other securities exchange or on a national securities quotation system, the last sale price or, in case no sale takes place on such date, the average of the high bid and low asked prices for each of such securities in the over-the-counter market, as quoted by any reporting system then in use (as selected by the Board); or (c) if the securities are not listed or admitted to trading as contemplated in clause (a) or (b) above, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the securities. If, for any reason, none of such prices is available on such date, the closing price per common share on such date means the fair value per common share on such date as determined in good faith by an internationally recognized investment dealer or investment banker with respect to the fair value per common share.The Market Price will be expressed in Canadian dollars and, if initially determined in respect of any day forming part of the 20 consecutive trading day period in question in United States dollars, the amount will be translated into Canadian dollars on such date at the Canadian dollar equivalent thereof, as determined in accordance with the Rights Agreement. Following a transaction which results in a person becomes an Acquiring Person (a "Flip-In Event") and as to which the Board has not waived the application of the Rights Plan pursuant to the terms thereof, the Rights entitle the holder thereof to receive, upon exercise, such number of common shares that have an aggregate Market Price (as of the date of the Flip-In Event) equal to twice the then Exercise Price of the Rights for an amount in cash equal to the Exercise Price (subject to adjustment in accordance with the provisions of the Rights Agreement).In such event, however, any Rights beneficially owned by an Acquiring Person (or any of its affiliates, associates and joint actors), or, in certain circumstances, a transferee of any such person, will be null and void.A Flip-In Event does not include acquisitions approved by the Board or acquisitions pursuant to a Permitted Bid. Permitted Bid Requirements A bidder can make a takeover bid and acquire common shares without triggering a Flip-In Event under the Rights Plan if the takeover bid qualifies as a Permitted Bid. The requirements of a "Permitted Bid" include the following: -5- ● the takeover bid must be made by means of a takeover bid circular; ● the takeover bid is made to all holders of common shares on the books of Pembina, other than the offeror; ● no common shares are taken up or paid for pursuant to the takeover bid unless, as of the close of business on the date on which common shares may be taken up and paid for under the takeover bid, more than 50% of the common shares held by Independent Shareholders (as such term is defined below) shall have been deposited pursuant to the takeover bid and not withdrawn; ● no common shares are taken up or paid for pursuant to the takeover bid prior to the close of business on the date that is no earlier than 60 days following the date of the takeover bid; ● common shares may be deposited pursuant to such takeover bid at any time during the period of time between the date of the takeover bid and the date on which common shares may be taken up and paid for, and any common shares deposited pursuant to the takeover bid may be withdrawn until taken up and paid for; and ● if on the date on which common shares may be taken up and paid for under the takeover bid, more than 50% of the common shares held by Independent Shareholders have been deposited to the takeover bid and not withdrawn, the offeror makes a public announcement of that fact and the takeover bid is extended to remain open for deposits and tenders of common shares for not less than 10 business days from the date of such public announcement. For purposes of the foregoing, an “Independent Shareholder” is any holder of common shares, other than: (a)any Acquiring Person; (b)any person that is making or has announced a current intention to make a takeover bid for common shares, subject to certain exceptions contained in the Rights Agreement; (c)certain affiliates and associates of such Acquiring Person or person referred to in clause (b) above; (d)any person acting jointly or in concert with such Acquiring Person or person referred to in clause (b) above; and (e)any trustee of any employee benefit plan, common share purchase plan, deferred profit sharing plan, or any similar plan or trust for the benefit of employees of Pembina or any of its subsidiaries, unless the beneficiaries of the plan or trust direct the manner in which the common shares are to be voted or direct whether the common shares are to be tendered to a take-over bid. -6- The Rights Plan also allows for a competing Permitted Bid (a "Competing Permitted Bid") to be made while a Permitted Bid is in existence.A Competing Permitted Bid must satisfy all of the requirements of a Permitted Bid, except that it may expire on the same date as the Permitted Bid, subject to the requirement that it be outstanding for a minimum period of 35 days (the minimum period required under Canadian securities laws).A Competing Permitted Bid is considered a Permitted Bid for the purposes of the Rights Plan. Permitted Lock-Up Agreements A person will not become an Acquiring Person by virtue of having entered into an agreement (a "Permitted Lock-Up Agreement") with a shareholder pursuant to which the shareholder agrees to deposit or tender common shares to a takeover bid (the "Lock-Up Bid") made by that person, provided that the agreement meets certain requirements, including that: (a) the terms of the agreement are publicly disclosed and a copy of the agreement is publicly available not later than the date of the Lock-Up Bid or, if the Lock-Up Bid has not been made prior to the date on which such agreement is entered into, not later than the first business day following the date of such agreement; (b) the shareholder who has agreed to tender common shares to the Lock-Up Bid made by the other party to the agreement is permitted to terminate its obligation under the agreement, and to terminate any obligation with respect to the voting of such common shares, in order to tender common shares to another takeover bid or transaction where the offer price or value of the consideration payable under the other takeover bid or transaction is greater than the price or value of the consideration per common share at which the shareholder has agreed to deposit or tender common shares to the Lock-Up Bid, or is greater than a specified minimum which is not more than 7% higher than the price or value of the consideration per common share at which the shareholder has agreed to deposit or tender common shares under the Lock-Up Bid; and (c) no break-up fees, top-up fees, penalties, expenses or other amounts that exceed in the aggregate the greater of (i) 2.5% of the price or value of the consideration payable under the Lock-Up Bid and (ii) 50% of the increase in consideration resulting from another takeover bid or transaction, shall be payable by the locked-up shareholder if the shareholder fails to deposit or tender common shares to the Lock-Up Bid, withdraws common shares previously tendered thereto, or supports another transaction. Waiver and Redemption If a potential offeror does not desire to make a Permitted Bid, it can negotiate with, and obtain the prior approval of, the Board to make a takeover bid by way of a takeover bid circular sent to all holders of common shares.In such circumstances, the Board may, prior to the occurrence of a Flip-in Event, waive the application of the Rights Plan, provided that the Flip-in Event would occur by reason of a takeover bid made by means of a takeover bid sent to all holders of common shares.Any waiver of the application of the Rights Plan in respect of a -7- particular takeover bid will also constitute a waiver of the Rights Plan in respect of any other formal takeover bid that is made while the initial takeover bid is outstanding. The Board may also waive the application of the Rights Plan in respect of a particular Flip-in Event that has occurred through inadvertence, provided that the Acquiring Person that inadvertently triggered such Flip-in Event reduces its beneficial holdings to less than 20% of the outstanding common shares such that at the time of the waiver, such person is not an Acquiring Person. With shareholder approval, the Board may waive the application of the Rights Plan to any other Flip-in Event prior to its occurrence. Rights are deemed to be redeemed following completion of a Permitted Bid or any other takeover bid in respect of which the Board has waived the application of the Rights Plan.The Board may, with shareholder approval, at any time prior to the occurrence of a Flip-in Event, elect to redeem all (but not less than all) of the then outstanding Rights at a redemption price of $0.0001 per Right. Protection Against Dilution The Exercise Price, the number and nature of securities that may be purchased upon the exercise of Rights and the number of Rights outstanding are subject to adjustment from time to time to prevent dilution in the event of stock dividends or subdivisions, consolidations, reclassifications or other changes in the outstanding common shares, pro rata distributions to holders of common shares and other circumstances where adjustments are requirement to appropriately protect the interests of the holders of Rights. Exemptions for Investment Advisors Investment advisors (for client accounts), trust companies (acting in their capacity as trustees or administrators), statutory bodies whose business includes the management of funds (for employee benefit plans, pension plans, or insurance plans of various public bodies), and administrators or trustees of registered pension plans or funds and agents or agencies of the Government of Canada or any Province thereofacquiring greater than 20% of the outstanding common shares are effectively exempted from triggering a Flip-in Event, provided they are not, and have not announced an intention to, in fact making, either alone or jointly or in concert with any other person, a takeover bid. Duties of the Board The adoption of the Rights Plan will not in any way lessen or affect the duty of the Board to act honestly and in good faith with a view to the best interests of Pembina.The Board, when a takeover bid or similar offer is made, will continue to have the duty and power to take such actions and make such recommendations to shareholders as are considered appropriate. -8- Amendment Pembina may make amendments to the Rights Agreement at any time to correct any clerical or typographical error, may make amendments that are required to maintain the validity of the Rights Plan due to changes in any applicable legislation, regulations or rules and may supplement, amend, vary, rescind or delete any provisions of the Rights Plan (provided that such action would not materially adversely affect the interests of the holders of Rights generally) where the board of directors of Pembina acting in good faith deems such action necessary or desirable).Pembina may, with shareholder approval, supplement, amend, vary, rescind or delete any of the provisions of the Rights Agreement. Item 2.Exhibits See the Exhibit Index hereto. -9- SIGNATURE Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereto duly authorized, on May 31, 2012. PEMBINA PIPELINE CORPORATION By: /s/ Jennifer A. Harker Name:Jennifer A. Harker Title:Corporate Secretary and Senior Legal Counsel - 10- EXHIBIT INDEX Exhibit Number Description of Document Sharenolder Rights Plan Agreement, dated effective as of October 1, 2010, between Pembina Pipeline Corporation and Computershare Trust Company of Canada, as rights agent Form of Rights Certificate (included as part of Exhibit 2.1 hereto)
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EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION -OXLEY ACT OF 2002 I, Kranti Kumar Kotni , hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Annual Report on Form 10-K of Axiom Corp. for the year ended August 31, 2013 (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 Axiom Corp. Dated: December 16, 2013 /s/ Kranti Kumar Kotni Kranti Kumar Kotni Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) Axiom Corp. 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 Axiom Corp. and will be retained by Axiom Corp. and furnished to the Securities and Exchange Commission or its staff upon request.
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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):December 19, 2011 Commission File Number: 0-7914 (Exact name of registrant as specified in its charter) Delaware 84-0592823 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) 633 17th Street, Suite 1900 Denver, Colorado 80202-3619 (Address of principal executive offices) (Zip Code) (303) 296-3076 (Registrant telephone including area code) Check the appropriate item below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the 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 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)) ¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 8.01.Other Events. On December 19, 2011, Earthstone Energy, Inc. (“Earthstone” or “the Company”) issued a press release announcing a previously unannounced exploration project.The press release announcesthe recent acquisition of leasehold and producing oil well interests in Sheridan County, Montana, as well as the commencement of drilling of a new well,as set forth in the press release attached hereto as Exhibit 99.1. The aforementioned information shall not be deemed to be “filed” for purposes of Section18 of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) or otherwise subject to the liability of that section, and shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. On December 20, 2011, the Company completed the previously announced transfer of the listing of its Common Stock to the New York Stock Exchange Amex (“NYSE Amex”) from the NASDAQ Capital Market, as set forth in the press release attached hereto as Exhibit 99.2.On such date, the Company’s Common Stock commenced trading on the NYSE Amex under the symbol “ESTE”. Item 9.01.Financial Statements and Exhibits. (d) Exhibits. The followingare furnished as exhibits to this report: Exhibit No. Description Earthstone Energy, Inc. Press Release dated December 19, 2011. Earthstone Energy, Inc. Press Release dated December 20, 2011. 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, hereunto duly authorized. EARTHSTONE ENERGY, INC. (Registrant) Date:December 20, 2011 By: /s/Ray Singleton Ray Singleton, President and Chief Executive Officer
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EXHIBIT 10.6
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of
September 10, 2018, is entered into by and among FARMER BROS. CO., a Delaware
corporation (“Farmer Bros.”), CHINA MIST BRANDS, INC., a Delaware corporation
(“China Mist”), BOYD ASSETS CO., a Delaware corporation, (“Boyd” and together
with Farmer Bros. and China Mist, each individually as a “Borrower”, and
individually and collectively, jointly and severally, as “Borrowers”), the other
Loan Parties (as defined below) party hereto, the Lenders (as defined below)
party hereto, and JPMORGAN CHASE BANK, N.A., as administrative agent for the
Lenders (in such capacity, “Administrative Agent”).
RECITALS
A.
Borrowers, the other parties signatory thereto as “Loan Parties” (each
individually, a “Loan Party” and collectively, the “Loan Parties”),
Administrative Agent, and the financial institutions party thereto as lenders
(each individually, a “Lender” and collectively, the “Lenders”) have previously
entered into that certain Credit Agreement, dated as of March 2, 2015, as
amended by that certain First Amendment to Credit Agreement and First Amendment
to Pledge and Security Agreement, dated as of August 25, 2017 (as so amended and
as further amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), pursuant to which the Lenders have made certain
loans and financial accommodations available to Borrowers. Terms used herein
without definition shall have the meanings ascribed to them in the Credit
Agreement.
B.
Borrowers and the other Loan Parties have requested that Administrative Agent
and the Lenders amend the Credit Agreement, and Administrative Agent and the
Lenders are willing to amend the Credit Agreement pursuant to the terms and
conditions set forth herein.
C.
Each Borrower and each other Loan Party is entering into this Amendment with the
understanding and agreement that, except as specifically provided herein, none
of Administrative Agent’s or any Lender’s rights or remedies as set forth in the
Credit Agreement and the other Loan Documents are being waived or modified by
the terms of this Amendment.
AGREEMENT
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1.Amendments to Credit Agreement.
a)The following definition is hereby added to Section 1.01 of the Credit
Agreement in its proper alphabetical order:
“Second Amendment Effective Date” means September 10, 2018.
b)Effective as of August 14, 2018, the definition of “EBITDA” in Section 1.01 of
the Credit Agreement is hereby amended and restated in its entirety to read as
follows:
“EBITDA” means, for any period, Net Income for such period plus (a) without
duplication and to the extent deducted in determining Net Income for such
period, the sum of (i) Interest Expense for such period, (ii) income tax expense
for such period net of tax refunds, (iii) all amounts attributable to
depreciation and amortization expense for such period, (iv) any extraordinary
non-cash charges for such period, (v) any other non-cash charges for such period
(but excluding any non-cash charge in respect of an item that was included in
Net Income in a prior period and any non-cash charge that relates to the
write-down or write-off of inventory), (vi) non-cash exchange, translation, or
performance losses relating to any hedging transactions or foreign currency
fluctuations, (vii) so long as incurred on or prior to June 30, 2018, unusual,
extraordinary or non-recurring cash charges, expenses or losses related to
strategic initiatives, business optimization and restructurings in connection
with Project Evolution, including, without limitation, severance costs,
relocation costs (including the relocation of the Company’s corporate
headquarters from the Torrance Facility), integration costs, opening,
pre-opening, closing and transition costs for facilities and distribution
centers, signing costs, retention or completion bonuses, restructuring charges,
systems establishment costs, curtailments or modifications to pension and
retirement benefit plans and contract termination costs in an aggregate amount
not to exceed $30,000,000 during the term of this Agreement, (viii) solely to
the extent incurred during the period of April 1, 2017, through September 30,
2018, integration and transaction costs associated with the Specified
Acquisition made prior to the Second Amendment Effective Date in an aggregate
amount not to exceed, for each of the fiscal quarters ending June 30, 2017,
September 30, 2017, December 31, 2017, March 31, 2018, June 30, 2018, and
September 30, 2018, the amount previously identified in respect of such fiscal
quarter to the Administrative Agent in writing prior to the Second Amendment
Effective Date, and (ix) other non-recurring, unusual or extraordinary cash
charges, losses or expenses in an aggregate amount not to exceed, for any such
period, 10% of EBITDA for such period (calculated prior to giving effect to this
clause (ix)), minus (b) without duplication and to the extent included in Net
Income, (i) any cash payments made during such period in respect of non-cash
charges described in clause (a)(v) taken in a prior period, (ii) any
extraordinary gains and any non-cash items of income for such period and (iii)
exchange, translation, or performance gains relating to any hedging transactions
or foreign currency fluctuations, all calculated for the Company and its
Subsidiaries on a consolidated basis in accordance with GAAP.
c)Effective as of August 14, 2018, the definition of “Fixed Charge Coverage
Ratio” in Section 1.01 of the Credit Agreement is hereby and restated in its
“Fixed Charge Coverage Ratio” means, at any date for any period, the ratio of
(a) EBITDA minus Unfinanced Capital Expenditures (other than Capital
Expenditures (i) made prior to the First Amendment Effective Date in an
aggregate amount not to exceed, for each of the fiscal quarters ending September
30, 2016, December 31, 2016, March 31, 2017, and June 30, 2017, the amount
previously identified in respect of such fiscal quarter to the Administrative
Agent in writing prior to the First Amendment Effective Date and (ii) made prior
to the Second Amendment Effective Date in an aggregate amount not to exceed, for
each of the fiscal quarters ending December 31, 2017, March 31, 2018, June 30,
2018, and September 30, 2018, the amount previously identified in respect of
such fiscal quarter to the Administrative Agent in writing prior to the Second
Amendment Effective Date), to (b) Fixed Charges, all calculated for the Company
and its Subsidiaries on a consolidated basis in accordance with GAAP.
d)Effective as of August 14, 2018, the definition of “Reporting Trigger Period”
in Section 1.01 of the Credit Agreement is hereby and restated in its entirety
“Reporting Trigger Period” means the period (a) commencing on any day that
Availability is less than an amount equal to 16% of the aggregate Revolving
Commitments (or $7,500,000, solely during the period commencing with the Second
Amendment Effective Date through October 31, 2018), and (b) continuing until
Availability has been greater than or equal to an amount equal to 16% of the
aggregate Revolving Commitments at all times for 30 consecutive calendar days
(or $7,500,000, solely during the period commencing with the Second Amendment
Effective Date through October 31, 2018).
e)Section 6.12 of the Credit Agreement is hereby amended and restated in its
“SECTION 6.12. Capital Expenditures. The Borrowers will not, nor will they
permit any Subsidiary to, incur or make any Capital Expenditures in excess of
$35,000,000, in the aggregate, during the fiscal year ending June 30, 2019.”
2.Effect of Amendment. For the avoidance of doubt, the parties hereto
acknowledge and agree that the effect of the amendments set forth in Section 1
above is that Borrowers were in compliance with the financial covenant set forth
in Section 6.13 of the Credit Agreement for the period ended March 31, 2018, and
no Event of Default has occurred or existed through the Second Amendment
Effective Date on account of (1) the financial covenant set forth in Section
6.13 for the period ended March 31, 2018 or (2) the requirement to deliver a
weekly Borrowing Base Certificate pursuant to Section 5.01(g)(iii) of the Credit
Agreement.
3.Conditions Precedent to Effectiveness of this Amendment. The following shall
have occurred before this Amendment is effective:
a.
Amendment. Administrative Agent shall have received this Amendment fully
executed in a sufficient number of counterparts for distribution to all parties.
b.
representations and warranties of Borrowers and the other Loan Parties set forth
herein and in the other Loan Documents shall be true and correct in all material
respects with the same effect as though made on and as of the date hereof (other
than any such representation or warranty set forth in any other Loan Document
which by its terms is made as of a specified date, which representation or
warranty shall be true and correct in all material respects only as of such
specified date), provided that any such representation or warranty which is
subject to any materiality qualifier shall be true and correct in all respects.
4.
Representations and Warranties. Each Borrower and each other Loan Party
represents and warrants to Administrative Agent and the Lenders as follows:
a.
Authority. Each Borrower and each other Loan Party has the requisite corporate
power and authority to execute and deliver this Amendment, and to perform its
obligations hereunder and under the Loan Documents (as amended or modified
hereby) to which it is a party. The execution, delivery, and performance by each
Borrower and each other Loan Party of this Amendment have been duly approved by
all necessary corporate action, have received all necessary governmental
approval, if any, and except to the extent such contravention or restriction
would reasonably be expected to result in a Material Adverse
Effect, do not contravene any law or any contractual restriction binding on such
Borrower or such Loan Party.
b.
Enforceability. This Amendment has been duly executed and delivered by each
Borrower and each other Loan Party. This Amendment and each Loan Document (as
amended or modified hereby) is the legal, valid, and binding obligation of each
Borrower and each other Loan Party, enforceable against each Borrower and each
other Loan Party in accordance with its terms, and is in full force and effect,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
c.
in the Loan Documents are true and correct in all material respects with the
same effect as though made on and as of the date hereof (other than any such
representation or warranty which by its terms is made as of a specified date,
which representation or warranty is true and correct in all material respects
only as of such specified date), provided that any such representation or
warranty which is subject to any materiality qualifier is true and correct in
all respects.
d.
No Default. After giving effect to this Amendment, no event has occurred and is
continuing that constitutes a Default.
5.Choice of Law. This Amendment shall be governed by and construed in accordance
with the internal laws (and not the law of conflicts) of the State of
California, but giving effect to federal laws applicable to national banks.
6.Counterparts. This Amendment may be executed in any number of counterparts and
by different parties and separate counterparts, each of which when so executed
and delivered, shall constitute an original, and all of which, when taken
together, shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Amendment by telecopy, 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 Amendment. Notwithstanding the foregoing, Borrowers and the other Loan
Parties hereby agree to provide Administrative Agent with original counterparts
of their respective signature pages hereto in a number sufficient for
distribution of an original counterpart to each party hereto (or such lesser
number as agreed to by Administrative Agent).
7.
Reference to and Effect on the Loan Documents.
a.
Upon and after the effectiveness of this Amendment, each reference in the Credit
Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import
referring to the Credit Agreement, and each reference in the other Loan
Documents to “the Credit Agreement”, “thereof” or words of like import referring
as modified and amended hereby.
b.
Except as specifically set forth in this Amendment, the Credit Agreement and all
other Loan Documents are and shall continue to be in full force and effect and
are hereby in all
respects ratified and confirmed and shall constitute the legal, valid, binding,
and enforceable obligations of Borrowers and the other Loan Parties to
Administrative Agent and the Lenders without defense, offset, claim, or
contribution.
c.
The execution, delivery and effectiveness of this Amendment shall not, except as
expressly provided herein, operate as a waiver of any right, power, or remedy of
Administrative Agent or any Lender under any of the Loan Documents, nor
8.Ratification. Each Borrower and each other Loan Party hereby restates,
ratifies and reaffirms each and every term and condition set forth in the Credit
Agreement and the other Loan Documents effective as of the date hereof.
9.Integration. This Amendment, together with the other Loan Documents,
incorporates all negotiations of the parties hereto with respect to the subject
matter hereof and is the final expression and agreement of the parties hereto
with respect to the subject matter hereof.
10.Severability. In case any provision in this Amendment shall be invalid,
illegal, or unenforceable, such provision shall be severable from the remainder
of this Amendment and the validity, legality, and enforceability of the
11.Submission of Amendment. The submission of this Amendment to the parties or
their agents or attorneys for review or signature does not constitute a
commitment by Administrative Agent or any Lender to waive any of their
respective rights and remedies under the Loan Documents, and this Amendment
shall have no binding force or effect until all of the conditions to the
effectiveness of this Amendment have been satisfied as set forth herein.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
first above written.
BORROWERS:
FARMER BROS. CO.,
a Delaware corporation
By /s/ David Robson
Name: David Robson
Title: CFO
CHINA MIST BRANDS, INC.,
a Delaware corporation
Name: David Robson
Title: CFO
BOYD ASSETS CO.,
a Delaware corporation
Name: David Robson
Title: CFO
OTHER LOAN PARTIES:
COFFEE BEAN INTERNATIONAL, INC.,
an Oregon corporation
Name: David Robson
Title: CFO
FBC FINANCE COMPANY,
a California corporation
Name: David Robson
Title: CFO
[Second Amendment to Credit Agreement]
COFFEE BEAN HOLDING CO., INC.,
a Delaware corporation
Name: David Robson
Title: CFO
ADMINISTRATIVE AGENT AND LENDERS:
as Administrative Agent, Issuing Bank, Swingline Lender and a Lender
By /s/ Kirk Wolverton
Name: Kirk Wolverton
Title: Authorized Officer
SUNTRUST BANK,
as a Lender
By /s/ Dan Clubb
Name: Dan Clubb
Title: Director
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Name: Commission Regulation (EC) No 1479/2000 of 6 July 2000 establishing the standard import values for determining the entry price of certain fruit and vegetables
Type: Regulation
Subject Matter: plant product; agricultural policy; prices
Date Published: nan
nan |
Name: Commission Regulation (EC) No 2721/95 of 24 November 1995 establishing rules for the application of reference and routine methods for the analysis and quality evaluation of milk and milk products under the common market organization
Type: Regulation
Subject Matter: health; European Union law; agricultural policy; processed agricultural produce; consumption
Date Published: nan
Avis juridique important|31995R2721Commission Regulation (EC) No 2721/95 of 24 November 1995 establishing rules for the application of reference and routine methods for the analysis and quality evaluation of milk and milk products under the common market organization Official Journal L 283 , 25/11/1995 P. 0007 - 0008COMMISSION REGULATION (EC) No 2721/95 of 24 November 1995 establishing rules for the application of reference and routine methods for the analysis and quality evaluation of milk and milk products under the common market organizationTHE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, Having regard to Council Regulation (EEC) No 804/68 of 27 June 1968 on the common organization of the market in milk and milk products (1), as last amended by Regulation (EC) No 1538/95 (2), and in particular Articles 6 (6), 7 (5), 8 (4), 9 (3), 10 (3), 11 (3), 12 (3), 13 (3), 16 (1) and (4) and 17 (14) thereof, Whereas the composition and quality characteristics of milk and milk products laid down in regulations under the common market organization in milk and milk products have to be verified to ensure strict compliance with those requirements; Whereas it is frequently provided provided that the reference methods for such verifications are methods published by international organisations such as IDF, ISO and AOAC International, which are regularly updated by those organizations; whereas, in certain cases a Community reference method is laid down which is subsequently replaced by a method published by an international organization; whereas, in other cases, no reference method is specified in the Community regulation; whereas in order to ensure uniformity in the application of reference methods, it is appropriate to draw up each year a list of reference methods, and to specify that the method applicable is that referred to in such list; Whereas the use of routine methods should not be excluded; whereas the conditions for their application should be specified; Whereas the Management Committee for Milk and Milk Products has not delivered an opinion within the time limit set by its chairman, HAS ADOPTED THIS REGULATION: Article 1 This Regulation lays down rules for the application of methods for the chemical, physical and microbiological analysis of milk and milk products provided for in Community Regulations relating to the common organization of the market in milk and milk products (hereafter referred to as 'the Regulations`). Article 2 1. The Commission shall, in accordance with the procedure laid down in Article 30 of Regulation (EEC) No 804/68, draw up before 1 April in each year a list of the reference methods applicable to the analyses referred to in Article 1. However, the first list shall be drawn up within six months of the entry into force of this Regulation. 2. Where no reference method is specified in the Regulations, or where the reference method specified differs from that set out in the list provided for in paragraph 1, the reference method specified in the list shall be applied. Article 3 Routine methods may be used for analyses required by the Regulations provided that they are properly calibrated and regularly checked against the reference method. In cases of dispute, the results obtained by the reference method are decisive. Article 4 The laboratory report of the results of the analysis must contain sufficient elements to enable an evaluation of the results to be made. Article 5 This Regulation shall enter into force six months following the date of its publication in the Official Journal of the European Communities. This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 24 November 1995. For the Commission Franz FISCHLER Member of the Commission |
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO §240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO §240.13d-2(a) (Amendment No. 1)1 Banc of California, Inc. (Name of Issuer) Common Stock, $0.01 par value per share (Title of Class of Securities) 05990K 10 6 (CUSIP Number) BRADLEY S. VIZI LEGION PARTNERS ASSET MANAGEMENT, LLC 9401 Wilshire Blvd, Suite 705 Beverly Hills, CA 90212 (424) 253-1775 APRIL WILCOX CALIFORNIA STATE TEACHERS’ RETIREMENT SYSTEM 100 Waterfront Place, MS 04 West Sacramento, CA 95605 (916) 414-7551 STEVE WOLOSKY, ESQ. OLSHAN FROMEWOLOSKY LLP 1325 Avenue of the Americas New York, New York 10019 (212) 451-2300 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) February 6, 2017 (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 §§240.13d-1(e), 240.13d-1(f) or 240.13d-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 §240.13d-7 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 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 purpose 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. 05990K 10 6 1 NAME OF REPORTING PERSON Legion Partners, L.P. I 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)o (b)o 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) ¨ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 SOLE VOTING POWER - 0 - 8 SHAREDVOTING POWER 9 SOLE DISPOSITIVE POWER - 0 - 10 SHAREDDISPOSITIVE POWER 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,121,769* 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.2% 14 TYPE OF REPORTING PERSON PN * Includes 203,100 Shares underlying call options exercisable within 60 days hereof. 2 CUSIP NO. 05990K 10 6 1 NAME OF REPORTING PERSON Legion Partners, L.P. II 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)o (b)o 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) ¨ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 SOLE VOTING POWER - 0 - 8 SHAREDVOTING POWER 9 SOLE DISPOSITIVE POWER - 0 - 10 SHAREDDISPOSITIVE POWER 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 102,181* 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Less than 1% 14 TYPE OF REPORTING PERSON PN * Includes 18,300 Shares underlying call options exercisable within 60 days hereof. 3 CUSIP NO. 05990K 10 6 1 NAME OF REPORTING PERSON Legion Partners Special Opportunities, L.P. I 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)o (b)o 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) ¨ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 SOLE VOTING POWER - 0 - 8 SHAREDVOTING POWER 9 SOLE DISPOSITIVE POWER - 0 - 10 SHAREDDISPOSITIVE POWER 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,905,229* 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.8% 14 TYPE OF REPORTING PERSON PN * Includes 493,300 Shares underlying call options exercisable within 60 days hereof. 4 CUSIP NO. 05990K 10 6 1 NAME OF REPORTING PERSON Legion Partners Special Opportunities, L.P. V 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)o (b)o 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) ¨ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 SOLE VOTING POWER - 0 - 8 SHAREDVOTING POWER 9 SOLE DISPOSITIVE POWER - 0 - 10 SHAREDDISPOSITIVE POWER 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) Less than 1% 14 TYPE OF REPORTING PERSON PN 5 CUSIP NO. 05990K 10 6 1 NAME OF REPORTING PERSON Legion Partners, LLC 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)o (b)o 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) ¨ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 SOLE VOTING POWER - 0 - 8 SHAREDVOTING POWER 9 SOLE DISPOSITIVE POWER - 0 - 10 SHAREDDISPOSITIVE POWER 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,305,679* 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.6% 14 TYPE OF REPORTING PERSON OO * Includes 714,700 Shares underlying call options exercisable within 60 days hereof. 6 CUSIP NO. 05990K 10 6 1 NAME OF REPORTING PERSON Legion Partners Asset Management, LLC 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)o (b)o 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) ¨ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 SOLE VOTING POWER - 0 - 8 SHAREDVOTING POWER 9 SOLE DISPOSITIVE POWER - 0 - 10 SHAREDDISPOSITIVE POWER 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,305,679* 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.6% 14 TYPE OF REPORTING PERSON IA * Includes 714,700 Shares underlying call options exercisable within 60 days hereof. 7 CUSIP NO. 05990K 10 6 1 NAME OF REPORTING PERSON Legion Partners Holdings, LLC 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)o (b)o 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) ¨ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 SOLE VOTING POWER - 0 - 8 SHAREDVOTING POWER 9 SOLE DISPOSITIVE POWER - 0 - 10 SHAREDDISPOSITIVE POWER 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,305,879* 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.6% 14 TYPE OF REPORTING PERSON OO * Includes 714,700 Shares underlying call options exercisable within 60 days hereof. 8 CUSIP NO. 05990K 10 6 1 NAME OF REPORTING PERSON Bradley S. Vizi 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)o (b)o 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) ¨ 6 CITIZENSHIP OR PLACE OF ORGANIZATION USA NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 SOLE VOTING POWER - 0 - 8 SHAREDVOTING POWER 9 SOLE DISPOSITIVE POWER - 0 - 10 SHAREDDISPOSITIVE POWER 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,305,879* 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.6% 14 TYPE OF REPORTING PERSON IN * Includes 714,700 Shares underlying call options exercisable within 60 days hereof. 9 CUSIP NO. 05990K 10 6 1 NAME OF REPORTING PERSON Christopher S. Kiper 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)o (b)o 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) ¨ 6 CITIZENSHIP OR PLACE OF ORGANIZATION USA NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 SOLE VOTING POWER - 0 - 8 SHAREDVOTING POWER 9 SOLE DISPOSITIVE POWER - 0 - 10 SHAREDDISPOSITIVE POWER 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,305,879* 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.6% 14 TYPE OF REPORTING PERSON IN * Includes 714,700 Shares underlying call options exercisable within 60 days hereof. 10 CUSIP NO. 05990K 10 6 1 NAME OF REPORTING PERSON Raymond White 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)o (b)o 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) ¨ 6 CITIZENSHIP OR PLACE OF ORGANIZATION USA NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 SOLE VOTING POWER - 0 - 8 SHAREDVOTING POWER 9 SOLE DISPOSITIVE POWER - 0 - 10 SHAREDDISPOSITIVE POWER 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,305,879* 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.6% 14 TYPE OF REPORTING PERSON IN * Includes 714,700 Shares underlying call options exercisable within 60 days hereof. 11 CUSIP NO. 05990K 10 6 1 NAME OF REPORTING PERSON California State Teachers’ Retirement System 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)o (b)o 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) ¨ 6 CITIZENSHIP OR PLACE OF ORGANIZATION California NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 SOLE VOTING POWER 8 SHAREDVOTING POWER - 0 - 9 SOLE DISPOSITIVE POWER 10 SHAREDDISPOSITIVE POWER - 0 - 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) Less than 1% 14 TYPE OF REPORTING PERSON EP 12 CUSIP NO. 05990K 10 6 1 NAME OF REPORTING PERSON Roger H. Ballou 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)o (b)o 3 SEC USE ONLY 4 SOURCE OF FUNDS 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) ¨ 6 CITIZENSHIP OR PLACE OF ORGANIZATION USA NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 SOLE VOTING POWER - 0 - 8 SHAREDVOTING POWER - 0 - 9 SOLE DISPOSITIVE POWER - 0 - 10 SHAREDDISPOSITIVE POWER - 0 - 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON - 0 - 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% 14 TYPE OF REPORTING PERSON IN 13 CUSIP NO. 05990K 10 6 1 NAME OF REPORTING PERSON Marjorie Bowen 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)o (b)o 3 SEC USE ONLY 4 SOURCE OF FUNDS 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) ¨ 6 CITIZENSHIP OR PLACE OF ORGANIZATION USA NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7 SOLE VOTING POWER - 0 - 8 SHAREDVOTING POWER - 0 - 9 SOLE DISPOSITIVE POWER - 0 - 10 SHAREDDISPOSITIVE POWER - 0 - 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON - 0 - 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES o 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% 14 TYPE OF REPORTING PERSON IN 14 CUSIP NO. 05990K 10 6 The following constitutes Amendment No. 1 to the Schedule 13D filed by the undersigned (the “Amendment No. 1”). This Amendment No. 1 amends the Schedule 13D as specifically set forth herein. Item 2. Identity and Background. (a) This statement is filed by: (i) Legion Partners, L.P. I, a Delaware limited partnership (“Legion Partners I”); (ii) Legion Partners, L.P. II, a Delaware limited partnership (“Legion Partners II”); (iii) Legion Partners Special Opportunities, L.P. I, a Delaware limited partnership (“Legion Partners Special I”); (iv) Legion Partners Special Opportunities, L.P. V, a Delaware limited partnership (“Legion Partners Special V”); (v) Legion Partners, LLC, a Delaware limited liability company, which serves as the general partner of each of Legion Partners I, Legion Partners II, Legion Partners Special I and Legion Partners Special V; (vi) Legion Partners Asset Management, LLC, a Delaware limited liability company (“Legion Partners Asset Management”), which serves as the investment advisor of each of Legion Partners I, Legion Partners II, Legion Partners Special I and Legion Partners Special V; (vii) Legion Partners Holdings, LLC, a Delaware limited liability company (“Legion Partners Holdings”), which serves as the sole member of Legion Partners Asset Management and sole member of Legion Partners, LLC; (viii) Bradley S. Vizi, who serves as a managing director of Legion Partners Asset Management and a managing member of Legion Partners Holdings; (ix) Christopher S. Kiper, who serves as a managing director of Legion Partners Asset Management and a managing member of Legion Partners Holdings; (x) Raymond White, who serves as a managing director of Legion Partners Asset Management and a managing member of Legion Partners Holdings; (xi) California State Teachers’ Retirement System (“CalSTRS”), a California Government Employee Benefit Plan; (xii) Roger H. Ballou, as a nominee for election to the Board of Directors of the Issuer (the “Board”); and (xiii) Marjorie Bowen, as a nominee for election to the Board and collectively with Mr. Ballou (the “Nominees”). Each of the foregoing is referred to as a “Reporting Person” and collectively as the “Reporting Persons.”Each of the Reporting Persons is party to that certain Joint Filing Agreement, as further described in Item 6.Accordingly, the Reporting Persons are hereby filing a joint Schedule 13D. 15 CUSIP NO. 05990K 10 6 (b)The address of the principal office of each of the Reporting Persons is 9401 Wilshire Boulevard, Suite 705, Beverly Hills, California 90212. The address of the principal office of CalSTRS is 100 Waterfront Place, MS 04, West Sacramento, California 95605. The principal business address of Mr. Ballou is 301 Via Linda, Palm Beach, Florida 33480. The principal business address of Ms. Bowen is 225 6th Street, Manhattan Beach, California 90266. (c)The principal business of each of Legion Partners I, Legion Partners II, Legion Partners Special I and Legion Partners Special V is investing in securities.The principal business of Legion Partners, LLC is serving as the general partner of each of Legion Partners I, Legion Partners II, Legion Partners Special I and Legion Partners Special V.The principal business of Legion Partners Asset Management is managing investments in securities and serving as the investment advisor of each of Legion Partners I, Legion Partners II, Legion Partners Special I and Legion Partners Special V.The principal business of Legion Partners Holdings is serving as the sole member of Legion Partners Asset Management and sole member of Legion Partners, LLC.The principal occupation of each of Messrs. Vizi, Kiper and White is serving as a managing director of Legion Partners Asset Management and a managing member of Legion Partners Holdings. The principal business of CalSTRS is providing retirement related benefits and services to teachers in public schools and community colleges in California. The principal occupation of Mr. Ballou is serving as a director of Univest Corporation of Pennsylvania, Alliance Data Systems Corporation and RCM Technologies, Inc. The principal occupation of Ms. Bowen is serving as a director of ShoteTel, Inc., SquareTwo Financial and V Global Holdings LLC. (d)No Reporting Person has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e)No Reporting Person has, during the last five years, been party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a 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. (f)Each of Messrs. Vizi, Kiper, White and Ballou and Ms. Bowen is a citizen of the United States of America. Item 3. Source and Amount of Funds or Other Consideration. Item 3 is hereby amended and restated to read as follows: The Shares purchased by each of Legion Partners I, Legion Partners II, Legion Partners Special I, Legion Partners Special V and Legion Partners Holdings were purchased with working capital (which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business) in open market purchases, except as otherwise noted in Schedule A, which is incorporated herein by reference. The aggregate purchase price of the 918,669 Shares owned directly by Legion Partners I is approximately $14,545,238, including brokerage commissions. The aggregate purchase price of certain call options exercisable into 203,100 Shares beneficially owned by Legion Partners I, as further described in Item 6 below, is approximately $326,877, including brokerage commissions. The aggregate purchase price of the 83,881 Shares owned directly by Legion Partners II is approximately $1,329,289, including brokerage commissions. The aggregate purchase price of certain call options exercisable into 18,300 Shares beneficially owned by Legion Partners II, as further described in Item 6 below, is approximately $31,290, including brokerage commissions. The aggregate purchase price of the 1,411,929 Shares owned directly by Legion Partners Special I is approximately $23,765,933, including brokerage commissions.The aggregate purchase price of certain call options exercisable into 493,300 Shares beneficially owned by Legion Partners Special I, as further described in Item 6 below, is approximately $823,121, including brokerage commissions. The aggregate purchase price of the 176,500 Shares owned directly by Legion Partners Special V is approximately $2,705,167, including brokerage commissions.The aggregate purchase price of the 200 Shares owned directly by Legion Partners Holdings is approximately $3,030, including brokerage commissions. 16 CUSIP NO. 05990K 10 6 The Shares purchased by CalSTRS were purchased with working capital (which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business) in open market purchases, except as otherwise noted in Schedule A, which is incorporated herein by reference. The aggregate purchase price of the 100,849 Shares beneficially owned by CalSTRS is approximately $1,424,533, including brokerage commissions. Item 4. Purpose of Transaction. Item 4 is hereby amended to add the following: On February 6, 2017, the Reporting Persons delivered a letter to the Issuer (the “Nomination Letter”) nominating the Nominees, as set forth therein, for election to the Board at the Issuer’s 2017 annual meeting of stockholders (including any other meeting of stockholders held in lieu thereof, and any adjournments, postponements, reschedulings or continuations thereof, the “Annual Meeting”). In the Nomination Letter, the Reporting Persons also notified the Issuer as to the submission of a business proposal to be presented at the Annual Meeting.The business proposal recommends that the Issuer initiate the appropriate process to amend the Issuer’s Articles of Incorporation and Bylaws to provide that the Issuer’s Bylaws can be amended by a simple majority vote of the stockholders. Currently, the Issuer’s Articles of Incorporation and Bylaws require 80% of the outstanding Shares for stockholders to amend the Bylaws. The Reporting Persons submitted the Nomination Letter because the Reporting Persons have serious concerns with the Issuer’s corporate governance, including the extent of related party transactions that appear, to the Reporting Persons, to be largely unchecked by the Issuer’s independent directors. The Reporting Persons believe the Nominees are highly qualified candidates with relevant credentials and skill-sets, including implementing corporate governance best practices, who will be vital in evaluating and executing on initiatives to unlock value at the Issuer, as evidenced by their bios below. The Reporting Persons intend to engage in discussions with management, the Board and stockholders of the Issuer regarding the nomination of directors at the Annual Meeting, the composition of the Issuer’s Board generally and the business proposal they seek to bring forth at the Annual Meeting in the hopes of avoiding a contested election at the Annual Meeting. The Nominees are: Roger H. Ballou, age 65, currently serves as a director of Univest Corporation of Pennsylvania (“Univest”), the parent company of Univest Bank and Trust Co., which acquired Fox Chase Bancorp, Inc. (“Fox Chase”), a federal savings bank, in July 2016, Alliance Data Systems Corporation, a provider of transaction-based, data-driven marketing and loyalty solutions, since February 2001, and RCM Technologies, Inc., a provider of business and technology solutions, since December 2013. Mr. Ballou previously served as a director of Fox Chase from 2005 until its acquisition by Univest in 2016 and as Fox Chase’s Chairman of the Board from January 2014 to July 2016. Mr. Ballou previously served as the Chief Executive Officer and a director of CDI Corporation, a company that offers engineering, information technology and professional staffing solutions, from October 2001 to January 2011. Mr. Ballou had served as Chairman and Chief Executive Officer of Global Vacation Group, Inc. from April 1998 to September 2000. He was a senior advisor for Thayer Capital Partners from September 1997 to April 1998. From 1995 to 1997, Mr. Ballou served as Vice-Chairman and Chief Marketing Officer, then as President and Chief Operating Officer, of Alamo Rent A Car, Inc. Before joining Alamo, for more than 16 years, he held several positions with American Express, culminating in his appointment as President of the Travel Services Group. Mr. Ballou received a B.S. in Economics from the University of Pennsylvania’s Wharton School and an M.B.A. from the Dartmouth College’s Amos Tuck School. 17 CUSIP NO. 05990K 10 6 Marjorie Bowen, age 51, currently serves on the Board of Directors of ShoreTel, Inc., a provider of simple business communication solutions since August 2016, and as a director for two privately held companies - SquareTwo Financial and V Global Holdings, LLC. Previously, Ms. Bowen was an investment banker with Houlihan Lokey from 1989 until 2007, serving as Managing Director since 1997. In her nearly 20 year career in investment banking at Houlihan Lokey, she advised boards of public companies on transaction, strategic and other shareholder matters and handled the firm’s fairness opinion practice. At Houlihan Lokey, Ms. Bowen was an active deal advisor to public company boards, a product and practice leader, as well as a member of the firms’ senior management. Ms. Bowen previously served as the Audit Committee Chair on the Board of Directors of Hansen Medical, Inc. until its acquisition in April 2016, and on the boards of seven other public and private companies, including as a director of Global Aviation Holdings from 2008 to 2014 and as a director of The Talbots, Inc. from 2010 to 2012. Ms. Bowen holds a B.A. in Economics from Colgate University and an M.B.A. from the University of Chicago. Item 5. Interest in Securities of the Issuer. Item 5(a)-(c) are hereby amended and restated to read as follows: The aggregate percentage of Shares reported owned by each person named herein is based upon 49,897,221 Shares outstanding as of December 31, 2016, which is the total number of Shares outstanding as reported in the Exhibit 99.1 to the Issuer’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 30, 2017. A. Legion Partners I (a) As of the close of business on February 6, 2017, Legion Partners I beneficially owned 1,121,769 Shares, including 203,100 Shares underlying certain call options. Percentage: Approximately 2.2% (b) 1. Sole power to vote or direct vote: 0 2. Shared power to vote or direct vote: 1,121,769 3. Sole power to dispose or direct the disposition: 0 4. Shared power to dispose or direct the disposition: 1,121,769 (c) Legion Partners I has not entered into any transactions in the Shares since the filing of the Schedule 13D. 18 CUSIP NO. 05990K 10 6 B. Legion Partners II (a) As of the close of business on February 6, 2017, Legion Partners I beneficially owned 102,181 Shares, including 18,300 Shares underlying certain call options. Percentage: Less than 1% (b) 1. Sole power to vote or direct vote: 0 2. Shared power to vote or direct vote: 102,181 3. Sole power to dispose or direct the disposition: 0 4. Shared power to dispose or direct the disposition: 102,181 (c) Legion Partners II has not entered into any transactions in the Shares since the filing of the Schedule 13D. C. Legion Partners Special I (a) As of the close of business on February 6, 2017, Legion Partners Special I beneficially owned 1,905,229 Shares, including 493,300 Shares underlying certain call options. Percentage: Approximately 3.8% (b) 1. Sole power to vote or direct vote: 0 2. Shared power to vote or direct vote: 1,905,229 3. Sole power to dispose or direct the disposition: 0 4. Shared power to dispose or direct the disposition: 1,905,229 (c) Legion Partners Special I has not entered into any transactions in the Shares since the filing of the Schedule 13D. D. Legion Partners Special V (a) As of the close of business on February 6, 2017, Legion Partners Special V beneficially owned 176,500 Shares. Percentage: Less than 1% (b) 1. Sole power to vote or direct vote: 0 2. Shared power to vote or direct vote: 176,500 3. Sole power to dispose or direct the disposition: 0 4. Shared power to dispose or direct the disposition: 176,500 (c) The transactions in the Shares by Legion Partners Special V since the filing of the Schedule 13D are set forth in Schedule A and are incorporated herein by reference. 19 CUSIP NO. 05990K 10 6 E. Legion Partners, LLC (a) As the general partner of each of Legion Partners I, Legion Partners II, Legion Partners Special I and Legion Partners Special V, Legion Partners, LLC may be deemed the beneficial owner of the (i) 1,121,769 Shares owned by Legion Partners I, (ii) 102,181 Shares owned by Legion Partners II, (iii) 1,905,229 Shares owned by Legion Partners Special I and (iv) 176,500 Shares owned by Legion Partners Special V. Percentage: Approximately 6.6% (b) 1. Sole power to vote or direct vote: 0 2. Shared power to vote or direct vote: 3,305,679 3. Sole power to dispose or direct the disposition: 0 4. Shared power to dispose or direct the disposition: 3,305,679 (c) Legion Partners, LLC has not entered into any transactions in the Shares since the filing of the Schedule 13D. The transactions in the Shares by Legion Partners Special V since the filing of the Schedule 13D are set forth in Schedule A and are incorporated herein by reference. F. Legion Partners Asset Management (a) Legion Partners Asset Management, as the investment advisor of each of Legion Partners I, Legion Partners II, Legion Partners Special I and Legion Partners Special V, may be deemed the beneficial owner of the (i) 1,121,769 Shares owned by Legion Partners I, (ii) 102,181 Shares owned by Legion Partners II, (iii) 1,905,229 Shares owned by Legion Partners Special I and (iv) 176,500 Shares owned by Legion Partners Special V. Percentage: Approximately 6.6% (b) 1. Sole power to vote or direct vote: 0 2. Shared power to vote or direct vote: 3,305,679 3. Sole power to dispose or direct the disposition: 0 4. Shared power to dispose or direct the disposition: 3,305,679 (c) Legion Partners Asset Management has not entered into any transactions in the Shares since the filing of the Schedule 13D. The transactions in the Shares by Legion Partners Special V since the filing of the Schedule 13D are set forth in Schedule A and are incorporated herein by reference. G. Legion Partners Holdings (a) As of the close of business on February 6, 2017, Legion Partners Holdings directly owned 200 Shares.Legion Partners Holdings, as the sole member of Legion Partners Asset Management and sole member of Legion Partners, LLC, may be deemed the beneficial owner of the (i) 1,121,769 Shares owned by Legion Partners I, (ii) 102,181 Shares owned by Legion Partners II, (iii) 1,905,229 Shares owned by Legion Partners Special I and (iv) 176,500 Shares owned by Legion Partners Special V. Percentage: Approximately 6.6% (b) 1. Sole power to vote or direct vote: 0 2. Shared power to vote or direct vote: 3,305,879 3. Sole power to dispose or direct the disposition: 0 4. Shared power to dispose or direct the disposition: 3,305,879 (c) The transactions in the Shares by Legion Partners Holdings since the filing of the Schedule 13D are set forth in Schedule A and are incorporated herein by reference. 20 CUSIP NO. 05990K 10 6 H. Messrs. Vizi, Kiper and White (a) Each of Messrs. Vizi, Kiper and White, as a managing director of Legion Partners Asset Management and a managing member of Legion Partners Holdings, may be deemed the beneficial owner of the (i) 1,121,769 Shares owned by Legion Partners I, (ii) 102,181 Shares owned by Legion Partners II, (iii) 1,905,229 Shares owned by Legion Partners Special I, (iv) 176,500 Shares owned by Legion Partners Special V and (v) 200 Shares directly owned by Legion Partners Holdings. Percentage: Approximately 6.6% (b) 1. Sole power to vote or direct vote: 0 2. Shared power to vote or direct vote: 3,305,879 3. Sole power to dispose or direct the disposition: 0 4. Shared power to dispose or direct the disposition: 3,305,879 (c) None of Messrs. Vizi, Kiper or White has entered into any transactions in the Shares since the filing of the Schedule 13D. The transactions in the Shares by each of Legion Partners I, Legion Partners II, Legion Partners Special I, Legion Partners Special V and Legion Partners Holdings since the filing of the Schedule 13D are set forth in Schedule A and are incorporated herein by reference. I. CalSTRS (a) As of the close of business on February 6, 2017, CalSTRS beneficially owned 100,849 Shares. Percentage: Less than 1% (b) 1. Sole power to vote or direct vote: 100,849 2. Shared power to vote or direct vote: 0 3. Sole power to dispose or direct the disposition: 100,849 4. Shared power to dispose or direct the disposition: 0 (c) The transactions in the Shares by CalSTRS since the filing of the Schedule 13D are set forth in Schedule A and are incorporated herein by reference. J. Mr. Ballou and Ms. Bowen (a) As of the close of business on February 6, 2017, Mr. Ballou and Ms. Bowen did not own any shares. Percentage: 0% (b) 1. Sole power to vote or direct vote: 0 2. Shared power to vote or direct vote: 0 3. Sole power to dispose or direct the disposition: 0 4. Shared power to dispose or direct the disposition: 0 (c) Neither Mr. Ballou nor Ms. Bowen has entered into any transactions in the Shares since the filing of the Schedule 13D. The filing of this Schedule 13D shall not be construed as an admission that the Reporting Persons are, for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, the beneficial owners of any of the securities reported herein. Each of the Reporting Persons specifically disclaims beneficial ownership of the securities reported herein that are not directly owned by such Reporting Person, except to the extent of their pecuniary interest therein. 21 CUSIP NO. 05990K 10 6 Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer. Item 6 is hereby amended to add the following: On February 6, 2017, the Reporting Persons entered into a Joint Filing and Solicitation Agreement pursuant to which, among other things, (i) they agreed to the joint filing on behalf of each of them of statements on Schedule 13D, and any amendments thereto, with respect to the securities of the Issuer, (ii) they agreed to solicit proxies or written consents for the election of the Nominees to the Board at the Annual Meeting (the “Solicitation”), and (iii) Legion Partners Holdings agreed to pay directly all pre-approved expenses incurred in connection with the Solicitation.A copy of the Joint Filing and Solicitation Agreement is attached hereto as Exhibit 99.1 and is incorporated herein by reference. Pursuant to letter agreements, Legion Partners Holdings has agreed to indemnify each of the Nominees against any and all claims of any nature arising from the Solicitation and any related transactions.A form of the indemnification letter agreement is attached hereto as Exhibit 99.2 and is incorporated herein by reference. Each of the Nominees has granted Messrs. Vizi and White powers of attorney in connection with the Solicitation. A copy of each of the powers of attorney is attached hereto as Exhibit 99.3 and is incorporated herein by reference. Other than as described herein, there are no contracts, arrangements, understandings or relationships among the Reporting Persons, or between the Reporting Persons and any other person, with respect to the securities of the Issuer. Item 7. Material to be Filed as Exhibits. Item 7 is hereby amended to add the following exhibits: Joint Filing and Solicitation Agreement. Form of Indemnification Agreement. Powers of Attorney. 22 CUSIP NO. 05990K 10 6 SIGNATURES After reasonable inquiry and to the best of his knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated:February 7, 2017 LEGION PARTNERS, L.P. I By: Legion Partners Asset Management, LLC Investment Advisor By: /s/ Bradley S. Vizi Name: Bradley S. Vizi Title: Managing Member LEGION PARTNERS, L.P. II By: Legion Partners Asset Management, LLC Investment Advisor By: /s/ Bradley S. Vizi Name: Bradley S. Vizi Title: Managing Member LEGION PARTNERS SPECIAL OPPORTUNITIES, L.P. I By: Legion Partners Asset Management, LLC Investment Advisor By: /s/ Bradley S. Vizi Name: Bradley S. Vizi Title: Managing Member LEGION PARTNERS SPECIAL OPPORTUNITIES, L.P. V By: Legion Partners Asset Management, LLC Investment Advisor By: /s/ Bradley S. Vizi Name: Bradley S. Vizi Title: Managing Member 23 CUSIP NO. 05990K 10 6 LEGION PARTNERS ASSET MANAGEMENT, LLC By: /s/ Bradley S. Vizi Name: Bradley S. Vizi Title: Managing Director LEGION PARTNERS HOLDINGS, LLC By: /s/ Bradley S. Vizi Name: Bradley S. Vizi Title: Managing Member /s/ Bradley S. Vizi Bradley S. Vizi Individually and as attorney-in-fact for Roger H. Ballou and Marjorie Bowen /s/ Christopher S. Kiper Christopher S. Kiper /s/ Raymond White Raymond White CALIFORNIA STATE TEACHERS’ RETIREMENT SYSTEM By: /s/ April Wilcox Name: April Wilcox Title: Director of Operations 24 CUSIP NO. 05990K 10 6 SCHEDULE A Transactions in the Shares Since the Filing of the Schedule 13D Shares of Common Stock Purchased Price Per Share($) Date of Purchase LEGION PARTNERS SPECIAL OPPORTUNITIES, L.P. V 01/30/2017 01/31/2017 LEGION PARTNERS HOLDINGS, LLC 01/26/2017 CALIFORNIA STATE TEACHERS’ RETIREMENT SYSTEM (CALSTRS) 02/01/2017
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Exhibit 10.3
AMENDMENT TO THE INTERMEC, INC.
DIRECTOR DEFERRED COMPENSATION PLAN
The Intermec, Inc. Director Deferred Compensation Plan (“Plan”) is hereby
amended as follows:
1. The definition of “Fees” in section 2 of the Plan is revised to read as
follows:
“Fees” means Retainer Fees, Meeting Fees and the annual award of restricted
stock units.
2. The definition of “Share Account” in section 2 of the Plan is revised to read
as follows:
“Share Account” means the bookkeeping account established by the Company for
(i) the deferrals of Fees by Directors, (ii) the restricted deferred stock unit
grants under the Director Compensation Program granted before 2012, and
(iii) the deferral of Common Stock issued in accordance with restricted stock
unit awards under the Director Compensation Program granted after 2011, which
account shall be credited with Share Units pursuant to Section 4(a).
3. Section 3 of the Plan is revised to read as follows:
Terms and Conditions of Deferral Elections.
(a) In General. Each Director may irrevocably elect annually to defer receiving
all or a portion of (i) the shares of Common Stock that would otherwise be
issued in connection with the Director’s retainer fees or meeting fees in
respect of a calendar year, (ii) the shares of Common Stock that would otherwise
be issued upon a Director’s election to receive cash retainer fees or meeting
fees in shares of Common Stock, (iii) a Director’s cash retainer fees or meeting
fees in respect of a calendar year that are not subject to an election to
receive such fees in shares of Common Stock or (iv) the shares of Common Stock
that would otherwise be issued in connection with the annual award of restricted
stock units (a “Deferral Election”). Each Deferral Election shall state the
amount of cash or stock that the Director is electing to defer. A Director who
has made a Deferral Election with respect to shares of Common Stock shall have
the number of shares of Common Stock that are the subject of the Deferral
Election credited to a Share Account in the form of Share Units. A Director who
has made a Deferral Election with respect to Meeting Fees that are not subject
to a Share Election shall have the amount of deferred fees credited to a Cash
Account.
(b) Timing of Deferral Election. The Deferral Election shall be in writing and
delivered to the Secretary of the Company on or prior to December 31 of the
calendar year preceding the calendar year in which the applicable Fees are to be
earned or awarded (if restricted stock units); provided, however, that a
Director who commences service on the Board on or subsequent to January 1 of a
calendar year may make a prospective Deferral Election during the 30-day period
immediately following the commencement of his or her directorship, provided
further, however, that such Deferral Election shall apply only with respect to
Retainer Fees and Meeting Fees paid for services to be performed in fiscal
quarters subsequent to the Deferral Election and shall not apply to any shares
of Common Stock that would otherwise be issued in connection with a mid-term or
annual award of restricted stock units. A Deferral Election, once made, shall be
irrevocable for the calendar year with respect to which it is made and shall
remain in effect for future calendar years unless revoked or modified by a
subsequent Deferral Election with respect to future calendar years on or prior
to December 31 of the calendar year preceding the calendar year in which such
revocation shall take effect and in accordance with the provisions hereof. No
subsequent Deferral Election may be made with respect to Fees earned or awarded
(if restricted stock units) during the current calendar year or prior calendar
years.
Page 1 of 2
3. The last sentence of paragraph 5(a), Payment of Deferred Amounts/(a)
Commencement of Payment, is revised to read as follows:
Payments from a Share Account shall be made by converting Share Units into
Common Stock on a one-for-one basis, with payment in shares of Common Stock to
be valued on the conversion date determined by the Plan Administrator in such
January and with payment of fractional shares to be made in cash based on the
Fair Market Value of such fractional share on the last market day of the
preceding calendar quarter.
4. Section 14, Compliance with Section 409A, is revised to read as follows:
The Plan is intended to comply with the requirements of Section 409A (including
all applicable Treasury regulations, IRS rulings and other guidance).
Notwithstanding any provision to the Plan or agreements made pursuant to the
Plan, the Plan shall be interpreted, operated and administered in a manner
consistent with this intention, so as to avoid the Adverse Tax Consequences
under Section 409A. Moreover, the Company, to the extent it deems necessary or
advisable in its sole discretion, reserves the right, but shall not be required,
to unilaterally amend or modify the Plan to comply with the requirements of
Section 409A, provided, however, that the Company makes no representations that
the Plan shall so comply. Each Director shall be deemed to have waived any claim
against the Company and its affiliates with respect to any tax, economic and
legal consequences arising from Section 409A.
In all other respects, the Plan is hereby ratified and confirmed. The effective
date of this amendment is January 19, 2012. Management of the Company is
authorized and directed to reflect this amendment in an amendment and
restatement of the Plan, incorporating such additional conforming and
administrative changes as they may deem reasonable and appropriate to reflect
the purpose and intent of the amendment.
Page 2 of 2 |
Name: Commission Regulation (EC) No 729/2004 of 15 April 2004 concerning the classification of certain goods in the Combined Nomenclature
Type: Regulation
Subject Matter: leather and textile industries; industrial structures and policy; tariff policy; electronics and electrical engineering; information and information processing
Date Published: nan
Avis juridique important|32004R0729Commission Regulation (EC) No 729/2004 of 15 April 2004 concerning the classification of certain goods in the Combined Nomenclature Official Journal L 113 , 20/04/2004 P. 0005 - 0007Commission Regulation (EC) No 729/2004of 15 April 2004concerning the classification of certain goods in the Combined NomenclatureTHE COMMISSION OF THE EUROPEAN COMMUNITIES,Having regard to the Treaty establishing the European Community,Having regard to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff(1), and in particular Article 9(1)(a) thereof,Whereas:(1) In order to ensure uniform application of the Combined Nomenclature annexed to Regulation (EEC) No 2658/87, it is necessary to adopt measures concerning the classification of the goods referred to in the Annex to this Regulation.(2) Regulation (EEC) No 2658/87 has laid down the general rules for the interpretation of the Combined Nomenclature. Those rules apply also to any other nomenclature which is wholly or partly based on it or which adds any additional subdivision to it and which is established by specific Community provisions, with a view to the application of tariff and other measures relating to trade in goods.(3) Pursuant to those general rules, the goods described in column 1 of the table set out in the Annex should be classified under the CN codes indicated in column 2, by virtue of the reasons set out in column 3.(4) It is appropriate to provide that binding tariff information which has been issued by the customs authorities of Member States in respect of the classification of goods in the Combined Nomenclature but which is not in accordance with this Regulation can, for a period of three months, continue to be invoked by the holder, under Article 12(6) of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code(2).(5) The measures provided for in this Regulation are in accordance with the opinion of the Customs Code Committee,HAS ADOPTED THIS REGULATION:Article 1The goods described in column 1 of the table set out in the Annex shall be classified within the Combined Nomenclature under the CN codes indicated in column 2.Article 2Binding tariff information issued by the customs authorities of Member States, which is not in accordance with this Regulation, can continue to be invoked for a period of three months under Article 12(6) of Regulation (EEC) No 2913/92.Article 3This Regulation shall enter into force on the 20th 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, 15 April 2004.For the CommissionFrederik BolkesteinMember of the Commission(1) OJ L 256, 7.9.1987, p. 1. Regulation as last amended by Commission Regulation (EC) No 2344/2003 (OJ L 346, 31.12.2003, p. 38).(2) OJ L 302, 19.10.1992, p. 1. Regulation as last amended by the Act of Accession of 2003.ANNEX>TABLE>(A)>PIC FILE= "L_2004113EN.000701.TIF">(B)>PIC FILE= "L_2004113EN.000702.TIF">>PIC FILE= "L_2004113EN.000703.TIF"> |
Exhibit A Press Release Ceragon Introduces Revolutionary IP-20 Platform – November 5, 2013 Ceragon Introduces the Revolutionary IP-20 – a Single Platform Serving All Radio Transport Technologies SDN-ready platform contains a rich product line for wireless backhaul and fronthaul powered by a common software-defined engine Paramus, NewJersey, November 5, 2013 - Ceragon Networks Ltd.(NASDAQ:CRNT), the #1 high-capacity wireless hauling specialist, today announced its new, ultra-high capacity platform for HetNet hauling – the IP-20. Designed to meet the constantly evolving needs of network operators, Ceragon’s IP-20 is a service-centric, SDN-ready wireless platform containing a rich product line for backhaul and fronthaul. Built around a powerful software-defined engine, the IP-20 platform supports any radio transmission technology mix, any network topology and any configuration. Serving the entire hauling ecosystem – from small cells, through super-sized macro cells in the aggregation layer, to hybrid TDM/IP trunk solutions for high capacity backbones – the platform provides a common, programmable architecture for all of Ceragon’s next-generation FibeAir® and Evolution products.A new high-performance operating system, CeraOS, provides a complete set of service-centric features and performance-boosting capabilities across the entire IP-20 product series. CeraOS creates a cohesive, easy to operate and simple to manage approach for building, expanding and maintaining wireless backhaul and fronthaul networks. “The IP-20 platform sets a new industry benchmark for microwave-based backhaul and fronthaul solutions,” said Ira Palti, President and CEO of Ceragon Networks. “This game-changing technology reinforces our position as the number 1 wireless hauling specialist. With the IP-20 platform, our customers can smoothly transition to 4G/LTE/LTE-A, while preparing for future SDN architectures.” The IP-20 product series has already been successfully deployed with selected customers around the world. Visit ceragon.com for more information about Ceragon’s IP-20 Platform and its advanced IP-20 Product Series. Press Release Ceragon Introduces Revolutionary IP-20 Platform – November 5, 2013 Read more about Ceragon’s IP-20 platform and related products: · FibeAir IP-20N– a multi-radio technology aggregation node featuring up to 10 radiocarriers in a modular 2 radio unit (2RU) design · FibeAir IP-20G – a multi-radio technology edge node featuring a low-footprint, fixed design for simple and reliable installation · FibeAir IP-20S – a compact single-core radio node · FibeAir IP-20LH – a versatile multi-carrier trunk node ideal for both all-indoor and split-mount configurations using Ceragon’s proven HP radios · Evolution IP-20LH – a versatile multi-carrier trunk node ideal for both all-indoor and split-mount configurations using Ceragon’s proven Evolution radios · FibeAir IP-20C – a unique Gigabit-in-a-Box compact all-outdoor multi-core node · FibeAir IP-20A – a NEBS-compliant, ultra-high power all-indoor solution tailored for the North American market About Ceragon Networks Ltd. Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 high-capacity wireless hauling specialist.We provide innovative, flexible and cost-effective wireless backhaul and fronthaul solutions that enable mobile operators and other wired/wireless service providers to deliver 2G/3G, 4G/LTE and other broadband services to their subscribers.Ceragon’s high-capacity, solutions use microwave technology to transfer voice and data traffic while maximizing bandwidth efficiency, to deliver more capacity over longer distances under any deployment scenario. Based on our extensive global experience, Ceragon delivers turnkey solutions that support service provider profitability at every stage of the network lifecycle enabling faster time to revenue, cost-effective operation and simple migration to all-IP networks.As the demand for data pushes the need for ever-increasing capacity, Ceragon is committed to serve the market with unmatched technology and innovation, ensuring effective solutions for the evolving needs of the marketplace. Our solutions are deployed by more than 430 service providers in over 130 countries. Media Contact: Media Contact: Company & Investor Contact: Justine Schneider Abigail Levy-Gurwitz Yoel Knoll Calysto Communications Ceragon Networks Ceragon Networks Tel: +1-(404)-266-2060 x507 Tel: +1-(201)-853-0271 Tel. +1-(201)-853-0228 [email protected] [email protected] [email protected] Press Release Ceragon Introduces Revolutionary IP-20 Platform – November 5, 2013 Join the discussion Ceragon Networks® and FibeAir® are registered trademarks of Ceragon Networks Ltd. in the United States and other countries. CERAGON ® is a trademark of Ceragon Networks Ltd., registered in various countries.Other names mentioned are owned by their respective holders. This press release may contain statements concerning Ceragon’s future prospects that are “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and projections that involve a number of risks and uncertainties. There can be no assurance that future results will be achieved, and actual results could differ materially from forecasts and estimates. These are important factors that could cause actual results to differ materially from forecasts and estimates. Some of the factors that could significantly impact the forward-looking statements in this press release include the risk of significant expenses in connection with potential contingent tax liability associated with Nera’s prior operations or facilities, risks associated with unexpected changes in customer demand, risks associated with increased working capital needs, and other risks and uncertainties, which are discussed in greater detail in Ceragon’s Annual Report on Form 20-F and Ceragon’s other filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made and Ceragon undertakes no commitment to revise or update any forward-looking statement in order to reflect events or circumstances after the date any such statement is made. Ceragon’s public filings are available from the Securities and Exchange Commission’s website at www.sec.gov or may be obtained on Ceragon’s website at www.ceragon.com
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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 Annual Report of Adams Resources & Energy, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2009 (the “Report”), I, Richard B. Abshire, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: The Report fully complies with the requirements of Section 13(a) of 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. /s/ Richard B. Abshire Richard B. Abshire Chief Financial Officer March 23, 2010 This Certification is being furnished solely to accompany the Report pursuant to 18 U.S.C.§1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Report, irrespective of any general incorporation language contained in such filing. A signed original of this written statement required by Section 906, or other documents 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 the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
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SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 OF THE SECURITIES EXCHANGE ACT OF 1934 For the month of August, 2017 (Commission File No. 1-14862 ) BRASKEM S.A. (Exact Name as Specified in its Charter) N/A (Translation of registrant's name into English) Rua Eteno, 1561, Polo Petroquimico de Camacari Camacari, Bahia - CEP 42810-000 Brazil (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F X Form 40-F Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1). Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7). 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 No X If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- . COMMUNICATION OF TRANSACTIONS BETWEEN RELATED PARTIES Parties Braskem S.A. (“Braskem” or “Issuer”) and Refinaria de Petróleo Riograndense Ltda. (“RPR”). Relationship with the Issuer Braskem holds a 33.33% interest in RPR voting capital and 33.20% of its total capital Purpose Purchase of gas oil is supplied by Braskem to the RPR through monthly supply contracts between the parties. Main terms and conditions The gas oil sales by Braskem to the RPR for use as raw material in its diesel production process. Due to the total amount of related transactions, communication it is necessary. Date of execution of the agreement July 25, 2017 Any participation of counterparty, its partners or managers in the issuer’s decision-making process or in the negotiation of the transaction as representatives of the issuer Hardi Schuck is member of the Board of Directors of RPR. Detailed justification of the reasons why the management of the issuer believes the transaction observed commutative conditions or expects adequate compensatory payment The price charged by Braskem to RPR is referenced in the international market price (Platts Gasoil No. 2 USG Waterborne) remaining guaranteed commutative operation for both parties. 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. Date:August 2, 2017 BRASKEM S.A. By: /s/Pedro van Langendonck Teixeira de Freitas Name: Pedro van Langendonck Teixeira de Freitas Title: Chief Financial Officer FORWARD-LOOKING STATEMENTS This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.
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Exhibit 10.2 The printed portions of this form, except differentiated additions, have been approved by the Colorado Real Estate Commission (TD72-8-10) (Mandatory 1-11) IF THIS FORM IS USED IN A CONSUMER CREDIT TRANSACTION, CONSULT LEGAL COUNSEL. THIS IS A LEGAL INSTRUMENT.IF NOT UNDERSTOOD, LEGAL, TAX OR OTHER COUNSEL SHOULD BE CONSULTED BEFORE SIGNING. DEED OF TRUST (Due on Transfer - Strict) THIS DEED OF TRUST is made this 15th day of September 2014, between JDone LLC(Borrower), whose address is ; and the Public Trustee of the County in which the Property (see § 1) is situated (Trustee); for the benefit of [Thomas S. Yang] (Lender), whose address is 2700 Youngfield St #280, Lakewood, CO 80215 Borrower and Lender covenant and agree as follows: 1.Property in Trust.Borrower, in consideration of the indebtedness herein recited and the trust herein created, hereby grants and conveys to Trustee in trust, with power of sale, the following described property located in the City and County of [Denver], State of [Colorado]: Lot 9, 10 and 11, Block 7, Ramona, City and County of Denver, State of Colorado. known as No.4420-4440 Garfield Street, Denver, CO 80216-6519 (Property Address), Street AddressCityStateZip together with all its appurtenances (Property). 2.Note; Other Obligations Secured.This Deed of Trust is given to secure to Lender: 2.1.the repayment of the indebtedness evidenced by Borrower’s note (Note) dated September 18, 2014, in the principal sum of Eight Hundred and Forty Thousand Dollars and 00/100 Dollars (U.S. $840,000.00), with interest on the unpaid principal balance from November 1, 2014, until paid, starting at the rate of7% percent per annum, with principal and interest payable at [2700 Youngfield St #280, Lakewood, CO 80215] or such other place as Lender may designate, in 24 payments of Five thousand nine hundred thirty six and 95/100 Dollars (U.S. $5935.95) due on the 1st day of each month beginning November 1st 2014; such payments to continue until the entire indebtedness evidenced by said Note is fully paid; however, if not sooner paid, the entire principal amount outstanding and accrued interest thereon, shall be due and payable on October 31st 2019 and Borrower is to pay to Lender a late charge of 8% of any payment not received by Lender within 12 days after payment is due; and Borrower has the right to prepay the principal amount outstanding under said Note, in whole or in part, at any time without penalty exceptNone. 2.2.the payment of all other sums, with interest thereon at 7% per annum, disbursed by Lender in accordance with this Deed of Trust to protect the security of this Deed of Trust; and 2.3.the performance of the covenants and agreements of Borrower herein contained. 2.4 Adjustable Interest Rate First and second year interest rate at 7% with 25 year amortization monthly payment at $5935.95 Third and forth year interest rate at 8% with 25 year amortization monthly payment at $6453.71 Fifth year interest rate at 9% with 25 year amortization monthly payment at $6958.35 3.Title.Borrower covenants that Borrower owns and has the right to grant and convey the Property, and warrants title to the same, subject to general real estate taxes for the current year, easements of record or in existence, and recorded declarations, restrictions, reservations and covenants, if any, as of this date; and subject to None. TD72-8-10.DEED OF TRUST (DUE ON TRANSFER – STRICT) Page1 of6 4.Payment of Principal and Interest.Borrower shall promptly pay when due the principal of and interest on the indebtedness evidenced by the Note, and late charges as provided in the Note and shall perform all of Borrower’s other covenants contained in the Note. 5.Application of Payments.All payments received by Lender under the terms hereof shall be applied by Lender first in payment of amounts due pursuant to § 23 (Escrow Funds for Taxes and Insurance), then to amounts disbursed by Lender pursuant to § 9 (Protection of Lender’s Security), and the balance in accordance with the terms and conditions of the Note. 6.Prior Mortgages and Deeds of Trust; Charges; Liens.Borrower shall perform all of Borrower’s obligations under any prior deed of trust and any other prior liens.Borrower shall pay all taxes, assessments and other charges, fines and impositions attributable to the Property which may have or attain a priority over this Deed of Trust, and leasehold payments or ground rents, if any, in the manner set out in § 23 (Escrow Funds for Taxes and Insurance) or, if not required to be paid in such manner, by Borrower making payment when due, directly to the payee thereof.Despite the foregoing, Borrower shall not be required to make payments otherwise required by this section if Borrower, after notice to Lender, shall in good faith contest such obligation by, or defend enforcement of such obligation in, legal proceedings which operate to prevent the enforcement of the obligation or forfeiture of the Property or any part thereof, only upon Borrower making all such contested payments and other payments as ordered by the court to the registry of the court in which such proceedings are filed. 7.Property Insurance.Borrower shall keep the improvements now existing or hereafter erected on the Property insured against loss by fire or hazards included within the term “extended coverage” in an amount at least equal to the lesser of (a) the insurable value of the Property or (b) an amount sufficient to pay the sums secured by this Deed of Trust as well as any prior encumbrances on the Property.All of the foregoing shall be known as “Property Insurance”. The insurance carrier providing the insurance shall be qualified to write Property Insurance in Colorado and shall be chosen by Borrower subject to Lender’s right to reject the chosen carrier for reasonable cause.All insurance policies and renewals thereof shall include a standard mortgage clause in favor of Lender, and shall provide that the insurance carrier shall notify Lender at least ten (10) days before cancellation, termination or any material change of coverage.Insurance policies shall be furnished to Lender at or before closing.Lender shall have the right to hold the policies and renewals thereof. In the event of loss, Borrower shall give prompt notice to the insurance carrier and Lender.Lender may make proof of loss if not made promptly by Borrower. Insurance proceeds shall be applied to restoration or repair of the Property damaged, provided such restoration or repair is economically feasible and the security of this Deed of Trust is not thereby impaired.If such restoration or repair is not economically feasible or if the security of this Deed of Trust would be impaired, the insurance proceeds shall be applied to the sums secured by this Deed of Trust, with the excess, if any, paid to Borrower.If the Property is abandoned by Borrower, or if Borrower fails to respond to Lender within 30 days from the date notice is given in accordance with § 16 (Notice) by Lender to Borrower that the insurance carrier offers to settle a claim for insurance benefits, Lender is authorized to collect and apply the insurance proceeds, at Lender’s option, either to restoration or repair of the Property or to the sums secured by this Deed of Trust. Any such application of proceeds to principal shall not extend or postpone the due date of the installments referred to in §§ 4 (Payment of Principal and Interest) and 23 (Escrow Funds for Taxes and Insurance) or change the amount of such installments.Notwithstanding anything herein to the contrary, if under § 18 (Acceleration; Foreclosure; Other Remedies) the Property is acquired by Lender, all right, title and interest of Borrower in and to any insurance policies and in and to the proceeds thereof resulting from damage to the Property prior to the sale or acquisition shall pass to Lender to the extent of the sums secured by this Deed of Trust immediately prior to such sale or acquisition. All of the rights of Borrower and Lender hereunder with respect to insurance carriers, insurance policies and insurance proceeds are subject to the rights of any holder of a prior deed of trust with respect to said insurance carriers, policies and proceeds. 8.Preservation and Maintenance of Property.Borrower shall keep the Property in good repair and shall not commit waste or permit impairment or deterioration of the Property and shall comply with the provisions of any lease if this Deed of Trust is on a leasehold.Borrower shall perform all of Borrower’s obligations under any declarations, covenants, by-laws, rules, or other documents governing the use, ownership or occupancy of the Property. 9.Protection of Lender’s Security.Except when Borrower has exercised Borrower’s rights under § 6 above, if Borrower fails to perform the covenants and agreements contained in this Deed of Trust, or if a default occurs in a prior lien, or if any action or proceeding is commenced which materially affects Lender’s interest in the Property, then Lender, at Lender’s option, with notice to Borrower if required by law, may make such appearances, disburse such sums and take such action as is necessary to protect Lender’s interest, including, but not limited to: 9.1any general or special taxes or ditch or water assessments levied or accruing against the Property; 9.2the premiums on any insurance necessary to protect any improvements comprising a part of the Property; 9.3sums due on any prior lien or encumbrance on the Property; if the Property is a leasehold or is subject to a lease, all sums due under such lease; 9.5the reasonable costs and expenses of defending, protecting, and maintaining the Property and Lender’s interest in the Property, including repair and maintenance costs and expenses, costs and expenses of protecting and securing the Property, receiver’s fees and expenses, inspection fees, appraisal fees, court costs, attorney fees and costs, and fees and costs of an attorney in the employment of Lender or holder of the certificate of purchaser; 9.6all other costs and expenses allowable by the evidence of debt or this Deed of Trust, and TD72-8-10.DEED OF TRUST (DUE ON TRANSFER – STRICT) Page2 of6 such other costs and expenses which may be authorized by a court of competent jurisdiction. Borrower hereby assigns to Lender any right Borrower may have by reason of any prior encumbrance on the Property or by law or otherwise to cure any default under said prior encumbrance. Any amounts disbursed by Lender pursuant to this § 9, with interest thereon, shall become additional indebtedness of Borrower secured by this Deed of Trust.Such amounts shall be payable upon notice from Lender to Borrower requesting payment thereof, and Lender may bring suit to collect any amounts so disbursed plus interest specified in § 2.2 (Note; Other Obligations Secured). Nothing contained in this § 9 shall require Lender to incur any expense or take any action hereunder. 10.Inspection.Lender may make or cause to be made reasonable entries upon and inspection of the Property, provided that Lender shall give Borrower notice prior to any such inspection specifying reasonable cause therefore related to Lender’s interest in the Property. 11.Condemnation.The proceeds of any award or claim for damages, direct or consequential, in connection with any condemnation or other taking of the Property, or part thereof, or for conveyance in lieu of condemnation, are hereby assigned and shall be paid to Lender as herein provided.However, all of the rights of Borrower and Lender hereunder with respect to such proceeds are subject to the rights of any holder of a prior deed of trust. In the event of a total taking of the Property, the proceeds shall be applied to the sums secured by this Deed of Trust, with the excess, if any, paid to Borrower.In the event of a partial taking of the Property, the proceeds remaining after taking out any part of the award due any prior lien holder (net award) shall be divided between Lender and Borrower, in the same ratio as the amount of the sums secured by this Deed of Trust immediately prior to the date of taking bears to Borrower’s equity in the Property immediately prior to the date of taking.Borrower’s equity in the Property means the fair market value of the Property less the amount of sums secured by both this Deed of Trust and all prior liens (except taxes) that are to receive any of the award, all at the value immediately prior to the date of taking. If the Property is abandoned by Borrower, or if, after notice by Lender to Borrower that the condemnor offers to make an award or settle a claim for damages, Borrower fails to respond to Lender within 30 days after the date such notice is given, Lender is authorized to collect and apply the proceeds, at Lender’s option, either to restoration or repair of the Property or to the sums secured by this Deed of Trust. Any such application of proceeds to principal shall not extend or postpone the due date of the installments referred to in §§ 4 (Payment of Principal and Interest) and 23 (Escrow Funds for Taxes and Insurance) nor change the amount of such installments. 12.Borrower Not Released.Extension of the time for payment or modification of amortization of the sums secured by this Deed of Trust granted by Lender to any successor in interest of Borrower shall not operate to release, in any manner, the liability of the original Borrower, nor Borrower’s successors in interest, from the original terms of this Deed of Trust.Lender shall not be required to commence proceedings against such successor or refuse to extend time for payment or otherwise modify amortization of the sums secured by this Deed of Trust by reason of any demand made by the original Borrower nor Borrower’s successors in interest. 13.Forbearance by Lender Not a Waiver.Any forbearance by Lender in exercising any right or remedy hereunder, or otherwise afforded by law, shall not be a waiver or preclude the exercise of any such right or remedy. 14.Remedies Cumulative. Each remedy provided in the Note and this Deed of Trust is distinct from and cumulative to all other rights or remedies under the Note and this Deed of Trust or afforded by law or equity, and may be exercised concurrently, independently or successively. 15.Successors and Assigns Bound; Joint and Several Liability; Captions. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respective successors and assigns of Lender and Borrower, subject to the provisions of § 24 (Transfer of Property; Assumption).All covenants and agreements of Borrower shall be joint and several.The captions and headings of the sections in this Deed of Trust are for convenience only and are not to be used to interpret or define the provisions hereof. 16.Notice.Except for any notice required by law to be given in another manner, (a) any notice to Borrower provided for in this Deed of Trust shall be in writing and shall be given and be effective upon (1) delivery to Borrower or (2) mailing such notice by first-class U.S. mail, addressed to Borrower at Borrower’s address stated herein or at such other address as Borrower may designate by notice to Lender as provided herein, and (b) any notice to Lender shall be in writing and shall be given and be effective upon (1) delivery to Lender or (2) mailing such notice by first-class U.S. mail, to Lender’s address stated herein or to such other address as Lender may designate by notice to Borrower as provided herein.Any notice provided for in this Deed of Trust shall be deemed to have been given to Borrower or Lender when given in any manner designated herein. 17.Governing Law; Severability.The Note and this Deed of Trust shall be governed by the law of Colorado.In the event that any provision or clause of this Deed of Trust or the Note conflicts with the law, such conflict shall not affect other provisions of this Deed of Trust or the Note which can be given effect without the conflicting provision, and to this end the provisions of the Deed of Trust and Note are declared to be severable. 18.Acceleration; Foreclosure; Other Remedies.Except as provided in § 24 (Transfer of the Property; Assumption), upon Borrower’s breach of any covenant or agreement of Borrower in this Deed of Trust, or upon any default in a prior lien upon the Property, (unless Borrower has exercised Borrower’s rights under § 6 above) at Lender’s option, all of the sums secured by this Deed of Trust shall be immediately due and payable (Acceleration).To exercise this option, Lender may invoke the power of sale and any other remedies permitted by law.Lender shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided in this Deed of Trust, including, but not limited to, reasonable attorney’s fees. TD72-8-10.DEED OF TRUST (DUE ON TRANSFER – STRICT) Page3 of6 If Lender invokes the power of sale, Lender shall give written notice to Trustee of such election.Trustee shall give such notice to Borrower of Borrower’s rights as is provided by law.Trustee shall record a copy of such notice andshall cause publication of the legal notice as required by law in a legal newspaper of general circulation in each county in which the Property is situated, and shall mail copies of such notice of sale to Borrower and other persons as prescribed by law.After the lapse of such time as may be required by law, Trustee, without demand on Borrower, shall sell the Property at public auction to the highest bidder for cash at the time and place (which may be on the Property or any part thereof as permitted by law) in one or more parcels as Trustee may think best and in such order as Trustee may determine.Lender or Lender’s designee may purchase the Property at any sale.It shall not be obligatory upon the purchaser at any such sale to see to the application of the purchase money. Trustee shall apply the proceeds of the sale in the following order:(a) to all reasonable costs and expenses of the sale, including, but not limited to, reasonable Trustee's and attorney’s fees and costs of title evidence; (b) to all sums secured by this Deed of Trust; and (c) the excess, if any, to the person or persons legally entitled thereto. 19.Borrower’s Right to Cure Default.Whenever foreclosure is commenced for nonpayment of any sums due hereunder, the owners of the Property or parties liable hereon shall be entitled to cure said defaults by paying all delinquent principal and interest payments due as of the date of cure, costs, expenses, late charges, attorney’s fees and other fees all in the manner provided by law.Upon such payment, this Deed of Trust and the obligations secured hereby shall remain in full force and effect as though no Acceleration had occurred, and the foreclosure proceedings shall be discontinued. 20.Assignment of Rents; Appointment of Receiver; Lender in Possession.As additional security hereunder, Borrower hereby assigns to Lender the rents of the Property; however, Borrower shall, prior to Acceleration under § 18 (Acceleration; Foreclosure; Other Remedies) or abandonment of the Property, have the right to collect and retain such rents as they become due and payable. Lender or the holder of the Trustee’s certificate of purchase shall be entitled to a receiver for the Property after Acceleration under § 18 (Acceleration; Foreclosure; Other Remedies) and shall also be so entitled during the time covered by foreclosure proceedings and the period of redemption, if any; and shall be entitled thereto as a matter of right without regard to the solvency or insolvency of Borrower or of the then owner of the Property, and without regard to the value thereof.Such receiver may be appointed by any Court of competent jurisdiction upon ex parte application and without notice; notice being hereby expressly waived. Upon Acceleration under § 18 (Acceleration; Foreclosure; Other Remedies) or abandonment of the Property, Lender, in person, by agent or by judicially-appointed receiver, shall be entitled to enter upon, take possession of and manage the Property and to collect the rents of the Property including those past due.All rents collected by Lender or the receiver shall be applied, first to payment of the costs of preservation and management of the Property, second to payments due upon prior liens, and then to the sums secured by this Deed of Trust.Lender and the receiver shall be liable to account only for those rents actually received. 21.Release.Upon payment of all sums secured by this Deed of Trust, Lender shall cause Trustee to release this Deed of Trust and shall produce for Trustee the Note.Borrower shall pay all costs of recordation and shall pay the statutory Trustee’s fees.If Lender shall not produce the Note as aforesaid, then Lender, upon notice in accordance with § 16 (Notice) from Borrower to Lender, shall obtain, at Lender’s expense, and file any lost instrument bond required by Trustee or pay the cost thereof to effect the release of this Deed of Trust. 22.Waiver of Exemptions.Borrower hereby waives all rights of homestead and any other exemption in the Property under state or federal law presently existing or hereafter enacted. 23.Escrow Funds for Taxes and Insurance.This § 23 is not applicable if Funds, as defined below, are being paid pursuant to a prior encumbrance.Subject to applicable law, Borrower shall pay to Lender, on each day installments of principal and interest are payable under the Note, until the Note is paid in full, a sum (herein referred to as “Funds”) equal to 0 of the yearly taxes and assessments which may attain priority over this Deed of Trust, plus 0 of yearly premium installments for Property Insurance, all as reasonably estimated initially and from time to time by Lender on the basis of assessments and bills and reasonable estimates thereof, taking into account any excess Funds not used or shortages. The principal of the Funds shall be held in a separate account by Lender in trust for the benefit of Borrower and deposited in an institution, the deposits or accounts of which are insured or guaranteed by a federal or state agency.Lender shall apply the Funds to pay said taxes, assessments and insurance premiums.Lender may not charge for so holding and applying the Funds, analyzing said account or verifying and compiling said assessments and bills.Lender shall not be required to pay Borrower any interest or earnings on the Funds.Lender shall give to Borrower, without charge, an annual accounting of the Funds showing credits and debits to the Funds and the purpose for which each debit to the Funds was made.The Funds are pledged as additional security for the sums secured by this Deed of Trust. If the amount of the Funds held by Lender shall not be sufficient to pay taxes, assessments and insurance premiums as they fall due, Borrower shall pay to Lender any amount necessary to make up the deficiency within 30 days from the date notice is given in accordance with § 16 (Notice) by Lender to Borrower requesting payment thereof.Provided however, if the loan secured by this Deed of Trust is subject to RESPA or other laws regulating Escrow Accounts, such deficiency, surplus or any other required adjustment shall be paid, credited or adjusted in compliance with such applicable laws. Upon payment in full of all sums secured by this Deed of Trust, Lender shall simultaneously refund to Borrower any Funds held by Lender.If under § 18 (Acceleration; Foreclosure; Other Remedies) the Property is sold or the Property is otherwise acquired by Lender, Lender shall apply, no later than immediately prior to the sale of the Property or its acquisition by Lender, whichever occurs first, any Funds held by Lender at the time of application as a credit against the sums secured by this Deed of Trust. TD72-8-10.DEED OF TRUST (DUE ON TRANSFER – STRICT) Page4 of6 24.Transfer of the Property; Assumption.The following events shall be referred to herein as a “Transfer”:(i) a transfer or conveyance of title (or any portion thereof, legal or equitable) of the Property (or any part thereof or interest therein): (ii) the execution of a contract or agreement creating a right to title (or any portion thereof, legal or equitable) in the Property (or any part thereof or interest therein): (iii) or an agreement granting a possessory right in the Property (or any portion thereof), in excess of three (3) years: (iv) a sale or transfer of, or the execution of a contract or agreement creating a right to acquire or receive, more than fifty percent (50%) of the controlling interest or more than fifty percent (50%) of the beneficial interest in Borrower and (v) the reorganization, liquidation or dissolution of Borrower.Not to be included as a Transfer are (x) the creation of a lien or encumbrance subordinate to this Deed of Trust: (y) the creation of a purchase money security interest for household appliances, or (z) a transfer by devise, descent or by operation of the law upon the death of a joint tenant.At the election of Lender, in the event of each and every transfer: 24.1All sums secured by this Deed of Trust shall become immediately due and payable (Acceleration). 24.2If a Transfer occurs and should Lender not exercise Lender’s option pursuant to this § 24 to Accelerate, Transferee shall be deemed to have assumed all of the obligations of Borrower under this Deed of Trust including all sums secured hereby whether or not the instrument evidencing such conveyance, contract or grant expressly so provides.This covenant shall run with the Property and remain in full force and effect until said sums are paid in full.Lender may without notice to Borrower deal with Transferee in the same manner as with Borrower with reference to said sums including the payment or credit to Transferee of undisbursed reserve Funds on payment in full of said sums, without in any way altering or discharging Borrower’s liability hereunder for the obligations hereby secured. 24.3Should Lender not elect to Accelerate upon the occurrence of such Transfer then, subject to § 24.2 above, the mere fact of a lapse of time or the acceptance of payment subsequent to any of such events, whether or not Lender had actual or constructive notice of such Transfer, shall not be deemed a waiver of Lender’s right to make such election nor shall Lender be estopped therefrom by virtue thereof.The issuance on behalf of Lender of a routine statement showing the status of the loan, whether or not Lender had actual or constructive notice of such Transfer, shall not be a waiver or estoppel of Lender’s said rights. 25.Borrower’s Copy.Borrower acknowledges receipt of a copy of the Note and this Deed of Trust. TD72-8-10.DEED OF TRUST (DUE ON TRANSFER – STRICT) Page5 of6 EXECUTED BY BORROWER. IF BORROWER IS NATURAL PERSON(s): [JDone LLC] [] doing business as [] [] IF BORROWER IS CORPORATION: ATTEST: Name of Corporation By Secretary President (SEAL) IF BORROWER IS PARTNERSHIP: Name of Partnership By A General Partner IF BORROWER IS LIMITED LIABILITY COMPANY: Name of Limited Liability Company By Its Authorized Representative Title of Authorized Representative STATE OF COLORADO [] County of [Adams ) )ss. ) The foregoinginstrument was acknowledged before me this 15th day of September 2014 by */s/ James B. Wiegand as member for JDone LLC. Witness my hand and official seal. My commission expires:[]. Notary Public *If a natural person or persons, insert the name(s) of such person(s). If a corporation, insert, for example, “John Doe as President and Jane Doe as Secretary of Doe & Co., a Colorado corporation.”.If a partnership, insert for example, “Sam Smith as general partner in and for Smith & Smith, a general partnership."A Statement of Authority may be required if borrower is a limited liability company or other entity (38-30-172, C.R.S.) TD72-8-10.DEED OF TRUST (DUE ON TRANSFER – STRICT) Page6 of6
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) þ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2014 o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period to Commission file number 001-08675 UNITED STATES ANTIMONY CORPORATION (Exact name of registrant as specified in its charter) Montana 81-0305822 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) P.O. Box 643, Thompson Falls, Montana (Address of principal executive offices) (Zip code) Registrant’s telephone number, including area code:(406) 827-3523 Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 No 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 þ No o Indicate by check mark whether the registrant is a shell company as defined by Rule 12b-2 of the Exchange Act. YES o No þ At November 10, the registrant had outstanding 66,027,453 shares of par value $0.01 common stock. 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 Rule12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer þ Non-accelerated filer o Smaller reporting company o (Do not check if a smaller reporting company) UNITED STATES ANTIMONY CORPORATION QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 2014 (UNAUDITED) TABLE OF CONTENTS Page PART I – FINANCIAL INFORMATION Item 1: Financial Statements (unaudited) 3-16 Item 2: Management’s Discussion and Analysis of Results of Operations and Financial Condition 17-21 Item 3: Quantitative and Qualitative Disclosure about Market Risk 21 Item 4: Controls and Procedures 22 PART II – OTHER INFORMATION Item 1: Legal Proceedings 23 Item 2: Unregistered Sales of Equity Securities and Use of Proceeds 23 Item 3: Defaults upon Senior Securities 23 Item 4: Mine Safety Disclosures 23 Item 5: Other Information 23 Item 6: Exhibits and Reports on Form 8-K 23 SIGNATURE 24 CERTIFICATIONS 25-30 [The balance of this page has been intentionally left blank.] 2 PART I-FINANCIAL INFORMATION Item 1. Financial Statements United States Antimony Corporation and Subsidiaries Consolidated Balance Sheets (Unaudited) September 30, December 31, ASSETS Current assets: Cash and cash equivalents $ $ Certificates of deposit Accounts receivable, net Inventories Other current assets Total current assets Properties, plants and equipment, net Restricted cash for reclamation bonds Other assets Total assets $ $ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ $ Due to factor Accrued payroll, taxes and interest Other accrued liabilities Payables to related parties Deferred revenue Notes payable to bank - Long-term debt, current Total current liabilities Long-term debt, net of discount and current portion Stock payable to directors for services - Asset retirement obligations and accrued reclamation costs Total liabilities Commitments and contingencies (Note 4, and 6) Stockholders' equity: Preferred stock $0.01 par value, 10,000,000 shares authorized: Series A:-0- shares issued and outstanding - - Series B: 750,000 shares issued and outstanding (liquidation preference $892,500 at December 31, 2013) Series C: 177,904 shares issued and outstanding (liquidation preference $97,847 at December 31, 2013) Series D: 1,751,005 shares issued and outstanding (liquidation preference $4,796,731 at December 31, 2013) Common stock, $0.01 par value, 90,000,000 shares authorized; 66,027,453 and 63,156,206 shares issued and outstanding, respectively Additional paid-in capital Notes receivable from stock sales ) - Accumulated deficit ) ) Total stockholders' equity Total liabilities and stockholders' equity $ $ The accompanying notes are an integral part of the consolidated financial statements. 3 United States Antimony Corporation and Subsidiaries Consolidated Statements of Operations (Unaudited) For the three months ended For the nine months ended September 30, September 30, September 30, September 30, REVENUES $ COST OF REVENUES ) GROSS PROFIT (LOSS) ) ) OPERATING EXPENSES: General and administrative Professional fees Gain on sale of equpment - - ) - TOTAL OPERATING EXPENSES LOSS FROM OPERATIONS ) OTHER INCOME (EXPENSE): Interest income Interest expense ) Factoring expense ) TOTAL OTHER EXPENSE ) LOSS BEFORE INCOME TAXES ) INCOME TAX EXPENSE - - - ) NET LOSS $ ) $ ) $ ) $ ) Net loss per share of common stock: Basic $Nil $Nil $ ) $ ) Diluted $Nil $Nil $ ) $ ) Weighted average shares outstanding: Basic Diluted The accompanying notes are an integral part of the consolidated financial statements. 4 United States Antimony Corporation and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) For the nine months ended September 30, September 30, Cash Flows From Operating Activities: Net loss $ ) $ ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization expense Gain on sale of asset ) - Accretion of asset retirement obligation ) Common stock issued to directors for services - Common stock issued for services - Deferred income tax expense - Change in: Accounts receivable, net ) ) Inventories ) Other current assets ) ) Other assets ) ) Accounts payable Due to factor Accrued payroll, taxes and interest ) Other accrued liabilities ) Deferred revenue ) Payables to related parties ) Net cash provided by operating activities ) Cash Flows From Investing Activities: Purchase of properties, plants and equipment ) ) Net cash used by investing activities ) ) Cash Flows From Financing Activities: Proceeds from issuance of long term debt Net proceeds from sale of common stock and exercise of warrants Principal payments on notes payable to bank ) - Principal payments on long-term debt ) ) Net cash provided by financing activities NET INCREASE (DECREASE)IN CASH AND CASH EQUIVALENTS ) Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period $ $ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Noncash investing and financing activities: Properties, plants and equipment acquired with long-term debt $ $
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FORM OF EXPENSE LIMITATION AGREEMENT TOUCHSTONE STRATEGIC TRUST EXPENSE LIMITATION AGREEMENT, effective as of [] by and between Touchstone Advisors, Inc. (the “Advisor”) and Touchstone Strategic Trust (the “Trust’), on behalf of certain series of the Trust set forth in Schedule A attached hereto (each a “Fund,” and collectively, the “Funds”). WHEREAS, the Trust is a Massachusetts business trust organized under a Declaration of Trust (“Declaration of Trust”), and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management company of the series type, and each Fund is a series of the Trust; and WHEREAS, the Trust and the Advisor have entered into an Investment Advisory Agreement dated [] (the “Advisory Agreement”), pursuant to which the Advisor provides investment advisory and other management services to each series of the Trust for compensation based on the value of the average daily net assets of each series; and WHEREAS, the Trust and the Advisor have determined that it is appropriate and in the best interests of shareholders to maintain the expenses of the Funds, and, therefore, have entered into this Expense Limitation Agreement (the “Agreement”), in order to maintain the expense ratios of the Funds at the levels specified in Schedule A attached hereto. NOW THEREFORE, the parties hereto agree that the Agreement provides as follows: 1.Expense Limitation. 1.1Expense Limit. The Advisor has contractually agreed to waive fees and reimburse expenses in order to limit certain Funds’ total operating expenses (excluding dividend expenses relating to short sales, interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with generally accepted accounting principles, the cost of “Acquired Fund Fees and Expenses,” if any, other extraordinary expenses not incurred in the ordinary course of Touchstone’s business, and amounts, if any, payable pursuant to a plan adopted in accordance with Rule 12b-1 under the 1940 Act) or other expenses. The contractual limits on total operating expenses set forth in Schedule A below have been adjusted to include the effect of Rule 12b-1 fees and other class specific expenses, if applicable. 1. 2Recoupment. The Advisor shall be entitled to recover, subject to approval by the Board of Trustees of the Trust, such amounts reduced or reimbursed for a period of up to three (3) years from the year in which the Advisor reduced its compensation and/or assumed expenses for a Fund. No recoupment will occur unless a Fund’s expenses are below the expense limitation. 1.3Method of Computation. Fee waivers and/or expense reimbursements are calculated and applied monthly, based on each Fund’s average net assets during such month. 2.Term and Termination of Agreement. This Agreement shall terminate (i) with respect to a Fund listed on Schedule A on the dates listed on Schedule A; (ii) upon the termination of the Advisory Agreement with respect to a Fund; or (iii) at an earlier date by a vote of the Board of Trustees of the Trust if they deem the termination to be beneficial to shareholders of a Fund, unless extended, terminated, modified, or revised by the mutual agreement of the parties, as provided for in writing. 3.Miscellaneous. 3.1Captions. The captions in this Agreement are included for convenience of reference only and in no other way define or delineate any of the provisions hereof or otherwise affect their construction or effect. 3.2Interpretation. Nothing herein contained shall be deemed to require the Trust or the Funds to take any action contrary to the Trust’s Declaration of Trust or Bylaws, or any applicable statutory or regulatory requirement to which it is subject or by which it is bound, or to relieve or deprive the Trust’s Board of Trustees of its responsibility for and control of the conduct of the affairs of the Trust or the Funds. 3.3Definitions. Any question of interpretation of any term or provision of this Agreement, including but not limited to the advisory fee, the computations of net asset values, and the allocation of expenses, having a counterpart in or otherwise derived from the terms and provisions of the Investment Advisory Agreement or the 1940 Act, shall have the same meaning as and be resolved by reference to such Investment Advisory Agreement or the 1940 Act. IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their respective officers thereunto duly, as of the day and year first above written. TOUCHSTONE STRATEGIC TRUST By: [Name] [Title] TOUCHSTONE ADVISORS, INC. By: [Name] [Title] By: [Name] [Title] Schedule A Dated [, 2012] To The Expense Limitation Agreement Dated [, 2012] Between Touchstone Strategic Trust and Touchstone Advisors, Inc. Fund Contractual Limit on Total Operating Expenses Termination Date Touchstone US Long/Short Fund Class A Class C Class Y Institutional 1.30% 2.05% 1.05% 0.90% [April 16, 2014] Touchstone Value Fund Class A Class C Class Y Institutional 1.20% 1.95% 0.95% 0.85% [April 16, 2014] Touchstone International Small Cap Fund Class A Class C Class Y Institutional 1.55% 2.30% 1.30% 1.05% [April 16, 2014] Touchstone Capital Growth Fund Class A Class C Class Y Institutional 1.25% 2.00% 1.00% 0.90% [April 16, 2014] Touchstone Mid Cap Value Opportunities Fund Class A Class C Class Y Institutional 1.29% 2.04% 1.04% 0.89% [April 16, 2014] Touchstone Small Cap Value Opportunities Fund Class A Class C Class Y Institutional 1.50% 2.25% 1.25% 1.10% [April 16, 2014] Touchstone Focused Fund Class A Class C Class Y Institutional 1.20% 1.95% 0.95% 0.80% [April 16, 2014] Touchstone Dynamic Equity Fund Class A Class C Class Y Institutional 1.55% 2.30% 1.30% 1.25% [April 16, 2014] Touchstone Emerging Growth Fund Class A Class C Class Y Institutional 1.39% 2.14% 1.14% 0.99% [April 16, 2014] Touchstone International Equity Fund Class A Class C Class Y Institutional 1.39% 2.14% 1.14% 0.99% [April 16, 2014] Fund Contractual Limit on Total Operating Expenses Termination Date Touchstone Conservative Allocation Fund Class A Class C Class Y Institutional 0.61% 1.36% 0.36% 0.36% [April 16, 2014] Touchstone Balanced Allocation Fund Class A Class C Class Y Institutional 0.64% 1.39% 0.39% 0.39% [April 16, 2014] Touchstone Moderate Growth Allocation Fund Class A Class C Class Y Institutional 0.57% 1.32% 0.32% 0.32% [April 16, 2014] Touchstone Growth Allocation Fund Class A Class C Class Y Institutional 0.57% 1.32% 0.32% 0.32% [April 16, 2014] This Schedule A to the Expense Limitation Agreement is hereby executed as of the date first set forth above. TOUCHSTONE STRATEGIC TRUST By: [Name] [Title] TOUCHSTONE ADVISORS, INC. By: [Name] [Title] By: [Name] [Title] Signature Page – Schedule A to Expense Limitation Agreement
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Exhibit 10.1
AMENDMENT TO
EMPLOYMENT AGREEMENT
(Steven G. Murdock)
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (the “Amendment”) is made as of June 29,
2011, by and between STEVEN G. MURDOCK (“Executive”) and MEADE INSTRUMENTS
CORP., a Delaware corporation (the “Company”).
RECITALS
A. WHEREAS, Executive and the Company entered into that certain Employment
Agreement dated as of February 1, 2010 (the “Agreement”); and
B. WHEREAS, the parties hereto desire to amend the Agreement as set forth herein
and, except as otherwise expressly provided in this Amendment, all capitalized
terms used herein shall have the same meanings as set forth in the Agreement.
AGREEMENT
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Amendments. Paragraph (b) of Section 4 of the Agreement is hereby amended and
restated in its entirety to read as follows:
“(b) Incentive Compensation.
(i) Executive shall also be entitled to a cash bonus if certain targets are
achieved. The calculation of such cash bonus amount shall be determined by the
Company’s compensation committee within the first sixty (60) days of each fiscal
year; provided, however, that for the Company’s FY2012 the cash bonus shall be
calculated as set forth in Section 4(b)(ii) below.
(ii) Executive shall receive a cash bonus, if any, based on the Company’s EBITDA
for FY2012 according to the following table:
EBITDA Bonus
> $112,000 < $224,000
$ 12,500
> $224,000 < $336,000
$ 25,000
> $336,000 < $448,000
$ 37,500
> $448,000 < $560,000
$ 50,000
> $560,000
$ 62,500
Any such cash bonus shall be paid to Executive prior to April 15, 2012. For
purposes of this Agreement, the following terms shall have the following
meanings:
“FY2012” means the Company’s fiscal year ending February 28, 2012.
“EBITDA” means an amount equal to the Net Income (without taking into account
any payment to Executive under this Section 4(b)(ii) and any bonus payment to
John Elwood) for FY2012 plus the provision for interest, income taxes and plus
the amount of Non-Cash Items.
“Net Income” means the Company’s net income as determined in accordance with
generally accepted accounting principles in the United States, determined on a
consistent basis).
“Non-Cash Items” means the following items to the extent included in Net Income
for FY2012:
(A)
depreciation and amortization expense;
(B)
stock-based compensation expense; and
(C)
impairment of inventory, goodwill and/or intangibles charges.
(iii) If Executive is terminated by the Company for any reason or Executive
voluntarily terminates his employment for any reason at any time prior to end of
FY2012, Executive shall not be entitled to any payment under Section 4(b)(ii);
provided, however, if after November 1, 2011, Executive is terminated by the
Company without Cause, he terminates his employment for Good Reason, he dies, he
suffers a Disability, or this Agreement is not renewed by the Company, then the
Company shall pay Executive or his estate (in the case of his death) any payment
which would be due and payable under Section 4(b)(ii) as if he had remained
employed by the Company throughout the end of FY2012.”
2. Effect of Amendment. Except to the extent modified by this Amendment, the
Agreement remains in full force and effect. If any provisions of this Amendment
contradicts or is inconsistent with any provision of the Agreement, then the
provisions of this Amendment shall prevail.
3. Miscellaneous. This Amendment, and all disputes between the parties under or
related to this Amendment or the facts and circumstances leading to its
execution, whether in contract, tort or otherwise, will be governed by and
construed in accordance with the laws of the State of California without regard
to conflicts of laws principles. This Amendment and the Agreement constitute the
full and entire understanding and agreement among the parties with regard to the
subjects hereof and supersedes all prior written and oral agreements,
representations and commitments, if any, among the parties with respect to such
subjects. This Amendment may be executed in any number of counterparts, each of
which will be an original, but all of which together will constitute one and the
same instrument.
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IN WITNESS WHEREOF, the parties have executed this Amendment effective as of the
date first written above, which date for all purposes shall be considered to be
the date of this Amendment.
“EXECUTIVE”
/s/ STEVEN G. MURDOCK Steven G. Murdock
“COMPANY”
MEADE INSTRUMENTS CORP., a Delaware corporation
By: /s/ JOHN A. ELWOOD
John A. Elwood, Chief Financial Officer
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Exhibit 10.2
COMPENSATION OF DIRECTORS
Effective as of June 4, 2013
Each non-employee director of Kaiser Aluminum Corporation (the “Company”)
shall receive:
•
an annual retainer of $45,000 per year;
•
an annual grant of restricted stock having a value equal to $95,000;
•
a fee of $1,500 per day for each meeting of the Board of Directors (the “Board”)
attended in person and $750 per day for each such meeting attended by phone; and
•
a fee of $1,500 per day for each committee meeting of the board of directors
attended in person ($2,000 per day for each such audit committee meeting) and
$750 per day for each such meeting attended by phone ($1,000 per day for each
such audit committee meeting).
In addition, the Lead Independent Director shall receive an additional annual
retainer of $10,000, the Chairman of the Audit Committee of the Board shall
receive an additional annual retainer of $15,000, the Chairman of the
Compensation Committee of the Board shall receive an additional annual retainer
of $5,000 and the Chairman of the Nominating and Corporate Governance Committee
of the Board shall receive an additional annual retainer of $5,000, with all
such amounts payable at the same time as the annual retainer. Each non-employee
director may elect to receive shares of common stock, par value $0.01 per share,
of the Company in lieu of any or all of his or her annual retainer, including
any additional annual retainer for service as the Lead Independent Director or
the Chairman of a committee.
The payment of annual retainers (including any additional annual retainers)
and the annual grant of restricted stock shall be made each year on the date on
which the Company holds its annual meeting of stockholders or such other date as
the Board may determine. The number of shares of common stock to be received in
the grant of restricted stock, as well as the number of shares of common stock
to be received by any non-employee director electing to receive common stock in
lieu of any or all of his or her payment of annual retainer (including any
additional annual retainer), shall be based on the closing price per share of
common stock on the date such grant and payments are made.
The Company shall reimburse all directors for travel and other
disbursements relating to meetings of the Board and committees thereof, and
non-employee directors shall be provided accident insurance with respect to
Company-related business travel.
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SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 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. ) Medlink International, Inc. (Name of Issuer) Common Stock, par value $.001 per share (Title of Class of Securities) (CUSIP Number) Galileo Partners, LLC 10550 Fontenelle Way Los Angeles, CA9077 (310) 474-7800 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) May 19, 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), Rule 13d-1(f) or Rule 13d-1(g), check the following box / /. (Continued on following pages) (Page 1 of 5 Pages) 1 NAME OF REPORTING PERSON Galileo Partners, LLC 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP(A) / /(B) / / 3 SEC USE ONLY 4 SOURCE OF FUNDS* WC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E): / / 6 CITIZENSHIP OR PLACE OF ORGANIZATION California NUMBER OF SHARES BENEFICIALLY OWNED BY REPORTING PERSON WITH 7 SOLE VOTING POWER 2,195,000 (A) 8 SHARED VOTING POWER 0 9 SOLE DISPOSITIVE POWER 2,195,000 (A) 10 SHARED DISPOSITIVE POWER 0 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,195,000 (A) 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES* / / 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 7% 14 TYPE OF REPORTING PERSON* OO (Limited Liability Company) (A) See Item 5. Item 1. Security And Issuer. This statement on Schedule 13D relates to the Series A Common Stock (the “Shares”), Series A Preferred Stock, each share of which is convertible into 1,000 Shares at a conversion price of $0.45 per share, (the “Series A Preferred”)and warrants to purchase Series A Preferred of Medlink International, Inc., a Minnesota corporation (the “Issuer”). The Issuer’s principal executive offices are located at 11 Oval Drive, Suite 200B Islandia NY,11749 Item 2. Identity And Background. This statement is being filed by Galileo Partners, LLC (“Galileo”) (the “Reporting Person”) whose principal business is investments and the principal business address is 10550 Fontenelle Way, Los Angeles, CA, 90077.Galileo is a California a limited liability company. During the past five years the Reporting Person has not been convicted in a criminal proceeding or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of which any of the foregoing was or is subject to a 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. Item 3. Source And Amount Of Funds Or Other Consideration. The total amount of funds used to purchase the Securities was $360,000 and was furnished from the working capital of Galileo. Item 4. Purpose Of The Transaction. On February 10, 2010 the Reporting Person received 500,000 Shares pursuant to a consulting arrangement with the Issuer. On March 4, 2010 the Reporting Person received 95,000 Shares pursuant to a consulting arrangement with an affiliate. On March 11, 2010 the Reporting Person purchased 200 shares of Series A Preferred and a three – year warrant to purchase 200,000 shares of Series A Preferred at an exercise price of $1.05 per share (the Series A Warrants”) (1) for the purchase price of $90,000. On April 8, 2010 the Reporting Person purchased an additional 200 shares of Series A Preferred and additional Series A Warrants (1) for the purchase price of $90,000. On April 23, 2010 the Reporting Person purchased an additional 200 shares of Series A Preferred and additional Series A Warrants (1) for the purchase price of $90,000 On May 13, 2010 the Reporting Person purchased an additional 200 shares of Series A Preferred and additional Series A Warrants (1) for the purchase price of $90,000. (1) The Issuer granted the Series A Warrants in May 2010 retroactive to the purchase dates of the Series A Preferred Stock. Item 5. Interest In Securities Of The Issuer. Galileo is the owners of an aggregate of 2,195,000 Shares (on an as diluted basis), representing approximately 7% of the outstanding Shares (based upon 31,567,236 Shares outstanding as of December 31, 2009, as reported on the latest 10-K filed by the Issuer ). Item 6. Contracts, Arrangements, Understandings Or Relationships With Respect To Securities Of The Issuer. Not applicable Item 7. Material To Be Filed As Exhibits. None 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. Galileo Partners, LLC DATED: May 19, 2010 By: /s/Steve Antebi Steve Antebi, Managing Member
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Exhibit 10.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into in North
Carolina by and between Xerium Technologies, Inc. (the “Company”), a Delaware
corporation with its principal place of business in Raleigh, North Carolina and
Harold C. Bevis (the “Executive”), effective as of the 15th day of August, 2012
WHEREAS, subject to the terms and conditions hereinafter set forth, the Company
wishes to employ the Executive in the position of President and Chief Executive
Officer and the Executive wishes to accept such employment;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises, terms, provisions and conditions set forth in this Agreement, the
parties hereby agree:
Agreement, the Company hereby offers and the Executive hereby accepts
employment.
2. Term. The employment of the Executive by the Company hereunder shall be
for the period commencing on the Effective Date and expiring on the date of the
termination of such employment in accordance with Section 5 hereof. For all
purposes of this Agreement, references to (a) the “Termination Date” shall mean
the date the Executive’s employment hereunder shall terminate pursuant to said
Section 5, and (b) references to the “term” of the Executive’s employment
hereunder shall mean the period commencing on the Effective Date and ending on
the Termination Date. Following the Termination Date, unless specifically
otherwise agreed between the Executive and any applicable party, the Executive
shall cease to hold any position (whether as an officer, director, manager,
employee, trustee, fiduciary or otherwise) with the Company or any of its
Subsidiaries or Affiliates.
(a) During the term of the Executive’s employment hereunder, the Executive
shall serve the Company as its President and Chief Executive Officer. In
addition, and without further compensation, the Executive shall serve as a
director of the Company and as a director and/or officer of one or more of the
Company’s Subsidiaries, if so elected or appointed from time to time.
(b) During the term of the Executive’s employment hereunder, the Executive
shall be employed by the Company on a full-time basis and shall perform such
duties and responsibilities on behalf of the Company and its Subsidiaries
commensurate with his title and position as may be designated from time to time
(c) During the term of the Executive’s employment hereunder, the Executive
shall devote his full business time to the advancement of the business and
interests of the Company and its Subsidiaries and to the discharge of his duties
and responsibilities hereunder; provided, however, that Executive may manage
personal investments and affairs for Executive and his family, and participate
in industry, trade, professional, non-profit, community or philanthropic
activities, serve on civic or charitable boards or committees, in each case to
the
extent that such activities do not materially interfere with the performance of
Executive’s duties
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under this Agreement and are not in conflict with the business interests of the
Company or its Subsidiaries or otherwise compete with the Company or its
Subsidiaries and, subject to Executive’s providing advance notice to the Board
and the Board’s written consent, which shall not be unreasonably withheld, may
serve as a director of two (2) for-profit external boards of directors that do
not compete with the Company or its Subsidiaries. The Executive shall not engage
in any other business activity or serve in any governmental or academic position
during the term of this Agreement, except as may be expressly approved in
advance by the Board in writing. The Executive agrees to relocate his primary
residence to a location within a reasonable distance of the Company’s offices in
Raleigh, North Carolina, as promptly as possible after the Effective Date, but
in no event, later than March 1, 2013.
4. Compensation and Benefits. During the term of the Executive’s employment
hereunder as compensation for all services performed by the Executive:
(a) Base Salary. The Company shall pay the Executive a base salary at the
rate of Six Hundred and Sixty-Five Thousand Dollars ($665,000) per year, payable
in accordance with the payroll practices of the Company for its executives and
subject to increase from time to time by the Board (but not decrease), in its
sole discretion. Such base salary, as from time to time increased, is hereafter
referred to as the “Base Salary.”
(b) Annual Bonus Plan. The Executive shall be entitled to participate in any
and all annual bonus plans (the “Annual Bonus Plans”) from time to time in
effect for senior executives of the Company generally. The terms of each Annual
Bonus Plan and Executive’s participation therein, including the form of payment,
shall be determined by the compensation committee of the Board (or, if there is
no such committee, by the Board); provided, however, that (i) the Executive
shall be entitled to participate in such plans at a target opportunity of one
hundred percent (100%) of his Base Salary (pro-rated in 2012 based on employment
commencement date, and, for 2012, payable 50% in shares of the Company’s common
stock and 50% in cash), (ii) each year the form of payment shall include at
least fifty percent (50%) of such bonus amount in cash and, (iii) provided that
the Executive is employed by the Company on the last day of the fiscal year for
which such awards were earned with any awards thereunder payable only to the
extent earned pursuant to the terms of the applicable Annual Bonus Plan and
subject to adjustment in accordance with the terms of the applicable Annual
Bonus Plan. Awards payable under the Annual Bonus Plans shall be payable not
later than two and one-half (2½) months following the end of the fiscal year for
which the awards were earned. The compensation committee of the Board (or, if
there is no such committee, the Board) may alter, modify, add to or delete any
Annual Bonus Plan at any time as it, in its sole judgment determines to be
appropriate.
(c) Long Term Incentive. Each fiscal year commencing with 2013, the Executive
will receive a grant of long-term incentive awards having a fair market value
that is not less than two hundred percent (200%) of the Executive's then current
Base Salary subject to such time-based and performance-based vesting conditions
as the Compensation Committee may impose, in its sole discretion, provided
however, such grant shall not be less than $1,400,000. Such long-term incentive
awards shall be issued under the Company’s then applicable Long Term Incentive
Program and will
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be made to the Executive at the same time and on the same terms as awards are
made to other participants in the Long Term Incentive Program.
(d) Other Incentive Plans. The Executive shall be entitled to participate in
any and all cash, equity, bonus and other incentive plans not otherwise
described herein from time to time in effect for senior executives of the
Company generally. The terms of each such plan and the Executive’s participation
therein shall be determined by the compensation committee of the Board (or, if
there is no such committee, by the Board). The compensation committee of the
Board (or, if there is no such committee, the Board) may alter, modify, add to
or delete any such plan at any time as it, in its sole judgment, determines to
be appropriate.
(e) Vacations. The Executive shall be entitled to an annual vacation of four
(4) weeks, with reasonable advance notice and subject to the reasonable business
needs of the Company. Vacation shall otherwise be governed by the policies of
the Company, as in effect from time to time.
(f) Other Benefits. Subject to any contribution therefor generally required
of executives of the Company, the Executive shall be entitled to participate in
any and all employee benefit plans from time to time in effect for executives of
the Company generally, except to the extent such plans are in a category of
benefit specifically otherwise provided to the Executive under this Agreement
(e.g., severance pay). Such participation shall be subject to the terms of the
applicable plan documents and generally applicable Company policies. Except to
the extent such plans are in a category of benefit specifically otherwise
provided to the Executive under this Agreement, the Board may alter, modify, add
to or delete employee benefit plans at any time as it, in its sole judgment,
determines to be appropriate.
(g) Automobile Allowance. The Company shall provide the Executive while he
continues to be employed by the Company with participation in the Company’s
standard executive automobile program pursuant to which he would receive a
current amount of eight hundred dollars ($800) per month as an automobile
allowance.
(h) Business Expenses. The Company shall pay or reimburse the Executive for
all reasonable and necessary business expenses incurred or paid by the Executive
in the performance of his duties and responsibilities hereunder, subject to any
maximum annual limit or other restrictions on such expenses set by the Board and
to such reasonable substantiation and documentation as may be specified by the
Company from time to time. In the case of any reimbursement to which the
Executive is entitled pursuant to this Section 4(h) that would constitute
deferred compensation subject to Section 409A of the Code, the following
additional rules shall apply: (i) the reimbursable expense must have been
incurred, except as otherwise expressly provided in this Agreement, during the
term of this Agreement; (ii) the amount of expenses eligible for reimbursement
during any calendar year will not affect the amount of expenses eligible for
reimbursement in any other calendar year; (iii) the reimbursement shall be made
not later than December 31 of the calendar year following the calendar year in
which the expense was incurred; and (iv) the Executive’s entitlement to
reimbursement shall not be subject to liquidation or exchange for another
benefit.
(i) Relocation Expenses. The Company shall provide the Executive with the
relocation benefits package set forth on Exhibit A attached hereto.
(j) Sign-On Award. The Executive shall be entitled to a Sign-On Award (the
“Sign-On Award”) consisting of Restricted Stock Units (the “RSUs”) and options
to acquire shares of the Company’s common stock (the “Options”) to be provided
as follows:
3
(i) 204,208 RSUs shall be granted to the Executive on the Effective Date.
Assuming the Executive’s continued employment with the Company, one third of the
total number of RSUs granted shall vest on each of the second, third and fourth
anniversaries of the Effective Date (unless otherwise fully vested immediately
prior to any Change of Control or other events) and otherwise be subject to the
terms and conditions of the attached RSU Agreement; and
(ii) Options to acquire 781,701 shares of the Company’s common stock shall
be granted to the Executive on the Effective Date. The exercise price of the
Options will be the fair market value of a share of the Company’s common stock
on the date of grant. Assuming the Executive’s continued employment with the
Company, one third of the total number of Options granted shall vest and become
exercisable on each of the second, third and fourth anniversaries of the
Effective Date (unless otherwise fully vested immediately prior to any Change of
Control or other events) and otherwise be subject to the terms and conditions of
the attached Option Agreement.
(k) Country Club Use. During the term of the Executive’s employment
hereunder, the Executive shall be eligible to use a Company-owned country club
membership at the McConnell Golf Course in Wakefield Plantation, Raleigh, North
Carolina.
(l) Annual Physical Examination. During the term of the Executive’s
employment hereunder, the Company shall reimburse the Executive for the cost and
expense of an annual physical and related testing conducted at the Duke
University Medical Center to the extent the cost and expense of such physical
and testing are not covered by the Company’s group health plan in which the
Executive is enrolled.
(m) Payments/Actions by Company. Wherever it is provided in this Agreement
that payment of any form of compensation or any other action shall be made by
the Company, such payment or action may be made by any Subsidiary or Affiliate
of the Company.
5. Termination of Employment. The Executive’s employment hereunder shall
terminate under the following circumstances:
(a) Death. In the event of the Executive’s death during the term of
Executive’s employment hereunder, the Executive’s employment shall immediately
and automatically terminate.
(b) Disability. The Company may terminate the Executive’s employment
hereunder, upon notice to the Executive, in the event that the Executive becomes
disabled during his employment hereunder. For this purpose, disability means
that the Executive (i) is unable to engage in any substantial gainful activity
period of not less than twelve (12) months, or (ii) is, by reason of any
medically determinable physical or mental impairment which can be expected to
not less than six (6) months under an accident and health plan covering
employees of the Company. If any question shall arise as to whether during any
period the Executive is disabled within the meaning of this Section 5(b), the
Executive, at the request of the Company, shall submit to a medical examination,
at the Company’s sole cost and expense, by a physician mutually selected and
agreed upon by the Company and Executive to determine whether the Executive is
so disabled and such determination shall for the purposes of this Agreement be
conclusive of the issue. If such
4
examination, the Company’s determination of the issue shall be binding on the
Executive.
(c) By the Company for Cause. The Company may terminate the Executive’s
forth the nature of such Cause. The following shall constitute Cause for
termination: (i) the Executive’s conviction of or plea of nolo contendere to a
felony or other crime involving moral turpitude (other than one involving a
motor vehicle); (ii) the Executive’s fraud, theft or embezzlement committed with
respect to the Company or its Subsidiaries; (iii) material breach by the
Executive of any of the provisions of Sections 8, 9 or 10 hereof that causes
demonstrable harm to the Company or any of its Subsidiaries; or (iv) the
Executive’s willful and continued failure to perform his material duties to the
Company and its Subsidiaries; provided, however, that the Company may terminate
Executive’s employment hereunder for “Cause” within the meaning of this clause
(iv) only after the Company has provided written notice to the Executive of the
failure and the Executive shall not have remedied such failure within thirty
(30) days following the effectiveness of such notice. “Cause” (including,
without limitation, any “Cause” under clause (iv) above) shall not include any
act or omission reasonably believed by the Executive in good faith to have been
in and not opposed to the best interests of the Company and its Subsidiaries
(without intent to gain, directly or indirectly, a profit to which the Executive
was not legally entitled) and reasonably believed by the Executive not to have
been improper or unlawful. In the event of any dispute between the Executive and
the Company regarding whether “Cause” exists, any determination by the Board
shall be subject to de novo review by any forum deciding the disputed issue,
provided that such de novo review shall not otherwise change or shift the burden
of proof in connection with any dispute resolution proceeding.
(d) By the Company Other than for Cause. The Company may terminate the
Executive’s employment, hereunder other than for Cause at any time upon not less
than thirty (30) days notice to the Executive. In the event of termination of
the Executive pursuant to this Section 5(d), the Board may elect to waive the
period of notice or any portion thereof (it being understood that if the Board
elects to waive the period of notice, or any portion thereof, the Company shall
pay Executive’s Base Salary through the notice period or any portion thereof so
waived).
(e) By the Executive Other than for Good Reason. The Executive may terminate
his employment hereunder other than for Good Reason (as defined in Section 5(f)
below) at any time upon the provision of sixty (60) days written notice to the
Company. In the event of termination of the Executive pursuant to this Section
5(e), the Board may elect to waive the period of notice or any portion thereof.
(f) By the Executive for Good Reason. The Executive may terminate his
employment hereunder for Good Reason upon written notice to the Company setting
forth in reasonable detail the nature of such Good Reason; provided, that such
written notice must be delivered to the Company within ninety (90) days of the
initial existence of the condition or circumstance constituting or giving rise
to the purported Good Reason. A termination by the Executive hereunder shall not
be treated as a termination for Good Reason if the Company remedies the
condition or circumstance constituting or giving rise to the purported Good
Reason within thirty (30) days of the receipt of the Executive’s notice, or if
actual termination occurs more than two (2) years following the initial
existence of such condition or circumstance. The following shall constitute Good
Reason for purposes of this Agreement: (i) relocation of the Executive’s primary
office to a location that is more than fifty (50) miles from his then-current
principal residence (following the Executive’s relocation of his principal
residence to a location within reasonable
5
commuting distance of the Company’s offices in Raleigh, North Carolina), it
being understood that the Executive may be required to travel frequently and
that prolonged periods spent away from Executive’s office shall not constitute
Good Reason; (ii) the assignment to Executive of duties materially inconsistent
with Executive’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by Section
3; (iii) the material breach by the Company of any material provision of this
Agreement; (iv) any material reduction in the Base Salary or the applicable
percentages of Base Salary used to determine bonuses under the Annual Bonus
Plans; or (v) the Company’s failure to cause any successor to assume this
Agreement as required by Section 19 below.
6. Compensation upon Termination.
(a) Death. In the event of a termination of the Executive’s employment
hereunder by reason of death as contemplated by Section 5(a), the Company shall
pay to the Executive’s designated beneficiary or, if no beneficiary has been
designated by the Executive, to his estate, the accrued compensation and vested
benefits required to be paid or provided pursuant to Section 6(g). In addition,
the Company shall pay the Executive’s beneficiary or, if no beneficiary has been
designated by the Executive, to his estate, the Annual Bonus for the fiscal year
in which the Executive’s employment is terminated (pro-rated based on employment
through the date of termination). The amount of such pro-rated Annual Bonus will
be determined based on actual performance during such fiscal year and will be
paid at the same time Annual Bonuses are paid to other members of senior
management.
(b) Disability. In the event of any termination of the Executive’s employment
hereunder by reason of disability as contemplated by Section 5(b), the Company
shall pay to the Executive the accrued compensation and vested benefits required
to be paid or provided pursuant to Section 6(g). In addition, the Company shall
pay the Executive the Annual Bonus for the fiscal year in which the Executive’s
employment is terminated (pro-rated based on employment through the date of
termination). The amount of such pro-rated Annual Bonus will be determined based
on actual performance during such fiscal year and will be paid at the same time
Annual Bonuses are paid to other members of senior management. The Company shall
also continue to contribute to the premium cost of the Executive’s participation
in the Company’s group medical and dental plans for eighteen (18) months (or
such longer period as may be provided under the employee benefit plans of the
Company) subject to any employee contribution applicable to the Executive on the
Termination Date, but only if the Executive does not have access at reasonable
cost to substantially equivalent benefits through another employer, and provided
that the Executive is entitled to continue such participation under applicable
law and plan terms. For the purpose of insuring that the Executive receives the
full benefit of the Company’s short-term disability insurance plan, the
Termination Date under Section 5(b) (Termination for Disability) shall be no
earlier than the date that corresponds with the date the Executive exhausts his
eligibility for short-term disability insurance benefits under the Company’s
then-existing short-term disability plan. For the avoidance of doubt, nothing in
this Agreement is intended to affect any rights the Executive may have under any
long-term disability plan the Company may have and in which the Executive is
entitled to participate.
(c) By the Company for Cause. In the event of any termination of the
Executive’s employment hereunder by the Company for Cause as contemplated by
Section 5(c), the Company shall have no further obligations to the Executive
under this Agreement other than payment of accrued compensation and vested
6
(d) By the Company Other than for Cause or by the Executive for Good Reason.
In the event of any termination of the Executive’s employment hereunder by the
Company pursuant to Section 5(d) or by the Executive pursuant to Section 5(f),
the Company shall pay to the Executive the accrued compensation and vested
the Company shall provide the Executive with the compensation and benefits
described in (i) and (ii) below.
(i) Not Close in Time to a Change of Control. In the event of any termination
of the Executive’s employment hereunder by the Company pursuant to Section 5(d)
or by the Executive pursuant to Section 5(f), which does not occur within three
(3) months prior to or within two (2) years following a Change of Control, the
Company (A) shall continue to pay the Executive the Base Salary at the rate in
effect on the Termination Date for eighteen (18) months, (B) the Annual Bonus
for the fiscal year in which the Executive’s employment is terminated (pro-rated
based on employment through the date of termination) and (C) subject to any
employee contribution applicable to the Executive on the Termination Date, shall
continue to contribute to the premium cost of the Executive’s participation in
the Company’s group medical and dental plans for eighteen (18) months, but only
if the Executive does not have access at reasonable cost to substantially
equivalent benefits through another employer, and provided that the Executive is
entitled to continue such participation under applicable law and plan terms. In
the event that the Executive is not permitted to continue under applicable law
or the plan terms for the entire eighteen (18) month period for any reason, the
Company shall reimburse the Executive for the portion of his monthly COBRA
premium that is equal to the employer portion of the premium paid by the Company
immediately prior to the Executive’s termination for the remainder of such
eighteen month period. All such reimbursements shall be made no later than two
(2) months following the end of the year in which the expense was incurred. The
amount of the pro-rated Annual Bonus payable pursuant to clause (B) above will
management.
(ii) Close in Time to a Change of Control. In the event of any termination of
the Executive’s employment hereunder by the Company pursuant to Section 5(d) or
by the Executive pursuant to Section 5(f), which occurs within three (e) months
prior to or within two (2) years following a Change of Control, the Company (A)
shall continue to pay the Executive the Base Salary at the rate in effect on the
Termination Date for twenty-four (24) months, (B) the Annual Bonus for the
fiscal year in which Executive’s employment is terminated (pro-rated based on
employment through the date of termination) and (C) subject to any employee
contribution applicable to the Executive on the Termination Date, shall continue
to contribute to the premium cost of the Executive’s participation in the
Company’s group medical and dental plans for twenty-four (24) months, but only
or the plan terms prior to the end of the twenty-four (24) month period for any
reason, the Company shall reimburse the Executive for the portion of his COBRA
premium that is equal to the employer portion of the premium costs paid by the
Company immediately prior to the Executive’s termination (“Employee’s Portion”)
for eighteen months following the termination of employment and if, at the end
of that eighteen (18) month period he is still participating in the Company’s
group medical and dental plans, the Company shall pay him a lump sum amount
equal to six (6) months of the Employer’s Portion. Said lump sum payment shall
be made within thirty (30) days following the end of that eighteen (18) month
period. All
7
such reimbursements shall be made no later than two (2) months following the end
of the year in which the expense was incurred. The amount of the pro-rated
Annual Bonus payable pursuant to clause (B) above will be determined based on
annual bonuses are paid to other members of senior management.
(iii) Conditions. Any obligation of the Company to the Executive under
Sections 6(b) and 6(d) hereof (other than the accrued compensation and vested
benefits required to be paid or provided pursuant to Section 6(g)) is
conditioned upon (A) the Executive’s signing a release of claims in the form of
Exhibit B attached hereto (the “Employee Release”) and (B) the Executive’s
continued full performance of his continuing obligations hereunder, including
those under Sections 8 and 9. The Company shall provide the Executive with an
executable copy of the Employee Release within seven (7) days following the
Termination Date. The Executive must execute the Employee Release within the
time period specified in the Employee Release which shall not be longer than
forty-five (45) days. The Employee Release shall not be effective until any
applicable revocation period has expired. Base Salary to which the Executive is
entitled under Sections 6(b) and 6(d) hereof shall be payable in accordance with
the normal payroll practices of the Company in effect on the Termination Date
and will begin at the Company’s next regular payroll period which is at least
five (5) business days following the effective date of the Employee Release, but
shall be retroactive to next business day following the Termination Date,
provided, however, that in all cases, such payments shall commence within ninety
(90) days following the Executive’s separation from service, and further
provided that if the ninety (90) day period begins in one taxable year for the
Executive and ends in the subsequent taxable year for the Executive, then the
payments shall not commence until the subsequent taxable year pursuant to the
guidance provided in IRS Notice 2010-80.
(iv) No reduction. The payments and contributions by the Company that are
described in Sections 6(d)(i) and 6(d)(ii) hereof shall not be reduced by any
income or other compensation received by the Executive subsequent to the
termination of his employment.
(e) By the Executive Other than for Good Reason. If the Executive shall
terminate his employment pursuant to Section 5(e), the Company shall have no
further obligations to the Executive under this Agreement other than payment of
accrued compensation and vested benefits required to be paid or provided
pursuant to Section 6(g). Notwithstanding the foregoing, if the Board elects to
waive the period of notice, or any portion thereof, the payment of Base Salary
shall continue through the notice period or any portion thereof so waived.
(f) Delay in Payment Commencement on Account of Internal Revenue Code Section
409A. If the Executive is, at the time of separation from service, a “specified
employee” (as hereinafter defined), any and all amounts payable in connection
with such separation from service that constitute deferred compensation subject
to Section 409A of the Code, as determined by the Company in its sole
discretion, and that would (but for this sentence) be payable within six (6)
months following such separation from service, shall not be paid until the date
which is six (6) months and one (1) day after the date of such separation from
service or, if earlier, the Executive’s date of death. In this regard, any
payments that otherwise would have been made during such six (6) month period
shall be paid to the Executive in a lump sum on the first date on which they may
be paid, together with interest credited at the short-term applicable federal
rate, compounded daily. For purposes of this subsection (f), “specified
employee” means an individual determined by the Company to be a specified
employee as defined in subsection (a)(2)(B)(i) of Section 409A of the Code. The
Company may, but need not, elect in writing, subject to the applicable
limitations under
8
Section 409 A of the Code, any of the special elective rules prescribed in
Section 1.409A-l(i) of the Treasury Regulations for purposes of determining
“specified employee” status. Any such written election shall be deemed part of
this Agreement.
(g) Payment of Post-Termination Accrued Obligations Generally. In addition to
the compensation and benefits provided pursuant to other provisions in this
Section 6, following the Executive’s termination of employment for any reason,
the Company (or its Affiliated or Subsidiaries, as applicable) shall (i) pay the
Executive (or his beneficiary or estate if the Executive has died) all accrued
but unpaid Base Salary earned through his Termination Date in accordance with
the Company’s regular payroll practices, (ii) any accrued but unpaid Annual
Bonus earned for the fiscal year ended prior to the Termination Date (except in
the case of a Termination by the Company for Cause in accordance with the
Section 5(c)) at the same time that annual bonuses are payable to other members
of senior management, (iii) provide any vested benefits under any employee
benefit plan referred to in Section 4(f) which specifically is designed to
provide benefits following termination of employment (such as any such plan
providing benefits upon disability or retirement) (but subject to all of the
terms, if any, of each such other benefit plan as to how such vested benefits
will be treated following termination of employment) and (iv) reimburse the
Executive within thirty (30) days of his Termination Date for any business
expenses incurred by the Executive prior to the Termination Date to the extent
not reimbursed prior to the Termination Date, and (v) pay or provide the
Executive with any other compensation, benefits or rights expressly set forth in
any other written agreement to which Executive and any of the Company or any of
its Subsidiaries or Affiliates shall become parties from time to time after the
date hereof.
7. Limitation.
(a) In the event that it is determined that any payment or benefit provided
by the Company or any of its Subsidiaries to or for the benefit of the
Executive, either under this Agreement or otherwise, and regardless of under
what plan or arrangement it was made, would, absent the application of this
Section 7, be subject to excise tax (the “Excise Tax”) imposed by Section 4999
of the Code, or any successor provision (“Section 4999”), the Company will
automatically reduce such payments and/or benefits to the extent, but only to
the extent, necessary so that no portion of the remaining payments and/or
benefits will be subject to the Excise Tax, unless the amount of such payment
and benefits that the Executive would retain after payment of the Excise Tax and
all applicable Federal, state and local income taxes without such reduction
would exceed the amount of such payments and benefits that the Executive would
retain after payment of all applicable Federal, state and local taxes after
applying such reduction. If any payments or benefits are reduced pursuant to the
preceding sentence, the Company shall have discretion in determining which, if
any, of several payments and/or benefits (if more than one) are to be reduced.
(b) Determinations as to whether any cutback is required and the amount of
any cutback that may be required under this Section 7 will be made by the
Company’s tax accountant unless the Executive has reasonable objections to the
use of that firm, in which case the determinations will be made by a comparable
firm chosen jointly by the Company and the Executive (the firm making the
determinations to be referred to as the “Firm”). The determinations of the Firm
will be binding upon the Company and the Executive except as the determinations
are established in resolution (including by settlement) of a controversy with
the Internal Revenue Service to have been incorrect. All fees and expenses of
the Firm will be paid by the Company.
9
8. Restricted Activities. The Executive agrees that some restrictions on his
activities during and after his employment are necessary to protect the
goodwill, Confidential Information and other legitimate interests of the Company
and its Subsidiaries:
(a) While the Executive is employed by the Company and for eighteen (18)
months after his employment terminates (the “Non-Competition Period”) the
Executive shall not, whether as owner, partner, investor, consultant, agent,
employee, co-venturer or otherwise, sell, distribute, manufacture, or market
products that are substantially the same as the Products (“Competitive
Activities”), it being understood that, as of the Effective Date, Competitive
Activities are selling, distributing, manufacturing or marketing textile belts
and rolls used in the manufacturing of paper and paperboard: (i) anywhere
throughout the world; (ii) in North America; (iii) in South America; (iv) in
Europe; (v) in Asia; (vi) in Australia; (vii) in the United States; (viii) in
those states of the United States in which the Company or any of its
Subsidiaries sells Products or conducts business activities. Specifically, but
without limiting the foregoing, the Executive agrees that during the
Non-Competition Period, he shall not: (A) undertake any planning for any
business involved in Competitive Activities; or (B) engage in any manner in any
Competitive Activity. For the purposes of this Section 8, the Executive’s
undertaking shall encompass all items and products that are intended to be used
as direct substitutes for Products.
(b) The Executive agrees that, during his employment with the Company, he
will not undertake any outside activity, whether or not competitive with the
business of the Company or its Subsidiaries that could reasonably give rise to a
conflict of interest or otherwise interfere with his duties and obligations to
(c) The Executive further agrees that while he is employed by the Company
and during the period of eighteen (18) months after his employment terminates,
the Executive will not, (i) hire or attempt to hire any employee of the Company
or any of its Subsidiaries, (ii) hire or attempt to hire any independent
contractor providing services to the Company or any of its Subsidiaries in
connection with any Competitive Activity, (iii) assist in hiring or any attempt
to hire anyone identified in clauses (i) or (ii) of this sentence by any other
Person, (iv) encourage any employee or independent contractor of the Company or
any of its Subsidiaries to terminate his or her relationship with the Company or
any of its Subsidiaries, or (v) solicit or encourage any customer or vendor of
the Company or any of its Subsidiaries to terminate or diminish its relationship
with any of them, or, in the case of a customer, to conduct with any Person any
Competitive Activity. For purposes of the Executive’s obligations hereunder
during that portion of the Non-Competition Period that follows the Termination
Date, employee, independent contractor, customer or vendor of the Company or any
of its Subsidiaries shall mean any Person who was such at any time during the
six (6) months immediately preceding the Termination Date.
(d) In the event that the eighteen (18) months period stated above is held
unenforceable by a court of competent jurisdiction due to its length, then the
period shall be one (1) year.
(e) The provisions of Section 8(a) shall not be deemed breached as a result
of Executive’s passive ownership of less than an aggregate of 5% of any class of
securities of a Person engaged, directly or indirectly, in Competitive
Activities, so long as Executive does not actively participate in the business
of such Person; provided, however, that the stock of such Person is listed on a
national securities exchange.
9. Confidential Information.
10
(a) The Executive acknowledges that the Company and its Subsidiaries
continually develop Confidential Information, that the Executive may develop
Confidential Information for the Company or its Subsidiaries during his
employment with the Company, and that the Executive may learn of Confidential
Information during the course of such employment. The Executive will comply with
the policies and procedures of the Company and its Subsidiaries for protecting
Confidential Information and shall never use or disclose to any Person (except
as required by applicable law or for the proper performance of his duties and
responsibilities to the Company and its Subsidiaries), any Confidential
Information obtained by the Executive incident to his employment or other
association with the Company or any of its Subsidiaries. The Executive
understands that this restriction shall continue to apply after his employment
terminates, regardless of the reason for such termination.
(b) All documents, records, tapes and other media of every kind and
its Subsidiaries and any copies, in whole or in part, thereof (the “Documents”),
whether or not prepared by the Executive, shall be the sole and exclusive
property of the Company and its Subsidiaries. The Executive shall safeguard all
Documents and shall surrender to the Company at the time his employment
terminates, or at such earlier time or times as the Board or its designee may
specify, all Documents then in the Executive’s possession or control.
10. Assignment of Rights to Intellectual Property. The Executive shall
promptly and fully disclose all Intellectual Property to the Company. The
Executive hereby assigns and agrees to assign to the Company (or as otherwise
directed by the Company) the Executive’s full right, title and interest in and
to all Intellectual Property. The Executive agrees to execute any and all
applications for domestic and foreign patents, copyrights or other proprietary
rights and to do such other acts (including without limitation the execution and
delivery of instruments of further assurance or confirmation) requested by the
Company to assign the Intellectual Property to the Company and to permit the
Company to enforce any patents, copyrights or other proprietary rights to the
Intellectual Property. The Executive will not charge the Company for time spent
in complying with these obligations. All copyrightable works that the Executive
creates shall be considered “work made for hire” and shall, upon creation, be
owned exclusively by the Company.
11. Notification Requirement. Until the conclusion of the Non-Competition
Period, the Executive hereby agrees that prior to accepting employment with, or
agreeing to provide services to, any other Person during any period during which
the Executive remains subject to any of the covenants set forth in Section 8,
the Executive shall provide such prospective employer with written notice of
such provisions of this Agreement (with a copy sent simultaneously to the
Company), unless such prospective employer is clearly not engaged in Competitive
Activities (for example, a university).
12. Enforcement of Covenants. The Executive acknowledges that he has
carefully read and considered all the terms and conditions of this Agreement,
including the restraints imposed upon him pursuant to Sections 8, 9 and 10
reasonable and proper protection of the Company and its Subsidiaries and that
each and every one of the restraints is reasonable in respect to subject matter,
were he to breach any of the covenants contained in Sections 8, 9 and 10 hereof,
the damage to the Company may be irreparable. The Executive therefore agrees
that the Company, in addition to any other remedies available to it, shall be
entitled to seek preliminary and permanent injunctive relief against any breach
or threatened
11
breach by the Executive of any of said covenants, without having to post bond.
The parties further agree that, in the event that any provision of Sections 8, 9
and 10 hereof shall be determined by any court of competent jurisdiction to be
unenforceable by reason of its being extended over too great a time, too large a
geographic area or too great a range of activities, such provision may be “blue
penciled” or written by the court to the extent necessary to render it
enforceable to the maximum extent permitted by law.
13. Conflicting Agreements. The Executive hereby represents and warrants that
will not breach or be in conflict with any other agreement to which the
Executive is a party or is bound and that the Executive is not now subject to
any covenants against competition or similar covenants or any court order or
other legal obligation that would affect the performance of his obligations
any proprietary information of a third party without such party’s consent.
14. Definitions. Words or phrases which are initially capitalized or are
within quotation marks shall have the meanings provided in this Section 14 and
as provided elsewhere herein. For purposes of this Agreement, the following
definitions apply:
(a) “Affiliate” means, with respect to the Company or any other specified
Person, any other Person directly or indirectly controlling, controlled by or
under common control with the Company or such other specified Person, where
control may be by management authority, equity interest or other means.
(b) “Change of Control” shall mean any of the following which takes place
after the Effective Date: (i) any Person or “group,” within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Act”),
other than the Company or any of its Subsidiaries or any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
one of its Subsidiaries, becomes a beneficial owner, directly or indirectly, in
one or a series of transactions, of securities representing fifty percent (50%)
or more of the total number of votes that may be cast for the election of
directors of the Company; (ii) any merger or consolidation involving the Company
or any sale or other disposition of all or substantially all of the assets of
the Company, or any combination of the foregoing, occurs and the beneficial
owners of the Company’s voting securities outstanding immediately prior to such
consolidation, merger, sale or other disposition do not, immediately following
the consummation of such consolidation, merger, sale or other disposition, hold
beneficial ownership, directly or indirectly, of securities representing fifty
percent (50%) or more of the total number of votes that may be cast for election
of directors of the surviving or resulting corporation in the case of any merger
or consolidation or of the acquiring Person or Persons in the case of any sale
or other disposition; or (iii) within twelve (12) months after a tender offer or
exchange offer for voting securities of the Company (other than by the Company
or any of its Subsidiaries), individuals who are Continuing Directors shall
cease to constitute a majority of the Board. For the purpose of this definition,
the term “beneficial owner” (and correlative terms, including “beneficial
ownership”) shall have the meaning set forth in Rule 13d-3 under the Act.
(c) “Confidential Information” means any and all confidential and
proprietary information of the Company and its Subsidiaries that is not
generally known by others with whom they compete or do business, or with whom
they plan to compete or do business and any and all information which, if
disclosed by the Company or its Subsidiaries, would assist in competition
against them. Confidential Information includes without limitation such
information relating to (i)
12
the development, research, testing, manufacturing, marketing and financial
activities of the Company and its Subsidiaries, (ii) the products planned,
researched, developed, tested, manufactured, sold, licensed, leased or otherwise
distributed or put into use by the Company or any of its Subsidiaries, together
with all services provided or planned by the Company or any of its Subsidiaries,
during the Executive’s employment with the Company or any of its Subsidiaries
(including prior to the Effective Date if applicable), (iii) the costs, sources
of supply, financial performance and strategic plans of the Company and its
Subsidiaries, (iv) the identity and special needs of the customers of the
Company and its Subsidiaries and (v) the people and organizations with whom the
Company and its Subsidiaries have business relationships and those
relationships. Confidential Information also includes any information that the
Company or any of its Subsidiaries have received, or may receive hereafter, from
others which was received by the Company or any of its Subsidiaries with any
understanding, express or implied, that the information would not be disclosed.
Confidential Information will not include such information known to Executive
prior to Executive’s involvement with the Company and its Subsidiaries or
information obtained by Executive from a third party (other than pursuant to a
breach by Executive of this Agreement).
(d) “Continuing Director” means, with respect to any event referred to in
the definition of “Change of Control,” each individual who was a director of the
Company immediately prior to the event in question and each individual whose
election as a director by the Board or whose nomination for election by the
stockholders of the Company was approved by a vote of two-thirds of the
directors then still in office who were directors immediately prior to such
event or whose election or nomination was previously so approved.
(e) “Intellectual Property” means inventions, discoveries, developments,
methods, processes, compositions, works, concepts and ideas (whether or not
patentable or copyrightable or constituting trade secrets) conceived, made,
created, developed or reduced to practice by the Executive (whether alone or
with others and whether or not during normal business hours or on or off the
premises of the Company or any of its Subsidiaries) during the Executive’s
employment with the Company or any of its Subsidiaries that relate to either the
products planned, researched, developed, tested, manufactured, sold, licensed,
leased or otherwise distributed or put into use by the Company or any of its
Subsidiaries, together with all services provided or planned by the Company or
any of its Subsidiaries, during the Executive’s employment with the Company or
any of its Subsidiaries (including prior to the Effective Date if applicable) or
any prospective activity of the Company or any of its Subsidiaries or that make
use of Confidential Information or any of the equipment or facilities of the
Company or any of its Subsidiaries.
(f) “Person” means an individual, a corporation, a limited liability company,
an association, a partnership, an estate, a trust and any other entity or
organization.
(g) “Products” mean all products manufactured, sold, licensed, leased or
together with all services provided by the Company or any of its Subsidiaries,
as of the date of Executive’s termination of employment.
(h) “Subsidiary” shall mean any Person of which the Company (or other
specified Person) shall, directly or indirectly, own beneficially or control the
voting of at least a majority of the outstanding capital stock (or other shares
of beneficial interest) entitled to vote generally or at least a majority of the
partnership, membership, joint venture or similar interests, or in which the
13
Company (or other specified Person) or a Subsidiary thereof shall be a general
partner or joint venturer without limited liability.
15. Section 409A. The compensation and benefits provided to the Executive
hereunder are intended to be exempt from the requirements of Section 409A of the
Code or to comply with the requirements of Section 409A of the Code so that the
Executive will not be subject to tax penalties imposed under Section 409A of the
Code and this Agreement shall be construed accordingly. All references in this
Agreement to termination of employment, separation from service, retirement and
similar or correlative terms, when used in a context that bears upon the
vesting, payment or timing of payment of any amounts or benefits that constitute
or could constitute “nonqualified deferred compensation” within the meaning of
Section 409A of the Code, shall be construed to require a “separation from
service” (as that term is defined in Section 1.409A-1(h) of the Treasury
Regulations) from the Company and from all other corporations and trades or
businesses, if any, that would be treated as a single “service recipient” with
the Company under Section 1.409A-l(h)(3) of the Treasury Regulations. The
limitations under Section 409A of the Code, any of the special elective rules
prescribed in Section 1.409A-1(h) of the Treasury Regulations for purposes of
election shall be deemed part of this Agreement. Each installment payment
required under this Agreement shall be considered a separate payment for
purposes of Section 409A.
16. Nondisparagement.
(i) The Executive shall not, whether in writing or orally, publicly malign,
denigrate or disparage the Company, its Subsidiaries or Affiliates or their
respective predecessors and successors, or any of the current or former
directors, officers, employees, shareholders, partners, members, agents or
representatives of any of the foregoing, with respect to any of their respective
past or present activities, or otherwise publish (whether in writing or orally)
statements that tend to portray any of the aforementioned parties in an
unfavorable light.
(ii) The directors, officers and members of senior management of the Company,
its Subsidiaries and Affiliates shall not, whether in writing or orally,
publicly malign, denigrate or disparage the Executive with respect to any of his
statements that tend to portray the Executive in an unfavorable light.
(iii) Nothing in Section 16(i) or 16(ii) shall or shall be deemed to prevent
or impair the Executive or the directors, officers and members of senior
management of the Company, its Subsidiaries and Affiliates from pleading or
testifying, to the extent that he or she reasonably believes his or her
pleadings or testimony to be true, in any legal or administrative proceeding if
such testimony is compelled or requested, or from otherwise complying with legal
requirements.
17. Survival. The provisions of this Agreement shall survive following the
Termination Date if so provided herein or desirable to accomplish the purposes
of other surviving provisions, including without limitation the provisions of
Sections 6, 7, 8, 9, 11, 15, and 16.
18. Withholding. All payments made by the Company under this Agreement shall
be reduced by any tax or other amounts required to be withheld by the Company
under applicable law.
19. Assignment. Neither the Company nor the Executive may make any assignment
of this Agreement or any interest herein, by operation of law or otherwise,
without the prior written
14
consent of the other; provided, however, that the Company may assign its rights
and obligations under this Agreement without the consent of the Executive in the
event that the Company shall hereafter effect a reorganization, consolidation or
merger or to whom the Company transfers all or substantially all of its
properties or assets so long as the Company requires any successor (whether
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
had taken place. This Agreement shall inure to the benefit of and be binding
upon the Company and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns.
20. Severability. If any portion or provision of this Agreement shall to any
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
21. Waiver. No waiver of any provision hereof shall be effective unless made
in writing and signed by the waiving party. The failure of either party to
require the performance of any term or obligation of this Agreement, or the
waiver by either party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
22. Notices. Any and all notices, requests, demands and other communications
delivered in person, when delivered by courier at the Executive’s last known
address on the books of the Company, or five (5) business days following deposit
in the United States mail, postage prepaid, registered or certified, and
addressed to the Executive at his last known address on the books of the Company
or, in the case of the Company, at its principal place of business, attention of
the Chairman of the Board or to such other address as either party may specify
by notice to the other actually received.
23. Entire Agreement. This Agreement and the other plans and documents
specifically referred to herein constitute the entire agreement between the
parties regarding the subject matter of this Agreement and such other plans and
documents and supersede all prior communications, agreements and understandings,
written or oral, with respect to such subject matter.
24. Amendment. This Agreement may be amended or modified only by a written
instrument signed by the Executive and by an expressly authorized representative
of the Company.
25. Headings. The headings and captions in this Agreement are for convenience
this Agreement.
26. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be an original and all of which together shall constitute
27. Governing Law. This is a North Carolina contract and shall be construed
and enforced under and be governed in all respects by the laws of the State of
North Carolina, without regard to the conflict of laws principles thereof.
15
28. Seal. The Executive warrants and represents that he hereby adopts the
word/symbol (SEAL) as his seal with the intent that this Agreement be signed by
the Executive under seal and treated as a sealed instrument.
29. Consideration. The parties expressly waive any defense either may now or
hereafter have as to the lack of inadequacy of consideration for this Agreement.
30. Director’s and Officer’s Liability Insurance; Indemnification. The
Company shall indemnify Executive to the fullest extent permitted by law (to the
extent not prohibited by the Company’s Certificate of Incorporation or Bylaws in
effect as of the date hereof, a copy of which has been provided to Executive)
for any actions or inactions as an officer or director of the Company, its
Subsidiaries or any related entity and as a fiduciary of any benefit plan of any
of the foregoing.
31. Reimbursement of Legal Expenses. The Company will reimburse the Executive
for reasonable legal fees and expenses incurred by the Executive in connection
with the negotiation and execution of this Agreement and the agreements
ancillary hereto up to Twenty-Five Thousand and 00/100 Dollars ($25,000). Said
reimbursement shall be made within thirty (30) days after the Executive submits
to the Company the invoice for such legal fees and expenses.
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
16
the Executive, and by the Company, through its duly authorized representative,
as the date first above written.
THE EXECUTIVE: XERIUM TECHNOLOGIES, INC.
Harold C. Bevis___________________ (SEAL) By: /s/ James F. Wilson__________
Harold C. Bevis Name: James F. Wilson_________
Title: Chairman of the Board______
17
EXHIBIT A
RELOCATION PACKAGE
The Company will provide the Executive with the Company’s normal relocation
package and, in addition and notwithstanding anything to the contrary in that
package, the Company shall:
1.
Reimburse the Executive for temporary housing and relocation expenses he incurs
for a maximum of four (4) months following the Effective Date. Reimbursement for
such temporary housing and relocation expenses shall include rent, utilities,
airfare, taxes, insurance, and such other expenses as are reasonably
attributable to residence in temporary housing and relocation, up to a maximum
total reimbursement of Five Thousand Dollars and 00/100 ($5,000.00) per month.
2.
Reimburse the Executive for two househunting trips for the Executive and his
family members associated with the relocation.
3.
Pay for shipment of two of the Executive’s automobiles from Illinois to North
Carolina.
4.
Pay for the cost of storage of the Executive’s household goods for up to eight
(8) months and pay for the cost of moving his household goods from storage and
from his temporary housing to his permanent housing.
5.
Assist the Executive with the sale of his personal residence as follows:
a.
The Company shall select a relocation company which shall obtain broker market
analyses (“BMA”) from three brokers providing an expected selling price for the
residence.
b.
The Executive shall list the residence with one of those three brokers.
c.
The residence shall be listed at 105% of the average of the three BMA values.
d.
If the residence has not been sold sixty (60) days after the initial listing,
then on the sixty-first (61st) day after the initial listing, the listing price
shall be reduced to 102% of the BMA and an appraisal process shall begin. The
Executive shall select two appraisers and an alternate appraiser from a list of
appraisers provided to the Executive by the relocation company.
e.
After the appraisers are selected, the two selected appraisers shall provide
appraisals of the residence. If the two appraisal values are reasonably close in
value, those two appraisals shall be averaged to determine the “Buyout Price.”
If the two appraisals are not reasonably close in value, then an appraisal shall
be obtained from the alternate appraiser and that third appraisal shall be
averaged with the closer in value to it of the other two appraisals. The
resulting average shall be the Buyout Price.
f.
If the residence has not sold 120 days after the initial listing, then the
Executive shall have seven (7) days in which to notify the Company in writing
that he wants the Company to buy the residence at the Buyout Price. If he so
notifies the
Company, the Company shall commence proceedings to buy the residence at the
Buyout Price, otherwise the Executive shall continue to market the residence.
If there is any discrepancy between this Exhibit A and the Company’s normal
relocation package, the provisions of this Exhibit A shall govern. The parties
acknowledge that Crown Relocations is not the party handling the relocation.
EXHIBIT B
RELEASE OF CLAIMS
1. Release of Claims
In consideration of the payments and benefits described in the Employment
Agreement (the “Employment Agreement”) dated as of August [__], 2012, by and
among Harold Bevis (hereinafter “you” or “Executive”) and Xerium Technologies,
Inc. (hereinafter the “Company”), to which you agree that you are not entitled
until and unless you execute this Release of Claims (“Release”) and it becomes
effective in accordance with the terms hereof, you, for and on behalf of
yourself and your heirs, successors and assigns, except as specifically
otherwise provided in the last sentence of this Section 1 and Section 2 of this
Release, hereby waive and release any common law, statutory or other complaints,
claims, charges or causes of action of any kind whatsoever, both known and
unknown, in law or in equity, which you ever had, now have or may have against
the Company and each of its shareholders, subsidiaries, predecessors,
successors, assigns, directors, officers, partners, members, managers,
employees, trustees (in their official and individual capacities), employee
benefit plans and their administrators and fiduciaries (in their official and
individual capacities), representatives or agents, and each of their affiliates,
successors and assigns, (collectively, the “Releasees”) by reason of acts or
omissions which have occurred on or prior to the date that you sign this
Release, on account of, arising out of or in connection with your employment
and/or the termination thereof, or the provision of any services to the
Releasees, or any term or condition of that employment or service, arising under
federal, state or local laws pertaining to employment, including the Age
Discrimination in Employment Act of 1967 (“ADEA,” a law which prohibits
discrimination on the basis of age), the Older Workers Benefit Protection Act,
the National Labor Relations Act, the Civil Rights Act of 1991, the Americans
With Disabilities Act of 1990, Title VII of the Civil Rights Act of 1964, the
Employee Retirement Income Security Act of 1974, the Family and Medical Leave
Act, the Sarbanes-Oxley Act of 2002, all as amended, and any other Federal,
state and local laws relating to discrimination on the basis of age, sex or
other protected class, all claims under Federal, state or local laws for express
or implied breach of contract, wrongful discharge, defamation, intentional
infliction of emotional distress, and any related claims for attorneys’ fees and
costs. You further agree that this Release may be pleaded as a full defense to
any action, suit, arbitration or other proceeding covered by the terms hereof
which is or may be initiated, prosecuted or maintained by you, your descendants,
dependents, heirs, executors, administrators or permitted assigns. By signing
this Release, you acknowledge that you intend to waive and release any rights
known or unknown that you may have against the Releasees under these and any
other laws by reason of acts or omissions which have occurred on or prior to the
date that you sign this Release, on account of, arising out of or in connection
with your employment and/or the termination thereof, or the provision of any
services to the Releasees, or any term or condition of that employment or
service; provided, that you do not waive or release claims with respect to (a)
rights that cannot be so released as a matter of applicable law, (b) breach of
the terms, provisions or covenants of this Release or the payments and benefits
provided to you and your family members pursuant to Section 6 of the Employment
Agreement, (c) accrued vested benefits under employee benefit plans of the
Company and its subsidiaries subject to the terms and conditions of such plans
and applicable law, (d) any rights you may have solely in connection with your
capacity as a stockholder of the Company (without regard to your employment or
termination of employment with the Company), (e) any claim arising under the
terms of the Employment Agreement after the effective date of this release, and
(f) any claims subject to (A) indemnification by the Company under any current
article, section or provision of the Company’s Certificate of Incorporation or
Bylaws related to liability and/or indemnification of officers and directors of
the Company or under any former article, section or provision of any of the
foregoing which remain in force, or (B) coverage under any of the Company’s
director and officer insurance policies (collectively, the “Unreleased Claims”).
2. Proceedings
You acknowledge that you have not filed any complaint, charge, claim or
proceeding, against any of the Releasees before any local, state or federal
agency, court or other body (each individually a “Proceeding”). You represent
that you are not aware of any basis on which such a Proceeding could reasonably
be instituted. Except with respect to Unreleased Claims, you (i) acknowledge
that you will not initiate or cause to be initiated any Proceeding and will not
participate in any Proceeding related to any claims released by you under
Section 1 of this Release, in each case, except as required by law; and (ii)
waive any right you may have to benefit in any manner from any relief (whether
monetary or otherwise) arising out of any Proceeding related to any claims
released by you under Section 1 of this Release, including any Proceeding
conducted by the Equal Employment Opportunity Commission (“EEOC”). Further, you
understand that, by executing this Release, you will be limiting the
availability of certain remedies that you may have against the Company and
limiting also your ability to pursue certain claims against the Releasees.
Notwithstanding the above, nothing in Section 1 of this Release shall prevent
you from (i) initiating or causing to be initiated any complaint, charge, claim
or proceeding against the Company before any local, state or federal agency,
court or other body challenging the validity of the waiver of claims under the
ADEA contained in Section 1 of this Release (but no other portion of such
waiver); (ii) initiating or participating in an investigation or proceeding
conducted by the EEOC or any other Federal, State or Local governmental or
quasi-governmental entity; or (iii) filing any claim for unemployment benefits.
3. Time to Consider
You acknowledge that you have been advised that you have twenty-one (21) days
from the date of receipt of this Release to consider all the provisions of this
Release. You acknowledge that you were provided with this Release in connection
with the negotiation of your employment agreement with the Company in August of
2012. You further acknowledge that you may not execute this Release prior to the
date your employment with the Company terminates. YOU FURTHER ACKNOWLEDGE THAT
YOU HAVE READ THIS RELEASE CAREFULLY, YOU HAVE BEEN ADVISED BY THE COMPANY TO
CONSULT AN ATTORNEY PRIOR TO EXECUTING THIS RELEASE, AND YOU FULLY UNDERSTAND
THAT BY SIGNING BELOW YOU ARE GIVING UP CERTAIN RIGHTS WHICH YOU MAY HAVE TO SUE
OR ASSERT A CLAIM AGAINST ANY OF THE RELEASEES. YOU ACKNOWLEDGE THAT YOU HAVE
NOT BEEN FORCED OR PRESSURED IN ANY MANNER WHATSOEVER TO SIGN THIS AGREEMENT,
AND YOU AGREE TO ALL OF ITS TERMS VOLUNTARILY.
4. Revocation
You hereby acknowledge and understand that you shall have seven (7) days from
the date of execution of this Release to revoke your execution of this Release
and that neither the Company nor any other person is obligated to provide any
benefits to you pursuant to this Release until eight (8) days have passed since
your signing of this Release without your having revoked this Release.
If you revoke this Release, you will be deemed not to have accepted the terms of
this Release, and no action will be required of the Company under any section of
this Release.
5. No Admission
This Release does not constitute an admission of liability or wrongdoing of any
kind by the Executive or the Company.
6. General Provisions
A failure of any of the Releasees to insist on strict compliance with any
provision of this Release shall not be deemed a waiver of such provision or any
other provision hereof. If any provision of this Release is determined to be so
broad as to be unenforceable, such provision shall be interpreted to be only so
broad as is enforceable, and in the event that any provision is determined to be
entirely unenforceable, such provision shall be deemed severable, such that all
other provisions of this Release shall remain valid and binding upon Executive
and the Releasees.
7. Governing Law
The validity, interpretations, construction and performance of this Release
shall be governed by the laws of the State of North Carolina without giving
effect to conflict of laws principles.
IN WITNESS WHEREOF, you have hereunto set your hand as of the day and year set
forth opposite your signature below.
________________________ __________________________
Date: Harold C. Bevis
|
August 3, 2012 Mr. Matthew Crispino Attorney-Advisor Securities and Exchange Commission Division of Corporate Finance treet NE Washington, D.C. 20549 RE:Personality Software Systems, Inc. Amendment No. 1 to Form S-1 File No. 333-182393 Filed June 28, 2012 Dear Mr. Crispino: Personality Software Systems, Inc. submits this letter to you in response to your letter of July 25, 2012, which letter sets forth comments of the Staff of the Securities and Exchange Commission regarding the above referenced filing.This letter sets forth our responses to the Staff’s comments.For your convenience, we have recited the Staff’s comments in italicized, bold type and have followed each comment with our response. COMMENT: General 1. Please supplementally provide us with any written materials that you or anyone authorized to do so on your behalf provides in reliance on Section 5(d) of the Securities Act to potential investors that are qualified institutional buyers or institutional accredited investors.Similarly, please supplementally provide us with any research reports about you that are published or distributed in reliance upon Section 2(a)(3) of the Securities Act of 1933 added by Section 105(a) of the Jumpstart Our Business Startups Act by any broker or dealer that is participating or will participate in your offering. RESPONSE: We acknowledge the Staff’s comment and the Company confirms that we do not have any written materials that we, or anyone authorized to do so on our behalf, would provide to potential investors that are qualified institutional buyers or institutional accreted investors.We will not offer our offering to qualified institutional buyers or institutional accreted investors.In addition, we do not have any research reports and will not use any broker or dealer to participate in our offering. COMMENT: Prospectus Cover Page 2. We note your disclosure in the risk factor section that you plan to contact a market maker immediately following the effectiveness of this Registration Statement and apply to have your common stock quoted on the OTC Electronic Bulletin Board.Please include this disclosure on the prospectus cover page. RESPONSE: We acknowledge the Staff’s comment and the Company confirms that we have included a disclosure on the prospectus cover page referencing our plans to contact a market maker following the effectiveness of our Registration Statement.We have provided below a copy of the disclosure as it appears on the prospects cover page in the Form S-1/A filing. We plan to contact a market maker immediately following the effectiveness of this Registration Statement and apply to have the shares quoted on the OTC Electronic Bulletin Board (OTCBB). COMMENT: Summary of Prospectus General Information about the Company, page 1 3. You indicate here that you intend to market your solution to human resources departments which have more than 15 employees.Note 1 to your audited financial statements, however, indicates that you will market your solution to human resource departments with more than 10 employees.Please resolve this discrepancy. RESPONSE: We acknowledge the Staff’s comment and confirm that our auditor has revised Note 1 in the audited financials to correctly state that we intend to market our solution to human resource departments who have more than 15 employees. COMMENT: The Offering, page 5 4. Given the minimum nature of your offering, it is unclear why you state on page five that “there is no minimum number of shares required to be purchased.”To the extent that you are referring to the fact that there is no minimum investment required from any individual investor, revise to make this clear. RESPONSE: We acknowledge the Staff’s comment and we have revised the filing to clarify that “there is no minimum investment required from any individual investor”.We revised “The Offering” section and where appropriate throughout the filing to provide clarification and consistency. COMMENT: 5. You indicate on page 6 that the net proceeds you will receive through this offering will be $150,000.In your use of proceeds section, however you estimate the expenses related to this offering to be $10,500.Revise so that that amount of net proceeds from this offering disclosed in your prospectus summary is consistent with your use of proceeds section.Also when stating the amount of net proceeds that may be received, list the net proceeds that you will receive in the event you raise the minimum amount of proceeds, 50% of the maximum amount of proceeds and 100% of the maximum amount of proceeds. RESPONSE: We acknowledge the Staff’s comment and confirm that we have revised sub-section “Net Proceeds to Company” of “The Offering” section to accurately reflect net proceeds to the Company based on the Minimum Amount, 50% of Maximum Amount, and Maximum Amount.We have provided a copy of the revision as it now appears in the filing below. Net Proceed to Company: Minimum Amount: $19,500 50% of Maximum Amount: $64,500 Maximum Amount: $139,500 2 COMMENT: Risk Factors General 6. It is unclear from your disclosure whether you intend to register a class of securities under Section 12 of the securities Exchange Act.To the extent that you do not intend to register a class of securities under Section 12, please include a risk factor that informs potential investors that you will not be a fully reporting company and will only comply with the limited reporting requirements imposed on Section 15(d) registrants.You should also briefly explain how those reports vary from the reporting obligations imposed on fully reporting issuers. RESPONSE: We acknowledge the Staff’s comment and confirm that we do intend to file the Form 8-A prior to the effectiveness of the registration statement. COMMENT: 7. We note that your attorney is also serving as your escrow agent.Please consider adding a risk factor that alerts investors to any potential conflict of interest regarding this relationship and the fact that your escrow agent is not an independent third party.Also, please tell us if the fact that the escrow agent is not an independent third party will have any impact on the company’s ability to promptly return funds to investors if the minimum offering is not achieved.Refer to Exchange Act Rules 10b-9(a) and 15c2-4(b)(1). RESPONSE: We acknowledge the Staff’s comment and confirm that we have included a risk factor to alert investors to any potential conflict of interest regarding the fact that our legal counsel also serves as our escrow agent and is not an independent third party.In addition, we have addressed the Staff’s concern regarding the company’s ability to promptly return funds to investors if the minimum offering is not achieved.We have provided below a copy of the risk factor as it appears in the amended filing below. OUR LEGAL COUNSEL ALSO SERVES AS THE COMPANIES ESCROW AGENT AND THEREFORE IS NOT AN INDEPENDENT THIRD PARTY. Personality Software Systems escrow agent, Law Offices of Harold P. Gewerter, Esq., Ltd., acts as legal counsel for Personality Software Systems and is therefore not an independent third party.If the Minimum Offering is not achieved within 180 days of the date of this prospectus, all subscription funds from the escrow account will be returned to investors promptly within 5 days without interest (since the funds are being held in a non-interest bearing account) or deduction of fees.The fact that our attorney is not an independent third party will not have any impact on the Company’s ability to return funds if the minimum is not achieved within 180 days of the date of this prospectus. COMMENT: 8. Please add a risk factor discussing the likelihood that your common stock will be considered a “penny stock”.Discuss the applicable SEC rules governing the trading of “penny stock” and limits relating to liquidity which may affect the trading price of your common stock in the event that it is considered “penny stock”. RESPONSE: We acknowledge the Staff’s comment and confirm that we have added a risk factor discussing the likelihood that our common stock will be considered a “penny stock”.In addition, we have included a discussion relating to its SEC rules governing the trading of “penny stocks” and limits relating to liquidity which may affect the trading price of our common stock.We have provided a copy of the discussion as it appears in the “Risk Factors” section of the amended filing below. 3 OUR STOCK MAY BE CONSIDERED A “PENNY STOCK” AND THEREFORE WOULD BE SUBJECT TO SEC RULES GOVERNING LIMITS RELATING TO LIQUIDITY WHICH MAY AFFECT THE TRADING PRICE. The Securities and Exchange Commission has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks.Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). A purchaser is purchasing penny stock which limits the ability to sell the stock.The shares offered by this prospectus constitute penny stock under the Securities and Exchange Act.The shares will remain penny stocks for the foreseeable future.The classification of penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his/his investment.Any broker-dealer engaged by the purchaser for the purpose of selling his or his shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and Exchange Act.Rather than creating a need to comply with those rules, some broker-dealers will refuse to attempt to sell penny stock. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document, which: a) contains a description of the nature and level of risk in the market for penny stock in both Public offerings and secondary trading; b) contains a description of the broker’s or dealer’s duties to the customer and of the right; c) and remedies available to the customer with respect to a violation of such duties or other requirements of the Securities Act of 1934, as amended; d) contains a brief, clear, narrative description of a dealer market, including “bid” and “ask” price for the penny stock and the significance of the spread between the bid and ask price; e) contains a toll-free number for inquiries on disciplinary actions; f) defines significant terms in the disclosure document or in the conduct of trading penny stocks; g) and contains such other information and is in such form (including language, type, size and format) as the Securities and Exchange Commission shall require by rule or regulation. The broker-dealer also must provide, prior to effecting any transaction in a penny stock, to the customer: a) the bid and offer quotations for the penny stock; b) the compensation of the broker-dealer and its salesperson in the transaction; c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; d) and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgement of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules.Therefore, stockholders may have difficulty selling their securities. COMMENT: “Uriel Lizama’s lack of experience in management of reporting companies.” Page 8 9. Include under a separate risk factor heading the discussion regarding the timing of when you will be required to provide management’s report on the effectiveness of your internal control over financial reporting and when you will become subject to the auditor attestation requirements.In addition, expand the disclosure to discuss associated risks. 4 RESPONSE: We acknowledge the Staff’s comment and confirm that we have included a separate risk factor heading regarding the timing of when we will be required to provide management’s report on the effectiveness of our internal control over financial reporting and when we will be subject to the auditor attestation requirements.In addition, we have expanded the disclosure to discuss associated risks.We have provided a copy of the risk factor as it now the amended filing below. IN THE FUTURE OUR COMPANY WILL BE REQUIRED TO PROVIDE MANAGEMENT’S REPORT ON THE EFFECTIVENESS OF OUR INTERNAL CONTROL OVER FINANCIAL REPORTING AND WE WILL BE SUBJECT TO AUDITOR ATTESTATION REQUIREMENTS. The Company will not be required to provide management’s report on the effectiveness of our internal controls over financial reporting until our second annual report.In addition, the Company will be exempt from the auditor attestation requirements concerning any such report so long as we are a smaller reporting company.This may cause the Company to incur additional costs related to auditing and also the examination, investigation and report on internal controls. COMMENT: “We are selling this offering without an underwriter and may be unable to sell any shares.”Page 11 You indicate in this risk factor heading that investors will receive a return of their entire investment unless you are successful in selling any shares in this offering.Revise this risk factor heading so that it clearly indicates that no proceeds from this offering are required to be returned if the minimum amount of shares are sold.Discuss the risks and uncertainties related to the completion of your business plan in the event you raise less than the maximum offering proceeds.Also, discuss the risks and uncertainties related to the completion of your business plan in the event you raise less than the maximum offering. RESPONSE: We acknowledge the Staff’s comment and confirm that we have revised the risk factor heading to clearly indicate that no proceeds from this offering are required to be returned if the minimum amount of shares are sold.In addition, we have provided a discussion of the risk and uncertainties related to the completion of our business plan in the event we raise less than the maximum offering proceeds.We have provided a copy of the risk factor as it now appears in the amended filing below. WE ARE SELLING THIS OFFERING WITHOUT AN UNDERWRITER AND MAY BE UNABLE TO SELL ANY SHARES. UNLESS WE ARE SUCCESSFUL IN SELLING THE MINIMUM SHARES AND RECEIVING THE PROCEEDS FROM THIS OFFERING, WE MAY HAVE TO SEEK ALTERNATIVE FINANCING TO IMPLEMENT OUR BUSINESS PLANS AND YOU WOULD RECEIVE A RETURN OF YOUR ENTIRE INVESTMENT.NO PROCEEDS FROM THIS OFFERING ARE REQUIRED TO BE RETURNED IF THE MINIMUM AMOUNT OF SHARES ARE SOLD. This offering is self-underwritten, that is, we are not going to engage the services of an underwriter to sell the shares; we intend to sell them through our officer and director, who will receive no commissions. He will offer the shares to friends, relatives, acquaintances and business associates; however, there is no guarantee that he will be able to sell any of the shares. In the event we do not sell at least the minimum of the shares before the expiration date of the offering, all funds raised will be promptly returned to the investors, without interest or deduction.If we raise only the minimum offering, the Company will be able to complete its business plan as described (please see section titled “Management’s Discussion and Analysis or Plan of Operation” in this offering for a detailed discussion of the Milestones we plan to complete based on the three levels of offering proceeds we may receive from this offering).Any raise above the minimum (up to the maximum offering) will allow the more rapid expansion and completion of the business plan. 5 COMMENT: Plan of Distribution Describe in this section the procedures that are in place to ensure that funds will be promptly returned to investors. RESPONSE: We acknowledge the Staff’s comment and confirm that we have included a procedure in the “Plan of Distribution” section of the amended filing to ensure that funds will be promptly returned to investors.We have added a disclosure thatin the event the Minimum amount of funds have not been received within 180 days of the date of the prospectus that they will be promptly returned “within 5 days” without interest (since the funds are being held in a non-interest bearing account) or deduction of fees.In addition, we have added this procedure to the Escrow Agreement in Section 4 and titled Disbursement from the Bank Account. COMMENT: Deposit of Offering Proceeds, page 16 Please disclose the name of the bank at which the proceeds from the sale will be deposited until minimum offering proceeds are raised. RESPONSE: We acknowledge the Staff’s comment and confirm that we have revised our filing to disclose the name of the bank at which the proceeds from the sale will be deposited.We have provided a copy of the disclosure as it appears in the “Deposit of Offering Proceeds” section and it appears as follows: “The Escrow Agent shall cause Bank of the West to process all Escrow Amounts for collection through the banking system.” COMMENT: Procedures and Requirements for Subscription, page 17 You state that you reserve the right to either accept or reject any subscriptions.Tell us, with a view towards disclosure, whether there are conditions (other than the method of payment and the completion of a subscription agreement) that must be met for subscriptions to be accepted. RESPONSE: We acknowledge the Staff’s comment and confirm that we have revised our disclosure to include conditions that must be met for subscriptions to be accepted.We have provided below a copy of the discussion as it appears in the amended filing as written below. Conditions for the acceptance of a subscription agreement include an acceptable method of payment, completion of a subscription agreement, and funds must come through the efforts of our President Uriel Lizama as acceptance of funds in any other event would fall outside the procedures set forth in this registration. COMMENT: Description of Business General Information, page 19 A search of the website for the Nevada Secretary of State indicates your corporate status as “default”.Please advise us concerning your current corporate status and revise the disclosure in the document as necessary. 6 RESPONSE: We acknowledge the Staff’s comment and confirm that our corporate status is now current and “Active” with the Nevada Secretary of State. COMMENT: Management’s Discussion and Analysis or Plan of Operation We note that you have budgeted different amounts for each of your milestones depending on whether you raise the minimum proceeds, 50% of the maximum proceeds or 100% of the maximum proceeds.Please clarify in your disclosure the degree which you will fulfill each milestone based on the different budgeted amounts.For example, you indicate that if you achieve the minimum proceeds, you will have $500 available to acquire freelance expertise to enhance your personality packages.If you achieve 50% of the maximum proceeds, you will have $4,000 and if you achieve the maximum proceeds, you will have $9,000 available.Please describe the work on the milestone you will complete if you spend %500, $4,000 or $9,000. RESPONSE: We acknowledge the Staff’s comment and confirm that we have clarified our filing to disclose the degree which we will fulfill each milestone based on the different budgeted amounts.We have provided a copy of the discussion as it now appears in the “Management’s Discussion and Analysis of Plan of Operation” section in the amended filing below. Minimum Offering proceeds raised of $30,000 (less the offering expenses estimated at $10,500 and $19,500 net remains for furthering the business of the Company) is budgeted to sustain operations for a twelve-month period.The minimum amount is sufficient to keep the Company current with its public listing status with prudently budgeted funds remaining which will be sufficient to complete the programming and development of our Restaurant Industry Personality Package.At this minimum raise the programming and software engineering work will be primarily completed by our President Mr. Lizama.Mr. Lizama has the background and expertise to complete these responsibilities as he is responsible for the oversight of all programming and software engineering work performed by any contracted workers.Since we have no funds budgeted for the marketing at the minimum raise level our President Mr. Lizama has verbally agreed to fund the Company with up to $5,000 for marketing efforts which we feel is sufficient to promote our product to the marketplace.Mr. Lizama, because he is the sole office and director, and although he has orally agreed to fund such amounts, as the sole officer and director such agreement is not binding and therefore it is within his sole discretion to provide such funds.At this level of funding we plan to offer our Restaurant Industry Package to the marketplace approximately seven to nine months following the closing of this offering. If the Company were to raise 50% of the Maximum Offering which is $75,000 (less the offering expenses estimated at $10,500 and $64,500 net remains for furthering the business of the Company) then we would be able to implement our business plan as follows.This level of raise is sufficient for the Company to complete the programming, development and marketing of the Restaurant Industry Personality Package and the Hospitality Industry Personality Package.We plan to offer our products to the marketplace within seven to nine months following the closing of this offering. In the event we are successful in raising the Maximum Offering of $150,000 (less the offering expenses estimated at $10,500 and $139,500 remains for furthering the business of the Company); this will enable the Company to implement our full business plan and offer our Personality Package to all three planned markets.The funds raised will enable us to complete the programming, development and market the Restaurant Personality Package, the Hospitality Industry Personality Package, and the Health Care Industry Personality Package.We plan to offer our products to the marketplace within seven to nine months following the closing of this offering. 7 If we begin to generate profits, we will increase our marketing and sales activity accordingly.We anticipate starting generating profits approximately nine months following closing of the offering. COMMENT: Directors, Executive Officers, Promoters and Control Persons, page 30 Your articles of incorporation identify Wendy Haviland as your initial director.Please provide us with your analysis as to whether Ms. Haviland is a “promoter” as that term is defined in Rule 405 under the Securities Act of 1933.Refer to Item 401(g)(1) and 404(d)(2) of Regulation S-K. RESPONSE: We acknowledge the Staff’s comment and we do not believe that Ms. Haviland is a “promoter” as that term is defined in Rule 405 under the Securities Act of 1933.The State of Nevada requires an initial director for the filing of the initial Articles of Incorporation until the initial Officers and Directors List is filed.Ms. Haviland served solely in this administrative purpose to file the initial Articles of Incorporation and was never a regular director or a promoter of the Company. Furthermore, the Company acknowledges that; · should the Commission or the staff, acting pursuant to delegated authority, in declaring the filing effective, it does not foreclose the Commission from taking any action with respect to the filing; · the action of the Commission or the staff, acting pursuant to delegated authority, in declaring the filing effective, does not relieve the company from its full responsibility for the adequacy and accuracy of the disclosure in the filing; and · the company may not assert staff comments and the declaration of effectiveness as a defense in any proceedings initiated by the Commission or any person under the federal securities laws of the United States. We appreciate the Staff’s comments and request that the Staff contact Harold P. Gewerter, Esq. at Law Offices of Harold P. Gewerter, Esq., Ltd at (702) 382-1759 facsimile, (702) 382-1714 telephone with any questions or comments. Sincerely, /s/ Uriel Lizama Uriel Lizama 8
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EXHIBIT 10.45
EXECUTION COPY
FIRST AMENDMENT TO THIRD AMENDED AND RESTATED RECEIVABLES PURCHASE AND
ADMINISTRATION AGREEMENT
THIS FIRST AMENDMENT TO THIRD AMENDED AND RESTATED RECEIVABLES PURCHASE AND
ADMINISTRATION AGREEMENT (this “Amendment”), dated as of December 21, 2018 (the
“First Amendment Closing Date”), is by and among T-MOBILE HANDSET FUNDING LLC
(the “Transferor”), as transferor, T-MOBILE FINANCIAL LLC (“Finco”),
individually and as servicer, T-MOBILE US, INC. and T-MOBILE USA, INC., jointly
and severally as guarantors (collectively, the “Guarantor”), ROYAL BANK OF
CANADA, as Administrative Agent (the “Administrative Agent”), and the various
Funding Agents party to the RPAA referenced below.
RECITALS:
WHEREAS, the parties hereto have entered into the Third Amended and Restated
Receivables Purchase and Administration Agreement, dated as of October 23, 2018
(as amended, supplemented or otherwise modified from time to time, the “RPAA”);
and
WHEREAS, the parties hereto wish to amend the RPAA as set forth in this
Amendment.
NOW, THEREFORE, the parties hereto, in consideration of their mutual covenants
hereinafter set forth and intending to be legally bound hereby, agree as
follows:
ARTICLE 1
DEFINITIONS
Section 1.01 Capitalized Terms. Capitalized terms used in this Amendment and
not otherwise defined herein shall have the meanings ascribed thereto in the
RPAA.
ARTICLE 2
AMENDMENTS
Section 2.01 Amendments to the RPAA.
(a) Section 1.1 of the RPAA is hereby amended by addition of the following
definition in the correct alphabetical order:
“Thirty-Six Month Contract Receivable Transfer Date” shall mean the date on
which the first Receivable related to a handset device with a contract term of
more than 25 months (but not in excess of 37 months) is transferred from Finco
to the Transferor pursuant to the Sale Agreement.
(b) The definition of “Eligible Receivable” in Section 1.1 of the RPAA is
hereby amended by amending and restating clause (f) therein as follows:
(f) (i) has an original term of 25 months or less if it relates to an
Accessory or Smart Watch; or (ii) has an original term of 37 months or less if
it relates to a handset device;
(c) Exhibit D to the RPAA is hereby amended by amending and restating clause
(i)(B) therein as follows:
(B) (1) for any Payment Date after the Scheduled Expiry Date prior to the
Thirty-Six Month Contract Receivable Transfer Date, the notional amount as of
the last Payment Date prior to the Scheduled Expiry Date reduced by one
twenty-fourth of such notional amount per month and (2) for any Payment Date
after the Scheduled Expiry Date on or after the Thirty-Six Month Contract
Receivable Transfer Date, the notional amount as of the last Payment Date prior
to the Scheduled Expiry Date reduced by one thirty-sixth of such notional amount
per month (or such other amount as agreed, from time to time, between the
Transferor and the Administrative Agent to reflect the percentage of Receivables
with an outstanding term in excess of 24 months);
(d) The matrix set forth in the definition of “Advance Matrix I” in Annex A
to the RPAA is hereby amended by replacing the existing matrix with the matrix
attached hereto as Schedule I.
(e) The matrix in the definition of “Advance Matrix II” in Annex A to the
RPAA is hereby amended by replacing the existing matrix with the matrix attached
hereto as Schedule II.
ARTICLE 3
EFFECTIVENESS; RATIFICATION
Section 3.01 Effectiveness. This Amendment shall become effective, and this
Amendment thereafter shall be binding on the parties hereto and their respective
successors and assigns, as of the First Amendment Closing Date upon the
execution and delivery of counterparts by the parties hereto.
Section 3.02 Incorporation; Ratification.
(a) On and after the execution and delivery hereof, this Amendment shall be a
part of the RPAA and each reference in the RPAA to “this Agreement” or “hereof”,
“hereunder” or words of like import, and each reference in any other Related
Document to the RPAA shall mean and be a reference to such RPAA as previously
amended, and as amended, modified and consented to hereby.
(b) Except as expressly provided herein, the RPAA shall remain in full force
and effect and is hereby ratified and confirmed by the parties hereto.
(c) After giving effect to this Amendment, the Performance Guaranty shall
remain in full force and effect.
2
ARTICLE 4
MISCELLANEOUS
Section 4.01 Representations and Warranties.
(a) The Transferor hereby represents and warrants to the Administrative Agent
and the Owners that its representations and warranties set forth in Section 3.1
of the RPAA are true and correct in all material respects as of the date hereof.
(b) Finco hereby represents and warrants to the Administrative Agent and the
Owners that its representations and warranties set forth in Section 3.1 and
Section 3.3 of the RPAA are true and correct in all material respects as of the
date hereof.
(c) Each of TMUS and TMUSA hereby represents and warrants to the
Administrative Agent and the Owners that its representations and warranties set
forth in Section 3.4 of the RPAA are true and correct in all material respects
as of the date hereof.
Section 4.02 Consent. The Funding Agents party hereto hereby consent to the
modification or amendment by Finco of the Credit and Collection Policies to
allow for Receivables with a term of up to 37 months, and the Funding Agents
hereby waive any notice period required pursuant to Section 3.7(t) of the RPAA
relating thereto.
Section 4.03 No Other Amendments or Consents; Status of RPAA and Related
Documents. The amendments and consent set forth herein are limited as specified
and shall not be construed as an amendment or consent to any other term or
provision of the RPAA. Nothing herein shall obligate the Administrative Agent,
any Conduit Purchaser, Committed Purchaser or Funding Agent to grant (or consent
to) any future amendment, consent or waiver of any kind under or in connection
with the RPAA or entitle the Transferor to receive any such amendment, consent
or waiver under the RPAA. Except as otherwise expressly provided herein, this
Amendment shall not constitute a waiver of any right, power or remedy of the
Owners, the Funding Agents or the Administrative Agent set forth in the RPAA and
Related Documents, and except as expressly provided herein, this Amendment shall
have no effect on any term or condition of the RPAA or Related Documents.
Section 4.04 Governing Law; Submission to Jurisdiction. THIS AMENDMENT SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS OTHER THAN SECTIONS 5-1401 AND
5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS. EACH OF THE PARTIES TO THIS AMENDMENT HEREBY AGREES TO THE JURISDICTION OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY
APPELLATE COURT HAVING JURISDICTION TO REVIEW THE JUDGMENTS THEREOF. EACH OF THE
PARTIES HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS
3
AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE
AFOREMENTIONED COURTS.
Section 4.05 Counterparts. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Amendment by signing such
counterpart.
4
IN WITNESS WHEREOF, each of the parties hereto have caused a counterpart of this
Amendment to be duly executed as of the date first above written.
T-MOBILE HANDSET FUNDING LLC
as Transferor
By:
/s/ Dirk Wehrse
Name:
Dirk Wehrse
Title:
Senior Vice President, Treasury &
Treasurer
T-MOBILE FINANCIAL LLC
In its individual capacity and as Servicer
By:
Name:
Dirk Wehrse
Title:
Assistant Treasurer
T-MOBILE US, INC.
as Guarantor
By:
Name:
Dirk Wehrse
Title:
Treasurer
T-MOBILE USA, INC.
as Guarantor
By:
Name:
Dirk Wehrse
Title:
Treasurer
(Signature Page to First Amendment to 3rd A&R RPAA)
ROYAL BANK OF CANADA
as Administrative Agent
By:
/s/ Thomas C. Dean
Name:
Thomas C. Dean
Title:
Authorized Signatory
By:
/s/ Lisa Wang
Name:
Lisa Wang
Title:
Authorized Signatory
ROYAL BANK OF CANADA
as Funding Agent
By:
Name:
Thomas C. Dean
Title:
Authorized Signatory
By:
Name:
Lisa Wang
Title:
Authorized Signatory
LANDESBANK HESSEN-THURINGEN
GIROZENTRALE,
as a Funding Agent
By:
/s/ Bjoern Mollner
Name:
Bjoern Mollner
Title:
Senior Vice President
By:
/s/ Daniel Geflitter
Name:
Daniel Geflitter
Title:
Associate
MUFG BANK, LTD. F/K/A THE BANK OF
TOKYO-MITSUBISHI UFJ, LTD.,
as a Funding Agent
By:
/s/ Christopher Pohl
Name:
Christopher Pohl
Title:
Managing Director
BNP PARIBAS,
as a Funding Agent
By:
/s/ Chris Fukuoka
Name:
Chris Fukuoka
Title:
Vice President
By:
/s/ Advait Joshi
Name:
Advait Joshi
Title:
Director
Schedule I
Advance Matrix I
Schedule II
Advance Matrix II
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Title: Siblings inheriting house without will. Would like some advice or direction due to a problematic sibling.[OK]
Question: Our parent died without a will. There are no other parents or stepparents left, just two middle aged siblings.
The only thing left of the estate is the house with furnishings. House is paid for, no outstanding loans.
I am the responsible sibling with job, family, house.
The other sibling, whom I will refer to as 2, is another story. 2 was living with parent in house when parent died and still lives there. Most of 2's income is from ssdi. 2 does have a small side job earning under the ssdi limit. 2 has a lifelong history of irresponsibility, credit problems, outstanding medical debt, felony convictions, drug abuse and disability due to drug abuse. That is the reason 2 was living with parent before parent's death.
The estate is about close with both siblings inheriting the house.
I do not trust my sibling for multiple reasons and would prefer NOT to jointly inherit a house with them.
2 has limited income, resources and bad credit. I don't foresee a way for them to buy their portion of the house from me.
2 has indicated they would prefer to keep living in this house.
I don't have the extra resources or income to pay yearly taxes and house insurance for 2 to live there. Even if I did, still wouldn't want to just give 2 a free place to live.
2 has concerns about inheriting the house with ssdi and a large outstanding medical debt. As far as I know it should not affect ssdi, not sure about the medical debt.
Could 2 decline to inherit their portion of the house leaving me sole beneficiary?
Should I decline to inherit the house just to get away from 2 never deal with them again?
I tried doing a little research. Conservatorship looks like I would be responsible for sibling in all aspects of life, I don'twant that. I'm not sure about a trust.
An idea I had was 2 would decline to inherit. I become landlord. 2 pays me rent that only covers insurance and taxes for the year, no profit for me. 2 can stay in the house till no longer able. It sounds rather unfair but I am grasping at ideas.
Could someone please give advice or a direction to research before 2 and I try to finalize estate?
State is Oklahoma if that matters.
Answer #1: You guys can sell the house and spilt the proceeds-best course of action bc then you dont have to have any financial relationship with 2.Answer #2: Just sell the house and cash out. File to partition and force sale if sibling refuses to sell. None of your ideas make any sense and create unequal distribution, especially the rental one. Just sell.Answer #3: Not legal advice, just practical. If you are the landlord, you have to fix every roof leak, water heater, keep the yard up, etc. I know of your sibling struggle, and putting myself in your shoes, I can see myself getting a ticket from code enforcement for neck-high grass, trash piled on side of the house, derelict vehicles parked about. I can also see finding out about major water damage that could have been prevented, from something simple like a leaky dishwasher, all because a sibling didn’t ever even tell me. Down the road, you are facing evicting said sibling.
My advice, sell the house, split the proceeds. Sibling can take money and find some place to live on their own, and you won’t have this lead weight on your neck for the next 20 years. |
3. Situation in Syria, Bahrain and Yemen ( |
Exhibit 99.1 RiT Technologies Ltd. 24 Raoul Wallenberg St. Tel Aviv, 69719, Israel Tel: +972-77-2707270 Fax: +972-3-6474115 RiT Technologies Signs Agreement with Blue Helix for U.K. Distribution Agreement increases RiT’s reach of Intelligent Infrastructure Management (IIM) solutions in the UK and Ireland. Tel Aviv, May 28, 2014 - RiT Technologies Ltd. (NASDAQ: RITT) today announced that it has signed a distribution agreement with Blue Helix, a leading British supplier of networking products. Blue Helix will distribute the full range of RiT products with a focus on the PatchView+ Intelligent Infrastructure Management (IIM) solution. “The addition of the RiT unique suite of products complements and extends our existing portfolio, enabling us to supply a robust solution to the growing number of customer requests for intelligent infrastructure solutions,” commented Mr. Colin Ryall, Blue Helix’s Managing Director. “Choosing RiT, the innovator and market leader in the IIM field, was an obvious move for us: as a leading distributor we carry only the best products backed by the best support.” Mr. Assaf Skolnik, RiT's VP Sales, added, “We are committed to working with BlueHelix, a leading and seasoned distributor in the UK market, with a strong record of deployments and superior customer service. This partnership strategically positions RiT’s products in a key market and presents growth opportunities for the company, as UK based clients focus on economic and operational efficiencies in managing their network infrastructure.” “We are confident Blue Helix is the right partner to assure smooth implementation of our products; and educate the market on the marked benefits of the PatchView+ IIM solution to operational efficiency and cost savings, through decreases in downtime, a reduction in technician errors, and reduced workload.” About Blue Helix Blue Helix is a dedicated distributor of fibre-optic and copper networking, as well as CCTV security systems. During its 10 years of trading, Blue Helix has enjoyed rapid growth to become one of the UK’s leading suppliers of networking products. Blue Helix strives to offer high quality products, excellent customer service with a strong emphasis on building long lasting relationships. More information atwww.bluehelix.co.uk About RiT Technologies RiT is a leading provider of cabling, DCIM and IIM solutions and a developer of an innovative indoor optical wireless technology solution. Our DCIM and IIM products provide network utilization for data centers, communication rooms and work space environments. They help companies plan and provision, monitor and troubleshoot their communications networks, maximizing utilization, reliability and physical security of the network while minimizing unplanned downtime. Our solutions are deployed around the world, in a broad range of organizations, including data centers in the private sector, government agencies, financial institutions, airport authorities, healthcare and education institutions. Our Beamcaster™ product is the first of our indoor optical wireless technology solutions. It is designed to help customers streamline deployment, reduce infrastructure design, installation and maintenance complexity and enhance security in a cost effective way. RiT’s shares are traded on the NASDAQ Capital Market under the symbol RITT. RiT Technologies Ltd. 24 Raoul Wallenberg St. Tel Aviv, 69719, Israel Tel: +972-77-2707270 Fax: +972-3-6474115 Safe Harbor Statement In this press release, all statements that are not purely about historical facts, including, but not limited to, those in which we use the words “believe,” “anticipate,” “expect,” “plan,” “intend,” “estimate", "forecast", “target”, “could” and similar expressions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.While these forward-looking statements represent our current judgment of what may happen in the future, actual results may differ materially from the results expressed or implied by these statements due to numerous important factors, including, but not limited to, those described under the heading “Risk Factors” in our most recent Annual Report filed with the Securities and Exchange Commission (SEC) on Form 20-F, which may be revised or supplemented in subsequent reports filed with the SEC.These factors include, but are not limited to, the following: our ability to raise additional financing, if required; the continued development of market trends in directions that benefit our sales; our ability to maintain and grow our revenues; our dependence upon independent distributors, representatives and strategic partners; our ability to develop new products and enhance our existing products; the availability of third-party components used in our products; the economic condition of our customers; the impact of government regulation; and the economic and political situation in Israel.Except as otherwise required by applicable law, we expressly disclaim any obligation to update the forward-looking statements in this press release, whether as a result of new information, future events or otherwise. COMPANY CONTACT: Elan Yaish, CFO +972-77-270-7210 [email protected] Page 2 of 2
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Exhibit 10.10
Execution Version
THIRD AMENDMENT TO SECURITY AGREEMENT
THIS THIRD AMENDMENT TO SECURITY AGREEMENT (this “Amendment”) is entered into
effective as of March 20, 2020 by and among Pacific Ethanol, Inc., a Delaware
corporation (the “Company”), each of the Holders and the New Holders (as defined
below), each in its capacity as a Holder and as a Secured Party, Cortland
Products Corp. (“Cortland Corp.”), as Successor Agent (as defined below), and
Cortland Capital Market Services LLC (“Cortland LLC”), as existing collateral
agent for itself and the Secured Parties (in such capacity, the “Existing
Agent”). All capitalized terms not otherwise defined herein or in the Security
Agreement (as defined below) shall have the meanings attributed to them in that
certain Senior Secured Note Amendment Agreement dated effective as of December
22, 2019 by and among the Company and each Holder (the “Amendment Agreement”).
RECITALS
WHEREAS, the Company and the Holders are party to the Amendment Agreement
pursuant to which the Company issued the Amended Notes;
WHEREAS, to secure the Obligations under the Amended Notes, the Company,
Existing Agent, and the other Secured Parties entered into that certain Security
Agreement dated as of December 15, 2016 (as amended, restated, supplemented, or
otherwise modified from time to time, the “Security Agreement”);
WHEREAS, the Existing Agent desires to resign as collateral agent under the
Security Agreement and the Required Holders have agreed to appoint Cortland
Corp. to act as successor Agent (in such capacity, together with its successors
and assigns in such capacity, the “Successor Agent”) pursuant to Section 17(j)
of the Security Agreement;
WHEREAS, the Company approves of the appointment of the Successor Agent as the
successor collateral agent pursuant to Section 17(j) of the Security Agreement;
WHEREAS, the Successor Agent has agreed to accept the role of the collateral
agent on behalf of itself and the Secured Parties in accordance with Section
17(j) of the Security Agreement;
WHEREAS, to secure the obligations of the Company under the Transaction
Documents, pursuant to the Transaction Documents, certain affiliates of the
Company are required to enter into certain additional Collateral Documents;
WHEREAS, in connection with the entry into such additional Collateral Documents,
the parties hereto have further agreed to amend the Security Agreement as set
forth herein,
AGREEMENT
NOW, THEREFORE, in consideration of the agreements herein contained and for
hereby acknowledged, the parties hereto hereby agree as follows:
1. Resignation and Appointment of Agent. Pursuant to Section 17(j) of the
Security Agreement, in each case, effective as of the Effective Date (as defined
below) (a) the Existing Agent hereby resigns from the performance of all its
functions and duties under this Agreement and the other Transaction Documents,
(b) each party hereto hereby waives the provisions of Section 17(j) of the
Security Agreement requiring that the Company and the Secured Parties be
provided with thirty (30) days’ advance written notice of the resignation of the
Existing Agent, (c) the Existing Agent’s resignation shall be effective and each
of the Company and the Required Holders accepts the resignation of Cortland LLC
as the collateral agent under the Security Agreement, and Cortland LLC shall
have no further obligations under the Transaction Documents or the Collateral
Documents in its capacity as the Agent or the collateral agent under any
Transaction Document (other than the obligations set forth herein), (d) the
Required Holders appoint Cortland Corp. to act as the Agent (and as collateral
agent under each Transaction Document to which it is party as successor to the
Existing Agent or becomes party on or about the date hereof pursuant to any
Transaction Document to be entered into on or about the date hereof) and (e) the
Company consents to the appointment of Cortland Corp. to act as the Agent (and
as collateral agent under each other Transaction Document to which it is or to
be party as collateral agent). As of the Effective Date, Cortland Corp. accepts
the appointment to act as the successor collateral agent under the Transaction
Documents and the Collateral Documents. The Required Holders and the Company
waive any inconsistency or conflict with the provisions of the Security
Agreement and any other Transaction Document with respect to the resignation of
Cortland LLC as Agent (and as collateral agent under any Transaction Document)
and the appointment of Cortland Corp. as the successor Agent (and as collateral
agent under each Transaction Document to which it is a party). Each of the
parties hereto agrees, at the Company’s sole cost and expense, to execute all
documents necessary to evidence and give effect to the appointment of Cortland
Corp. as the successor Agent.
2. Rights, Duties and Obligations of Successor Agent. (a) Effective as of the
Effective Date, the Successor Agent is hereby vested with all the rights,
powers, discretion and privileges of the Agent, as described in the Security
Agreement and the other Transaction Documents, and the Successor Agent assumes,
from and after the Effective Date, the duties and obligations of the Agent in
accordance with the terms of the Security Agreement and the other Transaction
Documents, and, the Existing Agent is discharged from all of its duties and
obligations as the Agent under the Transaction Documents. The Existing Agent
shall bear no responsibility for any actions taken or omitted to be taken by the
Successor Agent after the Existing Agent’s time serving as the Agent under the
Security Agreement and the other Transaction Documents. Nothing in this
Agreement shall be deemed a termination of the provisions of any Transaction
Document (including, without limitation, Sections 12, 17(i), and 18(j) of the
Security Agreement) that survive the Existing Agent’s resignation pertaining to
Cortland LLC in its capacity as Agent. For the avoidance of doubt and without
prejudice to any other provision of the Transaction Documents that is purported
to survive the Existing Agent’s resignation, Sections 12, 17(i), and 18(j) of
the Security Agreement shall continue in effect for the benefit of Cortland LLC
and its affiliates and the respective directors, trustees, officers, employees,
agents and advisors of Cortland LLC and its affiliates on and after the
Effective Date. The Company and the Required Holders expressly agree and
acknowledge that the Successor Agent is not assuming any liability (i) under or
related to the Transaction Documents prior to the Effective Date, (ii) for any
actions taken or omitted to be taken by Cortland LLC in its capacity as the
Existing Agent or otherwise under this Amendment, the Security Agreement and the
other Transaction Documents or the transactions contemplated thereby and (iii)
for any and all claims under or related to the Transaction Documents that may
have arisen or accrued prior to the Effective Date. Each of the Company and the
Required Holders, with respect to their applicable indemnification obligations
under the Transaction Documents, expressly agrees and confirms that the
Successor Agent’s right to indemnification, as set forth in the Transaction
Documents, shall apply with respect to any and all losses, claims, costs and
expenses that the Successor Agent suffers or incurs relating to actions taken or
omitted by any of the parties to this Amendment prior to the Effective Date.
2
(b) (i) The Existing Agent hereby assigns to the Successor Agent each of the
Liens and security interests granted to, or in favor of, the Existing Agent for
the benefit of the Secured Parties under the Transaction Documents. All of such
liens and security interests shall in all respects be continuing and in effect
and are hereby reaffirmed by the Company.
(ii) Each of the Existing Agent and the Company hereby agrees to execute and
deliver, at the Company’s sole cost and expense, to the Successor Agent any UCC
financing statements or similar documents, assignments or amendments that the
Successor Agent or the Required Holders reasonably request to evidence the
Successor Agent’s succession as Agent under the Security Agreement and the other
Transaction Documents. Each of the Existing Agent, the Company and the Holders
party hereto hereby authorizes the Successor Agent (or its designee) to file any
UCC financing statements or similar documents, assignments or amendments that
the Successor Agent deems necessary or desirable to evidence the Successor
Agent’s succession as Agent under the Security Agreement and the other
Transaction Documents; provided that the Existing Agent shall bear no
responsibility for any actions taken or omitted to be taken by the Successor
Agent (or its designee) with respect to the foregoing.
3. Notice Information. The address details listed on the Successor Agent’s
signature page hereto are to be used for purposes of all communications to the
Successor Agent pursuant to the Security Agreement and the other Transaction
Documents.
4. Fees and Expenses. All fees and expenses incurred by the Existing Agent prior
to the date hereof have been presented in an invoice and paid in full by the
Company. Commencing on the Effective Date, (a) the Successor Agent shall be
entitled to receive its agency fees and expenses set forth in that certain Agent
Fee Letter, dated as of the date hereof, between the Company and the Successor
Agent (the “New Agent Fee Letter”) and (b) the Existing Agent shall cease to be
entitled to receive the “Collateral Agency Fees” payable to the Existing Agent
pursuant to Section 12(i) of the Security Agreement and that certain Agent Fee
Letter, dated as of December 15, 2016, by and between the Company and the
Existing Agent. All other provisions of the Security Agreement and the other
Transaction Documents providing for the payment of fees and expenses of, and
providing indemnities for the benefit of, the Existing Agent shall remain in
full force and effect for the benefit of the Successor Agent and its Related
Parties (and, where applicable, the Existing Agent and its Related Parties). The
Company, the Holders and the Successor Agent hereby acknowledge and agree that,
effective as of the Effective Date, the New Agency Fee Letter shall constitute
the “Agent Fee Letter” under the Security Agreement, and all fees, costs,
expenses and compensation payable thereunder shall constitute Obligations
secured equally and ratably by the collateral under each of the Collateral
Documents.
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5. Amendments to Security Agreement.
(c) Section 1 of the Security Agreement is hereby amended to insert the
following defined terms therein in their appropriate alphabetical order as
follows:
“Collateral Documents” shall mean all security agreements, mortgages, pledge
agreements, documents, filings, certificates, and other agreements which grant
the Holders, or the Agent as collateral agent for the Holders, a security
interest to secure the Obligations.
“Intercreditor Agreement” means that certain Intercreditor Agreement, dated as
of March 20, 2020, made by any among the Agent, as “Notes Agent”, CoBank, ACB,
as “CoBank Agent”, the Company and each of the other grantors party thereto, as
“Transaction Documents” means this Agreement, the Amendment Agreement and the
schedules and exhibits attached thereto, the Amended Notes, the Purchase
Agreement, the Notes, the Warrants, the Registration Rights Agreement, the
Transfer Agent Instructions, the Collateral Documents, and the Intercreditor
Agreement, together with any amendments, restatements, extensions or other
modifications thereto.
(d) Section 17 of the Security Agreement is amended and restated in its entirety
“17. Agent.
(a) Appointment. The Secured Parties, by their acceptance of the benefits of the
Agreement, hereby designate Cortland Products Corp. as the Agent to act as
specified herein and in each other Collateral Document to which it is party as
Agent. Each Secured Party shall be deemed irrevocably to authorize and direct
the Agent to take such action on its behalf under the provisions of this
Agreement and each other Collateral Document to which it is party and to
exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. The Agent
may perform any and all of its duties hereunder and exercise its rights and
powers hereunder by or through any one or more sub-agents appointed by it, and
will not be responsible for any misconduct or negligence on the part of any of
them. The Agent and any such sub-agent may perform any and all of its duties
hereunder and exercise its rights and powers hereunder by or through their
respective Affiliates. The exculpatory and indemnification provisions of this
Agreement shall apply to any such sub-agent and to the Affiliates of the Agent
and any such sub-agent. All of the rights, benefits, and privileges (including
the exculpatory and indemnification provisions) of this Agreement shall apply to
any such sub-agent and to the Affiliates of any such sub-agent as if such
sub-agent and Affiliates were named herein.
4
(b) Nature of Duties. The Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and each of the other Collateral
Documents to which it is a party. Without limiting the generality of the
foregoing, (i) the Agent shall not have any duty to take any discretionary
powers expressly contemplated hereby that the Agent is instructed in writing to
exercise by the Required Holders (or such greater number of Holders as may be
expressly required herein); provided that the Agent shall not be required to
take any action that, in its opinion or the opinion of its legal counsel, may
expose the Agent to liability or that is contrary to this Agreement or any other
Transaction Document or applicable law, including for the avoidance of doubt any
action that may be in violation of the automatic stay under the Bankruptcy Code,
and (ii) neither the Agent nor any of its partners, officers, directors,
employees or agents shall be liable for any action taken or not taken by it as
such under this Agreement or any other Collateral Document or hereunder or
thereunder or in connection herewith or therewith, be responsible for the
consequence of any oversight or error of judgment or answerable for any loss,
unless caused solely by it or its gross negligence or willful misconduct as
determined by a final judgment (not subject to further appeal) of a court of
competent jurisdiction, and then only for direct damages to the extent provided
by law and not for any lost profits or special, indirect or consequential
damages or (to the fullest extent a claim for punitive damages may lawfully be
waived) any punitive damages; provided, further, that neither the Agent nor any
of its partners, officers, directors, employees or agents shall be liable for
any action taken or not taken by it with the consent or at the request of the
Required Holders (or such greater number of Holders as may be expressly required
herein). The duties of the Agent shall be mechanical and administrative in
nature; the Agent shall not have by reason of this Agreement, any other
Collateral Document or any other related agreement a fiduciary relationship or
other implied duties under this Agreement, any other Collateral Document or any
other related agreement, or in respect of the Company or any Secured Party,
regardless of whether an Event of Default has occurred and is continuing; and
nothing in the Agreement, any other Collateral Document or any other related
agreement, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Agreement, any other
Collateral Document or any other related agreement except as expressly set forth
herein and therein.
(c) Other Agreements. The Agent has accepted and is bound by this Agreement and
each other Collateral Document executed by or in favor of the Agent. The Agent
will not otherwise be bound by, or be held obligated by, the provisions of any
note purchase agreement, indenture, note or other agreement (other than this
Agreement and the other documents executed by the Agent in connection herewith).
5
(d) Lack of Reliance on the Agent. Independently and without reliance upon the
Agent, each Secured Party, to the extent it deems appropriate, has made and
shall continue to make (i) its own independent investigation of the financial
condition and affairs of the Company and its subsidiaries in connection with
such Secured Party’s purchase of Notes, the creation and continuance of the
Obligations, the transactions contemplated by the Transaction Documents, and the
taking or not taking of any action in connection therewith, and (ii) its own
appraisal of the creditworthiness of the Company, and of the value of the
Collateral (as defined in each Collateral Document) from time to time, and the
Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Secured Party with any credit, market or other information
with respect thereto, whether coming into its possession before any Obligations
are incurred or at any time or times thereafter. The Agent shall not be
responsible to the Company or any Secured Party for any recitals, statements,
information, financial statements, representations or warranties herein or in
any document, certificate or other writing delivered in connection herewith, or
for the execution, effectiveness, genuineness, validity, enforceability,
perfection, collectability, priority or sufficiency of this Agreement, any other
Collateral Document, or any other related agreement or any contracts or
insurance policies, or for the financial condition of the Company or the value
of any of the Collateral (as defined in any of the Collateral Documents), or
have any duty to ascertain or be required to make any inquiry concerning either
the performance or observance of any of the terms, provisions or conditions of
this Agreement, any other Collateral Document, or any other related agreement,
or the financial condition of the Company, or the value of any of the Collateral
(as defined in any Collateral Document), or the existence or possible existence
or absence of any default or Event of Default under this Agreement, Notes, any
other Collateral Document, or any of the other related agreement, or the
contents of any certificate, report or other document delivered under this
Agreement, any other Collateral Document, Notes or any of the other related
agreement or in connection therewith. It is acknowledged and agreed by the
Secured Parties and the Company that the Agent (i) has undertaken no analysis of
this Agreement, any other Collateral Document, or the Pledged Collateral or any
“Collateral” under any other Collateral Document and (ii) has made no
determination as to (x) the validity, enforceability, perfection,
collectability, priority or sufficiency of any Liens granted or purported to be
granted pursuant to this Agreement or any other Collateral Document or (y) the
accuracy or sufficiency of the documents, filings, recordings and other actions
taken, or to be taken, to create, perfect or maintain the existence, perfection
or priority of the Liens granted or purported to be granted pursuant to this
Agreement or any other Collateral Document. The Agent shall be entitled to
assume that all Liens purported to be granted pursuant to this Agreement and
pursuant to each other Collateral Document are valid and perfected Liens having
the priority intended by the Secured Parties and this Agreement (or such other
Collateral Document, as applicable).
6
(e) Certain Rights of the Agent. The Agent shall have the right to take any
action with respect to the Collateral (as defined in the applicable Collateral
Document), on behalf of itself and all of the Secured Parties. Whenever
reference is made in this Agreement or any other Collateral Document to any
action by, consent, designation, specification, requirement or approval of,
notice, request or other communication from, or other direction given or action
to be undertaken or to be (or not to be) suffered or omitted by the Agent to any
amendment, waiver or other modification of this Agreement (or any other
Collateral Document) to be executed (or not to be executed) by the Agent or to
any election, decision, opinion, acceptance, use of judgment, expression of
satisfaction or other exercise of discretion, rights or remedies to be made (or
not to be made) by the Agent, it is understood that in all cases the Agent shall
be fully justified in failing or refusing to take any such action under this
Agreement or any other Collateral Document as it deems appropriate. This
provision is intended solely for the benefit of the Agent and its successors and
permitted assigns and is not intended to and will not entitle the other parties
hereto to any defense, claim or counterclaim under or in relation to any
Transaction Document, or confer any rights or benefits on any party hereto. The
Agent shall be entitled to refrain from any act or the taking of any action
(including the failure to take an action) in connection herewith or from the
exercise of any power, discretion or authority vested in it hereunder or
thereunder unless and until the Agent shall have received written instructions
in respect thereof from the Required Holders (or such greater number of Holders
as may be expressly required herein) and, upon receipt of such instructions from
required herein), the Agent shall be entitled to act or (where so instructed)
refrain from action, or to exercise such power, discretion or authority, in
accordance with such instructions. The Agent may at any time solicit written
confirmatory instructions from the Required Holders (or such greater number of
Holders as may be expressly required herein) or request an order of a court of
competent jurisdiction as to any action that it may be requested or required to
take, or that it may propose to take, in the performance of any of its
obligations under this Agreement and each other Collateral Document. If such
instructions or order are not provided despite the Agent’s request therefor, the
Agent shall be entitled to refrain from such act or taking such action and may
suspend performance of such obligations as it determines to be appropriate until
it receives such instructions or order, and if such action is taken, shall be
entitled to appropriate indemnification from the Secured Parties in respect of
actions to be taken by the Agent; and the Agent shall not incur liability to any
person or entity by reason of so refraining. Without limiting the foregoing, (a)
no Secured Party shall have any right of action whatsoever against the Agent as
a result of the Agent acting or refraining from acting hereunder in accordance
with the terms of the Agreement, any other Collateral Document, or any other
related agreement, and the Company shall have no right to question or challenge
the authority of, or the instructions given to, the Agent pursuant to the
foregoing except in the case of the gross negligence or willful misconduct of
the Agent as determined by a final judgment (not subject to further appeal) of a
court of competent jurisdiction and (b) the Agent shall not be required to take
any action which the Agent believes (i) could reasonably be expected to expose
it to personal liability, or (ii) require it to expend or risk its own funds, or
(iii) is contrary to this Agreement, the other Collateral Documents, the Notes,
any other related agreement or applicable law.
7
(f) Reliance. The Agent shall be entitled to conclusively rely, and shall be
fully protected in relying, upon any writing, facsimile, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document, sent or made by the Company, any grantor
under any other Collateral Document, or any Secured Party, without being
required to determine the authenticity thereof or the correctness of any fact
stated therein or the propriety or validity of service thereof, upon any
judicial order or judgment pertaining to the Agreement, the Notes, the other
Collateral Documents, the Agent Fee Letter and any other related agreement and
the transactions contemplated thereunder, and, with respect to all legal matters
pertaining to the Agreement, the Notes, the other Collateral Documents, the
Agent Fee Letter and any other related agreement and its duties thereunder, upon
any advice, opinion or statement of legal counsel selected by it and upon all
other matters pertaining to this Agreement, the Notes, the other Collateral
Documents, the Agent Fee Letter and any other related agreement and its duties
thereunder, upon advice of independent consultants and other experts selected by
it, and may assume that any Person purporting to give notice or receipt or
advice or make any statement or execute any document in connection with the
provisions hereof or the other Transaction Documents has been duly authorized to
do so. Anything to the contrary notwithstanding, the Agent shall have no
obligation whatsoever to any Secured Party to assure that the Collateral (as
defined herein and in any other Collateral Document) exists or is owned by the
Company (or any other grantor thereof, as applicable) or is cared for, protected
or insured or that the liens granted pursuant to this Agreement (or pursuant to
any other Collateral Document) have been properly or sufficiently or lawfully
created, perfected, or enforced or are entitled to any particular priority.
8
(g) Limitations on Duty of Agent in Respect of Pledged Collateral.
(i) Beyond its obligations under Sections 4 and 6 hereof and the exercise of
reasonable care in the custody of Pledged Collateral (or any other Collateral
(as defined in any Collateral Document)) in its possession, the Agent will have
no duty as to any such Pledged Collateral (or other Collateral (as defined in
any Collateral Document)) in its possession or control or in the possession or
control of any agent or bailee or any income thereon or as to preservation of
rights against prior parties or any other rights pertaining or otherwise
perfecting or maintaining the perfection of any Liens on the Pledged Collateral
(or other Collateral (as defined in any Collateral Document)). The Agent will be
deemed to have exercised reasonable care in the custody of the Pledged
Collateral (and all other Collateral (as defined in any Collateral Document)) in
its possession if such Pledged Collateral (or other Collateral (as defined in
any Collateral Document)) is accorded treatment substantially equal to that
which it accords its own property, and the Agent will not be liable or
responsible for any loss or diminution in the value of any of the Pledged
Collateral (or other Collateral (as defined in any Collateral Document)) by
reason of the act or omission of any carrier, forwarding agency or other agent
or bailee selected by the Agent in good faith.
(ii) The Agent will not be responsible for the existence, genuineness or value
of any of the Pledged Collateral (or other Collateral (as defined in any
Collateral Document)) or for the validity, perfection, priority or
enforceability of the Liens in any of the Pledged Collateral (or other
Collateral (as defined in any Collateral Document)), whether impaired by
operation of law or by reason of any action or omission to act on its part
hereunder, except to the extent such action or omission constitutes gross
negligence or willful misconduct on the part of the Agent, for the validity or
sufficiency of the Pledged Collateral (or other Collateral (as defined in any
Collateral Document)) or any agreement or assignment contained therein, for the
validity of the title of the Company to the Pledged Collateral (or other
Collateral (as defined in any Collateral Document)), for insuring the Pledged
Collateral (or other Collateral (as defined in any Collateral Document)) or for
the payment of taxes, charges, assessments or Liens upon the Pledged Collateral
(or other Collateral (as defined in any Collateral Document)) or otherwise as to
the maintenance of the Pledged Collateral (or other Collateral (as defined in
any Collateral Document)). The Agent hereby disclaims any representation or
warranty to the present and future holders of the Obligations concerning the
perfection of the Liens granted hereunder or in the value of any of the Pledged
9
(h) Security or Indemnity in favor of the Agent. The Agent will not be required
to advance or expend any funds or otherwise incur any financial liability in the
performance of its duties or the exercise of its powers or rights hereunder
unless it has been provided with security or indemnity reasonably satisfactory
to it against any and all liability or expense which may be incurred by it by
reason of taking or continuing to take such action.
(i) Indemnification. To the extent that the Agent is not reimbursed and
indemnified by the Company, the Secured Parties, shall severally, and not
jointly, reimburse and indemnify the Agent and its Affiliates, and each and all
of their respective partners, members, shareholders, officers, directors,
employees, trustees, attorneys and agents (and any other persons with other
titles that have similar functions) and (in each case) their respective heirs,
representatives, successors and assigns (each of the foregoing, an “Agent
Indemnitee”), in proportion to the outstanding amount of their respective
principal amounts of the Notes on the date on which indemnification is sought
under this Section 17(i) (or, if indemnification is sought after the date upon
which the Notes have been paid in full, in proportion to the outstanding amount
of their respective principal amounts of the Notes immediately prior to such
date), from and against any and all losses, claims, liabilities, obligations,
damages, penalties, suits, actions, judgments, costs, taxes, disbursements and
expenses of any kind or nature whatsoever which may be imposed on, incurred by
or asserted against any Agent Indemnitee in performing its duties hereunder or
under any other related agreement, or in any way relating to or arising out of
this Agreement, any other Collateral Document and any other related agreement,
THE COMPARATIVE, CONTRIBUTORY, OR SOLE NEGLIGENCE OF SUCH AGENT INDEMNITEE;
provided, no Agent Indemnitee will be entitled to indemnification hereunder of
any such losses, claims, liabilities, obligations, damages, penalties, suits,
actions, judgments, costs, taxes, disbursements and expenses which result from
the gross negligence or willful misconduct of such Agent Indemnitee as
determined by a final, nonappealable decision of a court of competent
jurisdiction. Prior to taking any action or further action hereunder as the
Agent, the Agent may require each Secured Party to deposit with it sufficient
sums as it determines in good faith is necessary to protect the Agent for costs
and expenses associated with taking such action or further action; provided, in
no event shall this sentence require any Secured Party to indemnify any Agent
Indemnitee against any liability, obligation, loss, damage, penalty, action,
judgment, suit, cost, expense or disbursement in excess of an amount in
proportion to the outstanding amount of their respective principal amounts of
the Notes on the date on which indemnification is sought under this Section
17(i) (or, if indemnification is sought after the date upon which the Notes have
been paid in full, in proportion to the outstanding amount of their respective
principal amounts of the Notes immediately prior to such date); and provided
further, this sentence shall not be deemed to require any Secured Party to
indemnify any Agent Indemnitee against any liability, obligation, loss, damage,
penalty, action, judgment, suit, cost, expense or disbursement described in the
proviso in the immediately preceding sentence. All of the agreements in this
Section 17(i) will survive and remain operative and in full force and effect
regardless of the repayment of the Obligations, the termination of this
Agreement or any other Collateral Document or the resignation or removal of the
Agent.
10
(j) Resignation or Removal of the Agent.
(i) The Agent may resign from the performance of all its functions and duties
under this Agreement, the other Collateral Documents and the other Transaction
Documents at any time by giving not less than 30 days’ prior written notice to
the Company and the Secured Parties, and, subject to the appointment of a
successor Agent and the acceptance of such appointment by the successor Agent,
the Agent may be removed at any time by the Secured Parties. Such resignation or
removal shall take effect upon the appointment of a successor Agent pursuant to
clauses (ii) and (iii) below.
(ii) Upon any such notice of resignation or removal, the Required Holders shall
appoint a successor Agent hereunder.
(iii) If a successor Agent shall not have been so appointed within 30 days after
the retiring Agent gave notice of resignation or was removed, the retiring Agent
may, at its option, (i) appoint a successor Agent who shall serve as successor
Agent until such time, if any, as the Secured Parties appoint a successor Agent
as provided above or (ii) petition any court of competent jurisdiction or may
interplead the Company and the Secured Parties in a proceeding for the
appointment of a successor Agent, and, in each cash, all fees, costs and
expenses, including, but not limited to, extraordinary fees associated with the
filing of interpleader and expenses associated therewith, shall be payable by
the Company on demand; provided, that, notwithstanding the foregoing, in the
case of a resignation by the Agent, if no successor Agent has been appointed by
the 30th day after the date the Agent has given notice of its resignation in
accordance with clause (i) above, the Agent’s resignation shall nevertheless
become effective and the Secured Parties shall thereafter perform all of the
duties of the Agent under this Agreement and each other Collateral Document
until such time, if any, as the Secured Parties appoint a successor Agent.
11
(k) Rights with respect to Collateral. Each Secured Party agrees with all other
Secured Parties and the Agent (i) that it shall not, and shall not attempt to,
exercise any rights with respect to its security interest in the Collateral (as
defined in any Collateral Document), whether pursuant to any other agreement or
otherwise (other than pursuant to this Agreement and the other Collateral
Documents), and (ii) that such Secured Party has no other rights with respect to
the Collateral (as defined in any Collateral Document) other than as set forth
in this Agreement, the other Collateral Documents, the Notes and any other
related agreements. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement, the other Collateral Documents, and each other Transaction
Document. The retiring Agent will (at the sole expense of the Company) promptly
transfer all Liens and collateral security within its possession or control to
the possession or control of the successor Agent and will execute such
instruments and assignments as may be reasonably requested by the successor
Agent to transfer to the successor Agent all Liens, interests, rights, powers
and remedies of the predecessor Agent in respect of this agreement or the
Pledged Collateral (or any other Collateral (as defined in any Collateral
Document)). After any retiring Agent’s resignation or removal hereunder as
collateral agent, the provisions of this Agreement, including without limitation
the immunities granted to it in Sections 12, 17 and 18(j) hereof shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent hereunder and any actions taken in accordance with this clause (l).”
(e) The Security Agreement is hereby amended to add a new Section 19 to the end
thereof that reads as follows:
“19 Intercreditor Agreement; Other Terms. Each Holder hereby (i) instructs and
authorizes the Agent to execute and deliver the Intercreditor Agreement on its
behalf, (ii) authorizes and directs the Administrative Agent to exercise all of
the Agent’s rights and to comply with all of its obligations under the
Intercreditor Agreement, (iii) agrees that the Agent may take actions on its
behalf as is contemplated by the terms of the Intercreditor Agreement, and (iv)
understands, acknowledges and agrees that at all times following the execution
and delivery of the Intercreditor Agreement such Holder (and each of its
successors and assigns) shall be bound by the terms thereof. Each Holder
acknowledges that it has reviewed and is satisfied with the terms and provisions
of the Intercreditor Agreement and acknowledges and agrees that such Holder is
responsible for making its own analysis and review of the Intercreditor
Agreement and the terms and provisions thereof, and neither Agent nor any of its
Affiliates makes any representation to any Holder as to the sufficiency or
advisability of the provisions contained in the Intercreditor Agreement. Each
Holder further agrees that each reference in any Transaction Document to the
“Intercreditor Agreement”, any “Collateral Documents” and any “Transaction
Documents” shall be deemed to refer to the Intercreditor Agreement, the
Collateral Documents, and the Transaction Documents, each as defined herein.”
12
6. Effectiveness. This Amendment will become effective upon the date on which
the Agent has received a counterpart hereof duly executed by each party hereto
7. Representations and Warranties. In order to induce the Agent and the Holders
to enter into this Amendment, the Company hereby remakes all of the
representations and warranties contained in Section 6 of the Security Agreement
as of the date of this Amendment (except to the extent such representation or
warranty relates to an earlier date, in which case, it is true, correct and
complete as of such earlier date). The Company’s representations and warranties
in Sections 6(b) and (c) of the Security Agreement shall apply, mutatis
mutandis, to this Amendment.
8. Interpretation. Except as expressly modified by this Amendment, all terms and
provisions of the Security Agreement shall remain unchanged and in full force
and effect and are ratified and affirmed on the date hereof. In the event of any
inconsistency between the terms of this Amendment and the terms of the Security
Agreement prior to its amendment, the terms of this Amendment shall control.
9. Reaffirmation. The Company hereby acknowledges and agrees that (i) to the
extent any Transaction Document or Collateral Document purports to grant, assign
or pledge to the Agent or any Holder a security interest or lien on any
collateral as security for the Obligations, such grant, assignment or pledge is
hereby ratified and confirmed in all respects and (ii) the obligations secured
under the Transaction Documents and the Collateral Documents will include all
Obligations, as amended by this Amendment and the Amendment Agreement, including
the Amended Notes.
10. Counterparts. This Amendment may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument and
either of the parties hereto may execute this Amendment by signing any such
counterpart.
11. Governing Law. This Amendment shall be construed and enforced in accordance
and performance of this Agreement shall be governed by, the internal laws of the
State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York.
13
12. Direction. The Holders party hereto (including, for the avoidance of doubt,
the New Holders (as defined below) constituting all of the Holders hereby (a)
authorize and direct the Agent to execute and deliver (i) this Amendment, (ii)
the Intercreditor Agreement (as defined in the Security Agreement as amended
hereby) and (iii) each of the other Transaction Documents to be entered into on
or about the date hereof, including, for the avoidance of doubt (a) that certain
Security Agreement (Illinois Corn Processing), to be made by Illinois Corn
Processing, LLC in favor of the Agent, in substantially the form attached hereto
as Exhibit A, (b) that certain Security Agreement (Pacific Ethanol Central,
LLC), to be made by Pacific Ethanol Central, LLC in favor of the Agent, in
substantially the form attached hereto as Exhibit B, (c) that certain Security
Agreement (Pacific Ethanol West, LLC) (PE Op Co.), to be made by and among
Pacific Ethanol West, LLC, PE Op Co. and the Agent, in substantially the form
attached hereto as Exhibit C, (d) that certain Pledge Agreement by and among
Pacific Ethanol Central, LLC, Pacific Aurora, LLC, and the Agent, in
substantially the form attached hereto as Exhibit D, (e) that certain Pledge
Agreement by and among Pacific Ethanol Central, LLC, Pacific Ethanol Pekin, LLC,
and the Agent, in substantially the form attached hereto as Exhibit E, and (f)
that certain Pledge Agreement by and among Pacific Ethanol Central, LLC,
Illinois Corn Processing, LLC, and the Agent, in substantially the form attached
hereto as Exhibit F, and each other Transaction Document as the Required Holders
may request in writing (which may be by email, and may be requested through
their counsel by email), (b) authorize and direct the Agent to take any and all
actions as may be required or advisable to effectuate the amendments
contemplated hereby and the agreements and transactions contemplated by each of
the Transaction Documents to be entered into on or about the date hereof
(including, without limitation, each of the Transaction Documents listed above
and each of the mortgages and deeds of trust executed or to be executed by any
grantor in favor of the Agent for the benefit of the Secured Parties), and (c)
acknowledge and agree that (i) each of the directions in this Section 13
constitute a direction from all Holders under the provisions of Section 17 of
the Security Agreement, and (ii) Section 17(i) of the Security Agreement shall
apply to any and all actions taken by the Agent in accordance with such
directions.
13. Joinder. Each of the Persons signatory hereto under the title “New Holders”
(the “New Holders”) on the signature pages hereof constitute certain of the
holders of the Amended Notes under the Amendment Agreement and each hereby
agrees to be added as a party to the Security Agreement as a “Secured Party”.
Each New Holder hereby unconditionally and irrevocably expressly assumse,
confirms, and agrees to perform and observe as a Secured Party each of the
covenants, agreements, terms, conditions, obligations, duties, promises and
liabilities applicable to a “Secured Party” under the Secured Agreement
(including, without limitation, those set forth in Section 17(f) of the Security
Agreement, as amended hereby) as if they were an original signatory thereto.
Each New Holder hereby agrees (i) to promptly execute and deliver any and all
further documents and take such further action as the Agent may reasonably
require to effect the purpose of this Section, and (ii) that their address for
notices under the Security Agreement are as set forth under each New Holder’s
signature hereof.
14
executed and delivered as of the day and year first above written.
COMPANY: Pacific Ethanol, Inc. By: /s/ Neil M. Koehler Name:
Neil M. Koehler Title: President and Chief Executive Officer
15
EXISTING AGENT: Cortland Capital Market Services LLC, as Existing
Agent By: /s/ Matthew Trybula Name: Matthew Trybula
Title: Associate Counsel AGENT: CORTLAND PRODUCTS CORP. By:
/s/ Matthew Trybula Name: Matthew Trybula Title: Associate Counsel
Cortland Products Corp. 225 W Washington Street, 9th Floor Chicago, IL 60606
Attn: Ashwinee Sawh and Legal Department Email:
[email protected] and [email protected]
With a copy (which shall not constitute notice) to: Arnold & Porter Kaye
Scholer LLP 250 W 55th Street New York, NY 10019 Attn: Alan Glantz
Email: [email protected]
16
HOLDERS: CIF Income Partners (A), LLC By: BlackRock Financial
Management, Inc., its investment manager By: /s/ Stephen Kavulich
Name: Stephen Kavulich Title: Director Orange 2015 DisloCredit Fund,
L.P. By: BlackRock Financial Management, Inc., its investment manager
By: /s/ Stephen Kavulich Name: Stephen Kavulich Title: Director
Sainsbury’s Credit Opportunities Fund, Ltd. By: BlackRock Financial
Name: Stephen Kavulich Title: Director Co-Investment Income Fund, L.P. –
US Tax-Exempt Series By: BlackRock Financial Management, Inc., its
investment manager By: /s/ Stephen Kavulich Name: Stephen Kavulich
Title: Director Co-Investment Income Fund, L.P. – US Taxable Series
By: BlackRock Financial Management, Inc., its investment manager By: /s/
Stephen Kavulich Name: Stephen Kavulich Title: Director
17
NEW HOLDERS: CKP South LLC By: /s/ Philip DeSantis Name: Philip
DeSantis Title: [Address for notices] Corrum Capital Global Credit
Opportunities Co Investment Fund I LP By: /s/ Jonathan R. Mandle Name:
Jonathan R. Mandle Title: Manager [Address for notices] Corrum
Capital Global Credit Opportunities Fund LP By: /s/ Jonathan R. Mandle
Name: Jonathan R. Mandle Title: Manager [Address for notices]
Corrum Capital Alternative Income Fund LP By: /s/ Jonathan R. Mandle
Name: Jonathan R. Mandle Title: Manager [Address for notices] /s/
Alfred J. De Leo Alfred J. De Leo [Address for notices] /s/ David
Koenig David Koenig [Address for notices] /s/ Jonathan W. Weiss
Jonatham W. Weiss [Address for notices] /s/ Justin S. Wohler
Justin S. Wohler [Address for notices] /s/ Philip DeSantis Philip
DeSantis [Address for notices]
18
EXHIBIT A
[See Attached]
19
EXHIBIT B
[See Attached]
20
EXHIBIT C
[See Attached]
21
EXHIBIT D
[See Attached]
22
EXHIBIT E
[See Attached]
23
EXHIBIT F
[See Attached]
23
|
UNITED STATESSECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTEREDMANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: (811-05346) Exact name of registrant as specified in charter: Putnam Variable Trust Address of principal executive offices: One Post Office Square, Boston, Massachusetts 02109 Name and address of agent for service: Robert T. Burns, Vice PresidentOne Post Office SquareBoston, Massachusetts 02109 Copy to: Bryan Chegwidden, Esq.Ropes & Gray LLP1211 Avenue of the AmericasNew York, New York 10036 Registrant's telephone number, including area code: (617) 292-1000 Date of fiscal year end: December 31, 2016 Date of reporting period: January 1, 2016 — June 30, 2016 Item 1. Report to Stockholders: The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act of 1940: Message from the Trustees Dear Shareholder: As summer comes to a close, we note that despite multiple headwinds and uncertainties both at home and overseas, the overall trajectory of the equity markets has been somewhat positive so far in2016. It is heartening that markets have recovered from various international and domestic challenges. Weknow volatile markets can be unsettling, but if recent events are any indication, we believe it is important not to overreact to short-term developments and to focus instead on the long term. We believe the global environment continues to be supportive of stocks. Central banks around the world stand ready to add more stimulus and liquidity, if necessary, while the underpinnings of the U.S. economy remain solid, in our view. Overseas, higher hurdles to growth exist, but we believe that market gyrations may present investment opportunities. Within fixed income, yields have fallen — and in some cases have gone further into negative territory — as investors seek safety from turbulent markets, notably after the United Kingdom’s vote to depart the European Union. At Putnam, our portfolio managers seek positive returns in every kind of market environment, backed by our network of global analysts and their own experience navigating changing conditions. They, and we, share a deep conviction that an active approach based on fundamental research can play a valuable role in your portfolio. In the following pages, you will find an overview of your fund’s performance for the reporting period ended June 30, 2016, as well as an outlook for the comingmonths. As always, it may be helpful for you to consult with your financial advisor, who can assist you in determining if your portfolio remains aligned with your long-term goals, time horizon, and tolerance for risk. Thank you for investing with Putnam. Performance summary (as of 6/30/16) Investment objective Capital growth and current income Net asset value June 30, 2016 Class IA: $23.30 Class IB: $23.23 Total return at net asset value Russell 1000 (as of 6/30/16)* Class IA shares† Class IB shares‡ Value Index 6 months 2.97% 2.85% 6.30% 1 year –4.63 -4.89 2.86 5 years 57.70 55.80 71.19 Annualized 9.54 9.27 11.35 10 years 60.33 56.41 81.30 Annualized 4.83 4.57 6.13 Life 1,000.88 939.70 1,456.80 Annualized 8.81 8.59 10.17 For a portion of the periods, the fund had expense limitations, without which returns would have been lower. * Recent performance may have benefited from one or more legal settlements. † Class inception date: February 1, 1988. ‡ Class inception date: April 6, 1998. The Russell 1000 Value Index is an unmanaged index of those companies in the large-cap Russell 1000 Index chosen for their value orientation. Data represent past performance. Past performance does not guarantee future results. More recent returns may be less or more than those shown. Investment return and principal value will fluctuate, and you may have a gain or a loss when you sell your shares. Performance information does not reflect any deduction for taxes a shareholder may owe on fund distributions or on the redemption of fund shares. All total return figures are at net asset value and exclude contract charges and expenses, which are added to the variable annuity contracts to determine total return at unit value. Had these charges and expenses been reflected, performance would have been lower. Performance of class IB shares before their inception is derived from the historical performance of class IA shares, adjusted to reflect the higher operating expenses applicable to such shares. For more recent performance, contact your variable annuity provider who can provide you with performance that reflects the charges and expenses at your contract level. Allocations are shown as a percentage of the fund’s net assets. Cash and net other assets, if any, represent the market value weights of cash, derivatives, short-term securities, and other unclassified assets in the portfolio. Summary information may differ from the portfolio schedule included in the financial statements due to the inclusion of derivative securities, any interest accruals, the exclusion of as-of trades, if any, the use of different classifications of securities for presentation purposes, and rounding. Holdings and allocations may vary over time. Putnam VT Growth and Income Fund 1 Report from your fund’s manager Bob, how was the environment for stock market investors during the six-month reporting period ended June 30, 2016? The period began in January 2016, just after U.S. stocks posted their weakest annual results since the global financial crisis. Stocks were still struggling with the same issues that burdened investors throughout 2015, including plunging oil prices, a strong U.S. dollar, slowing economic growth in China, and uncertainty over the timing and extent of Federal Reserve action on interest rates. In January, volatility in the financial markets picked up immediately and dramatically, and new concerns emerged, such as the potential for a recession in the U.S. economy. The stock market, as measured by the S&P 500 Index, posted one of its worst-ever January losses. The downturn continued through February 11, the low point for the period, when major U.S. stock indexes were down more than 10% since the start of the year. Stocks then staged a remarkable rebound. As recession fears subsided and oil prices stabilized, turbulence eased, and in March, the S&P 500 Index recorded its best monthly return in five months. In late June, however, market volatility spiked again, largely in response to Brexit — the decision by United Kingdom voters to leave the European Union. U.S. stock prices plummeted more than 5% in the two days after the vote, followed by a dramatic three-day recovery as the period came to a close. Could you provide some examples of stocks that helped performance relative to the benchmark during the reporting period? Throughout the fund’s previous fiscal year, many of the weakest-performing fund holdings were stocks of companies in the energy sector, as oil prices plummeted to historic lows. During this six-month reporting period, however, we saw a sharp reversal in that trend. By mid-March, oil prices were up 50% from their lows early in the year, and in April, they rose more than 20%, their biggest monthly gain since October 2014. Top contributors from the energy sector included oil and gas companies Royal Dutch Shell and Cabot Oil & Gas, as well as Exelon, a utility services holding company. These companies were all beneficiaries of stabilizing and improving oil and commodity prices. Could you discuss some stocks that detracted from fund returns? For the same reasons that energy stocks dominated the top performers, the fund’s underweight position in Exxon Mobil dampened performance for the period. Also detracting from performance was my decision to maintain an underweight position, relative to the benchmark, in AT&T. This is an example of a so-called “bond proxy” — a stock that offers a relatively high yield and is generally expected to perform well when interest rates are low. I believed most of these types of stocks were too expensive. What effect did the use of derivatives have on fund performance? During the reporting period, forward currency contracts were used to help reduce foreign exchange risk. These derivatives had a positive impact on fund performance. What is your outlook for the financial markets in the coming months? Despite their resilience through a turbulent first half of 2016, I believe stocks could encounter some risks in the coming months. The challenges for U.S. equity investors, in my view, relate more to macroeconomic than microeconomic factors. At the micro level, we are encouraged by U.S. business fundamentals and, in our view, there are attractively valued stocks in many segments of the market. At the macro level, however, U.S. markets have continued to be burdened with uncertainties, including potential economic disruption in the United Kingdom and the European Union, further weakening of the Chinese currency, and the back-and-forth discounting of Federal Reserve action on interest rates. The views expressed in this report are exclusively those of Putnam Management and are subject to change. They are not meant as investment advice. Please note that the holdings discussed in this report may not have been held by the fund for the entire period. Portfolio composition is subject to review in accordance with the fund’s investment strategy and may vary in the future. Consider these risks before investing: Value stocks may fail to rebound, and the market may not favor value-style investing. Income provided by the fund may be reduced by changes in the dividend policies of, and the capital resources available at, the companies in which the fund invests. Stock prices may fall or fail to rise over time for several reasons, including general financial market conditions and factors related to a specific company or industry. You can lose money by investing in the fund. Your fund’s manager Portfolio Manager Robert D. Ewing, CFA, is Head of U.S. Equities at Putnam. He joined Putnam in 2008 and has been in the investment industry since 1990. Your fund’s manager may also manage other accounts advised by Putnam Management or an affiliate, including retail mutual fund counterparts to the funds in Putnam Variable Trust. 2 Putnam VT Growth and Income Fund Understanding your fund’s expenses As an investor in a variable annuity product that invests in a registered investment company, you pay ongoing expenses, such as management fees, distribution fees (12b-1 fees), and other expenses. In the most recent six-month period, your fund’s expenses were limited; had expenses not been limited, they would have been higher. Using the following information, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You may also pay one-time transaction expenses, which are not shown in this section and would result in higher total expenses. Charges and expenses at the insurance company separate account level are not reflected. For more information, see your fund’s prospectus or talk to your financial representative. Review your fund’s expenses The two left-hand columns of the Expenses per $1,000 table show the expenses you would have paid on a $1,000 investment in your fund from 1/1/16 to 6/30/16. They also show how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses . To estimate the ongoing expenses you paid over the period, divide your account value by $1,000, then multiply the result by the number in the first line for the class of shares you own. Compare your fund’s expenses with those of other funds The two right-hand columns of the Expenses per $1,000 table show your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return . You can use this information to compare the ongoing expenses (but not transaction expenses or total costs) of investing in the fund with those of other funds. All shareholder reports of mutual funds and funds serving as variable annuity vehicles will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period. Expense ratios Class IA Class IB Total annual operating expenses for the fiscal year ended 12/31/15 0.58% 0.83% Annualized expense ratio for the six-month period ended 6/30/16 0.59% 0.84% Fiscal-year expense information in this table is taken from the most recent prospectus, is subject to change, and may differ from that shown for the annualized expense ratio and in the financial highlights of this report. Expenses are shown as a percentage of average net assets. Expenses per $1,000 Expenses and value for a Expenses and value for a $1,000 investment, assuming $1,000 investment, assuming a actual returns for the 6 months hypothetical 5% annualized return ended 6/30/16 for the 6 months ended 6/30/16 Class IA Class IB Class IA Class IB Expenses paid per $1,000*† $2.98 $4.24 $2.97 $4.22 Ending value (after expenses) $1,029.70 $1,028.50 $1,021.93 $1,020.69 *Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of average net assets for the six months ended 6/30/16. The expense ratio may differ for each share class. †Expenses based on actual returns are calculated by multiplying the expense ratio by the average account value for the period; then multiplying the result by the number of days in the period; and then dividing that result by the number of days in the year. Expenses based on a hypothetical 5% return are calculated by multiplying the expense ratio by the average account value for the six-month period; then multiplying the result by the number of days in the six-month period; and then dividing that result by the number of days in the year. Putnam VT Growth and Income Fund3 The fund’s portfolio 6/30/16 (Unaudited) COMMON STOCKS (96.6%)* Shares Value Aerospace and defense (6.8%) Airbus Group SE (France) 54,486 $3,163,915 Embraer SA ADR (Brazil) 64,300 1,396,596 General Dynamics Corp. 68,300 9,510,092 Honeywell International, Inc. 85,000 9,887,200 L-3 Communications Holdings, Inc. 63,400 9,300,146 Northrop Grumman Corp. 80,800 17,960,224 Raytheon Co. 47,700 6,484,815 Rockwell Collins, Inc. 26,600 2,264,724 United Technologies Corp. 58,500 5,999,175 Airlines (0.3%) American Airlines Group, Inc. 123,100 3,484,961 Auto components (0.3%) Johnson Controls, Inc. 81,600 3,611,616 Automobiles (0.1%) General Motors Co. 45,200 1,279,160 Banks (10.8%) Bank of America Corp. 1,378,445 18,291,965 Citigroup, Inc. 485,850 20,595,182 JPMorgan Chase & Co. 570,086 35,425,144 PacWest Bancorp 38,400 1,527,552 Regions Financial Corp. 488,600 4,157,986 Wells Fargo & Co. 522,520 24,730,872 Beverages (1.4%) Molson Coors Brewing Co. Class B 41,500 4,196,895 PepsiCo, Inc. 86,700 9,184,998 Biotechnology (0.6%) AbbVie, Inc. 38,500 2,383,535 Gilead Sciences, Inc. 39,600 3,303,432 Building products (0.4%) Fortune Brands Home & Security, Inc. 73,600 4,266,592 Capital markets (3.9%) AllianceBernstein Holding LP 118,600 2,763,380 Charles Schwab Corp. (The) 180,700 4,573,517 E*Trade Financial Corp. † 52,600 1,235,574 Goldman Sachs Group, Inc. (The) 52,969 7,870,134 KKR & Co. LP 508,732 6,277,753 Morgan Stanley 325,864 8,465,947 State Street Corp. 117,300 6,324,816 Chemicals (2.7%) Axalta Coating Systems, Ltd. † 167,470 4,442,979 Dow Chemical Co. (The) 131,600 6,541,836 E.I. du Pont de Nemours & Co. 96,900 6,279,120 Ingevity Corp. † 76,000 2,587,040 Monsanto Co. 40,300 4,167,423 Symrise AG (Germany) 25,465 1,735,200 Commercial services and supplies (0.7%) Tyco International PLC 151,375 6,448,575 Communications equipment (1.6%) Cisco Systems, Inc. 549,100 15,753,679 COMMON STOCKS (96.6%)* cont. Shares Value Consumer finance (0.3%) Synchrony Financial † 129,100 $3,263,648 Diversified consumer services (—%) ITT Educational Services, Inc. † S 127,483 244,767 Diversified telecommunication services (1.4%) AT&T, Inc. S 178,300 7,704,343 Verizon Communications, Inc. 105,272 5,878,388 Electric utilities (2.4%) American Electric Power Co., Inc. 46,600 3,266,194 Edison International 47,900 3,720,393 Exelon Corp. 312,300 11,355,228 PG&E Corp. 80,500 5,145,560 Energy equipment and services (2.2%) Baker Hughes, Inc. 87,200 3,935,336 Halliburton Co. 168,500 7,631,365 Schlumberger, Ltd. 98,389 7,780,602 Weatherford International PLC † S 401,681 2,229,330 Food and staples retail (2.4%) CVS Health Corp. 70,800 6,778,392 Kroger Co. (The) 147,800 5,437,562 Wal-Mart Stores, Inc. 91,000 6,644,820 Walgreens Boots Alliance, Inc. 53,300 4,438,291 Food products (2.4%) JM Smucker Co. (The) 28,700 4,374,167 Kraft Heinz Co. (The) 105,600 9,343,488 Mead Johnson Nutrition Co. 28,100 2,550,075 Mondelez International, Inc. Class A 161,800 7,363,518 Health-care equipment and supplies (2.7%) Abbott Laboratories S 78,100 3,070,111 Baxter International, Inc. 42,200 1,908,284 Becton Dickinson and Co. 34,300 5,816,937 C.R. Bard, Inc. 27,800 6,537,448 Medtronic PLC 102,224 8,869,976 Health-care providers and services (1.3%) Cardinal Health, Inc. 40,600 3,167,206 Cigna Corp. 37,900 4,850,821 UnitedHealth Group, Inc. 30,000 4,236,000 Hotels, restaurants, and leisure (1.1%) Hilton Worldwide Holdings, Inc. 300,400 6,768,012 Penn National Gaming, Inc. † 264,142 3,684,781 Household durables (0.4%) PulteGroup, Inc. 134,800 2,627,252 Whirlpool Corp. 10,100 1,683,064 Household products (0.5%) Procter & Gamble Co. (The) 51,600 4,368,972 Independent power and renewable electricity producers (1.8%) Calpine Corp. † 594,333 8,766,412 NRG Energy, Inc. 555,700 8,329,943 Industrial conglomerates (1.5%) General Electric Co. 370,370 11,659,248 Siemens AG (Germany) 31,450 3,221,677 4 Putnam VT Growth and Income Fund COMMON STOCKS (96.6%)* cont. Shares Value Insurance (4.9%) American International Group, Inc. 319,500 $16,898,355 Assured Guaranty, Ltd. 239,967 6,087,963 Chubb, Ltd. 47,600 6,221,796 Hartford Financial Services Group, Inc. (The) 198,500 8,809,430 MetLife, Inc. 110,613 4,405,716 Prudential PLC (United Kingdom) 307,501 5,238,526 Internet and catalog retail (—%) FabFurnish GmbH (acquired 8/2/13, cost $13) (Private) (Brazil) † ∆∆ F 10 8 Global Fashion Holding SA (acquired 8/2/13, cost $636,303) (Private) (Brazil) † ∆∆ F 15,020 107,352 New Bigfoot Other Assets GmbH (acquired 8/2/13, cost $13) (Private) (Brazil) † ∆∆ F 10 8 New Middle East Other Assets GmbH (acquired 8/2/13, cost $5) (Private) (Brazil) † ∆∆ F 4 3 Internet software and services (1.3%) Alphabet, Inc. Class C † 14,915 10,322,672 Yahoo!, Inc. † 66,200 2,486,472 IT Services (0.9%) Computer Sciences Corp. 170,000 8,440,500 Life sciences tools and services (0.3%) Agilent Technologies, Inc. 59,900 2,657,164 Media (2.8%) Charter Communications, Inc. Class A † 16,980 3,882,307 Comcast Corp. Class A 121,100 7,894,509 Discovery Communications, Inc. Class A † S 112,100 2,828,283 DISH Network Corp. Class A † 69,400 3,636,560 Liberty Global PLC Ser. C (United Kingdom) † 122,200 3,501,030 Time Warner, Inc. 71,200 5,236,048 Metals and mining (1.1%) Alcoa, Inc. S 348,900 3,234,303 BHP Billiton, Ltd. (Australia) 106,934 1,523,050 Newmont Mining Corp. 141,500 5,535,480 Multiline retail (0.2%) Macy’s, Inc. 50,600 1,700,666 Oil, gas, and consumable fuels (11.9%) Anadarko Petroleum Corp. 191,200 10,181,400 Apache Corp. 44,900 2,499,583 Cabot Oil & Gas Corp. 169,900 4,373,226 Chevron Corp. 33,600 3,522,288 Concho Resources, Inc. † 32,800 3,912,056 ConocoPhillips 245,900 10,721,240 Diamondback Energy, Inc. † 38,200 3,484,222 Energen Corp. 90,100 4,343,721 EOG Resources, Inc. 59,200 4,938,464 Exxon Mobil Corp. 89,418 8,382,043 Gulfport Energy Corp. † 220,100 6,880,326 Marathon Oil Corp. 264,400 3,968,644 Pioneer Natural Resources Co. 49,400 7,469,774 Range Resources Corp. S 125,700 5,422,698 Royal Dutch Shell PLC ADR Class A (United Kingdom) 405,854 22,411,258 Scorpio Tankers, Inc. 610,900 2,565,780 Suncor Energy, Inc. (Canada) 136,872 3,796,968 COMMON STOCKS (96.6%)* cont. Shares Value Oil, gas, and consumable fuels cont. Total SA ADR (France) 94,779 $4,558,870 Whiting Petroleum Corp. † S 233,956 2,166,433 Paper and forest products (0.4%) Boise Cascade Co. † 158,300 3,632,985 Personal products (0.9%) Avon Products, Inc. 393,763 1,488,424 Coty, Inc. Class A 79,649 2,070,078 Edgewell Personal Care Co. † 56,618 4,779,125 Pharmaceuticals (9.9%) Allergan PLC † 31,000 7,163,790 AstraZeneca PLC ADR (United Kingdom) S 288,200 8,700,758 Bristol-Myers Squibb Co. 60,500 4,449,775 Eli Lilly & Co. 98,100 7,725,375 Johnson & Johnson 130,500 15,829,650 Merck & Co., Inc. 266,825 15,371,788 Perrigo Co. PLC 23,900 2,167,013 Pfizer, Inc. 546,554 19,244,166 Sanofi ADR (France) 104,600 4,377,510 Teva Pharmaceutical Industries, Ltd. ADR (Israel) 130,300 6,544,969 Zoetis, Inc. 92,002 4,366,415 Real estate investment trusts (REITs) (1.1%) American Tower Corp. 29,200 3,317,412 Gaming and Leisure Properties, Inc. 200,466 6,912,068 Road and rail (0.7%) Union Pacific Corp. 72,300 6,308,175 Semiconductors and semiconductor equipment (1.6%) Intel Corp. 232,900 7,639,120 Lam Research Corp. S 35,363 2,972,614 Micron Technology, Inc. † 376,400 5,179,264 Software (2.3%) Microsoft Corp. 364,700 18,661,699 Oracle Corp. 80,000 3,274,400 Specialty retail (1.6%) Advance Auto Parts, Inc. 18,200 2,941,666 Bed Bath & Beyond, Inc. † S 43,300 1,871,426 Gap, Inc. (The) S 207,200 4,396,784 Home Depot, Inc. (The) 32,700 4,175,463 Michaels Cos., Inc. (The) † 87,700 2,494,188 Technology hardware, storage, and peripherals (2.6%) Apple, Inc. 120,800 11,548,480 EMC Corp. 147,100 3,996,707 Hewlett Packard Enterprise Co. 165,510 3,023,868 HP, Inc. 182,210 2,286,736 Samsung Electronics Co., Ltd. (South Korea) 3,492 4,347,047 Thrifts and mortgage finance (0.6%) Radian Group, Inc. 558,287 5,817,351 Tobacco (0.8%) Philip Morris International, Inc. 75,400 7,669,688 Wireless telecommunication services (0.7%) Vodafone Group PLC ADR (United Kingdom) 204,310 6,311,132 Total common stocks (cost $811,963,086) Putnam VT Growth and Income Fund 5 Principal amount/ SHORT-TERM INVESTMENTS (7.2%)* shares Value Putnam Cash Collateral Pool, LLC 0.64% d Shares 35,815,593 $35,815,593 Putnam Short Term Investment Fund 0.47% L Shares 30,706,072 30,706,072 SSgA Prime Money Market Fund Class N 0.39% P Shares 1,910,000 1,910,000 U.S. Treasury Bills 0.27%, August 18, 2016 $30,000 29,991 U.S. Treasury Bills 0.20%, August 11, 2016 720,000 719,833 U.S. Treasury Bills 0.21%, July 7, 2016 420,000 419,996 Total short-term investments (cost $69,601,476) Total investments (cost $881,564,562) Key to holding’s abbreviations ADR American Depository Receipts: represents ownership of foreignsecurities on deposit with a custodian bank Notes to the fund’s portfolio Unless noted otherwise, the notes to the fund’s portfolio are for the close of the fund’s reporting period, which ran from January 1, 2016 through June 30, 2016 (the reporting period). Within the following notes to the portfolio, references to “ASC820” represent Accounting Standards Codification 820 Fair Value Measurements and Disclosures and references to “OTC”, if any, represent over-the-counter. * Percentages indicated are based on net assets of $968,319,717. † This security is non-income-producing. ∆∆ This security is restricted with regard to public resale. The total fair value of this security and any other restricted securities (excluding 144A securities), if any, held at the close of the reporting period was $107,371, or less than 0.1% of net assets. d Affiliated company. See Note 1 to the financial statements regarding securities lending. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period. F This security is valued by Putnam Management at fair value following procedures approved by the Trustees. Securities may be classified as Level 2 or Level 3 for ASC820 based on the securities’ valuation inputs. At the close of the reporting period, fair value pricing was also used for certain foreign securities in the portfolio (Note 1). L Affiliated company (Note 5). The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period. P This security was pledged, or purchased with cash that was pledged, to the fund for collateral on certain derivative contracts. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period (Note 1). S Security on loan, in part or in entirety, at the close of the reporting period (Note 1). Unless otherwise noted, the rates quoted in Short-term investments security descriptions represent the weighted average yield to maturity. FORWARD CURRENCY CONTRACTS at 6/30/16 (aggregate face value $34,370,418) (Unaudited) Unrealized Contract Delivery Aggregate appreciation/ Counterparty Currency type date Value face value (depreciation) Credit Suisse International British Pound Sell 9/21/16 $21,389,609 $23,151,646 $1,762,037 Euro Sell 9/21/16 4,613,495 4,648,743 35,248 JPMorgan Chase Bank N.A. Euro Sell 9/21/16 6,519,434 6,570,029 50,595 Total 6 Putnam VT Growth and Income Fund ASC 820 establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of the fund’s investments. The three levels are defined as follows: Level 1: Valuations based on quoted prices for identical securities in active markets. Level 2: Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Level 3: Valuations based on inputs that are unobservable and significant to the fair value measurement. The following is a summary of the inputs used to value the fund’s net assets as of the close of the reporting period: Valuation inputs Investments in securities: Level 1 Level 2 Level 3 Common stocks*: Consumer discretionary $64,457,582 $— $107,371 Consumer staples 80,688,493 — — Energy 137,175,627 — — Financials 203,973,561 5,238,526 — Health care 142,742,123 — — Industrials 94,970,523 6,385,592 — Information technology 95,586,211 4,347,047 — Materials 36,421,166 3,258,250 — Telecommunication services 19,893,863 — — Utilities 40,583,730 — — Total common stocks Short-term investments 32,616,072 36,985,413 — Totals by level Valuation inputs Other financial instruments: Level 1 Level 2 Level 3 Forward currency contracts $— $1,847,880 $— Totals by level $— $— * Common stock classifications are presented at the sector level, which may differ from the fund’s portfolio presentation. During the reporting period, transfers within the fair value hierarchy, if any (other than certain transfers involving non-U.S. equity securities as described in Note 1), did not represent, in the aggregate, more than 1% of the fund’s net assets measured as of the end of the period. Transfers are accounted for using the end of period pricing valuation method. At the start and close of the reporting period, Level 3 investments in securities represented less than 1% of the fund’s net assets and were not considered a significant portion of the fund’s portfolio. The accompanying notes are an integral part of these financial statements. Putnam VT Growth and Income Fund7 Statement of assets and liabilities 6/30/16 (Unaudited) Assets Investment in securities, at value, including $35,270,554 of securities on loan (Note 1): Unaffiliated issuers (identified cost $815,042,897) $938,909,485 Affiliated issuers (identified cost $66,521,665) (Notes 1 and 5) 66,521,665 Foreign currency (cost $41) (Note 1) 11 Dividends, interest and other receivables 1,646,500 Receivable for shares of the fund sold 76,029 Receivable for investments sold 780,799 Unrealized appreciation on forward currency contracts (Note 1) 1,847,880 Total assets Liabilities Payable for investments purchased 1,366,895 Payable for shares of the fund repurchased 1,100,722 Payable for compensation of Manager (Note 2) 378,498 Payable for custodian fees (Note 2) 11,501 Payable for investor servicing fees (Note 2) 73,440 Payable for Trustee compensation and expenses (Note 2) 605,852 Payable for administrative services (Note 2) 3,707 Payable for distribution fees (Note 2) 36,075 Collateral on securities loaned, at value (Note 1) 35,815,593 Collateral on certain derivative contracts, at value (Note 1) 1,910,000 Other accrued expenses 160,369 Total liabilities Net assets Represented by Paid-in capital (Unlimited shares authorized) (Notes 1 and 4) $824,001,080 Undistributed net investment income (Note 1) 6,591,159 Accumulated net realized gain on investments and foreign currency transactions (Note 1) 12,012,424 Net unrealized appreciation of investments and assets and liabilities in foreign currencies 125,715,054 Total — Representing net assets applicable to capital shares outstanding Computation of net asset value Class IA Net assets $792,971,485 Number of shares outstanding 34,030,957 Net asset value, offering price and redemption price per share (net assets divided by number of shares outstanding) $23.30 Computation of net asset value Class IB Net assets $175,348,232 Number of shares outstanding 7,547,683 Net asset value, offering price and redemption price per share (net assets divided by number of shares outstanding) $23.23 The accompanying notes are an integral part of these financial statements. 8 Putnam VT Growth and Income Fund Statement of operations Six months ended 6/30/16 (Unaudited) Investment income Dividends (net of foreign tax of $119,518) $9,979,633 Interest (including interest income of $61,412 from investments in affiliated issuers) (Note 5) 62,633 Securities lending (Note 1) 131,046 Total investment income Expenses Compensation of Manager (Note 2) 2,253,125 Investor servicing fees (Note 2) 333,345 Custodian fees (Note 2) 16,629 Trustee compensation and expenses (Note 2) 40,146 Distribution fees (Note 2) 216,236 Administrative services (Note 2) 10,959 Other 163,075 Fees waived and reimbursed by Manager (Note 2) (14,681) Total expenses Expense reduction (Note 2) (53,503) Net expenses Net investment income Net realized gain on investments (Notes 1 and 3) 19,855,057 Net realized gain on foreign currency transactions (Note 1) 206,665 Net unrealized appreciation of assets and liabilities in foreign currencies during the period 1,688,113 Net unrealized depreciation of investments during the period (2,885,634) Net gain on investments Net increase in net assets resulting from operations Statement of changes in net assets Six months ended Year ended 6/30/16* 12/31/15 Decrease in net assets Operations: Net investment income $7,207,981 $18,852,683 Net realized gain on investments and foreign currency transactions 20,061,722 103,321,766 Net unrealized depreciation of investments and assets and liabilities in foreign currencies (1,197,521) (205,489,195) Net increase (decrease) in net assets resulting from operations Distributions to shareholders (Note 1): From ordinary income Net investment income Class IA (15,909,956) (20,152,530) Class IB (3,050,941) (3,925,247) From net realized long-term gain on investments Class IA (24,015,660) — Class IB (5,387,714) — Decrease from capital share transactions (Note 4) (20,753,808) (143,692,939) Total decrease in net assets Net assets: Beginning of period 1,011,365,614 1,262,451,076 End of period (including undistributed net investment income of $6,591,159 and $18,344,075, respectively) * Unaudited. The accompanying notes are an integral part of these financial statements. Putnam VT Growth and Income Fund 9 Financial highlights (For a common share outstanding throughout the period) INVESTMENT OPERATIONS: LESS DISTRIBUTIONS: RATIOS AND SUPPLEMENTAL DATA: Period ended Net asset value, beginning of period Net investment income (loss) a Net realized and unrealized gain (loss) on investments Total from investment operations From net investment income From net realized gain on investments Total distributions Net asset value, end of period Total return at net asset value (%) b,c Net assets, end of period (in thousands) Ratio of expenses to average net assets (%) b,d Ratio of net investment income (loss) to average net assets (%) Portfolio turnover (%) Class IA 6/30/16† $23.83 .18 .49 .67 (.48) (.72) $23.30 * $792,971 .29 * e .78 * e 19 * 12/31/15 26.25 .43 (2.32) (.53) — 23.83 826,425 .58 1.69 36 12/31/14 24.02 .48 2.14 2.62 (.39) — 26.25 11.04 1,031,623 .61 1.92 38 12/31/13 18.01 .33 6.07 6.40 (.39) — 24.02 36.01 1,098,360 .62 1.59 50 12/31/12 15.37 .34 2.63 2.97 (.33) — 18.01 19.43 948,756 .63 2.03 34 12/31/11 16.31 .29 (.99) (.24) — 15.37 933,477 .63 1.81 44 Class IB 6/30/16† $23.72 .15 .49 .64 (.41) (.72) $23.23 * $175,348 .42 * e .65 * e 19 * 12/31/15 26.12 .36 (2.30) (.46) — 23.72 184,941 .83 1.44 36 12/31/14 23.91 .41 2.13 2.54 (.33) — 26.12 10.73 230,829 .86 1.66 38 12/31/13 17.93 .28 6.04 6.32 (.34) — 23.91 35.68 241,961 .87 1.34 50 12/31/12 15.30 .30 2.61 2.91 (.28) — 17.93 19.14 211,327 .88 1.78 34 12/31/11 16.23 .25 (.98) (.20) — 15.30 212,939 .88 1.56 44 * Not annualized. † Unaudited. a Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding during the period. b The charges and expenses at the insurance company separate account level are not reflected. c Total return assumes dividend reinvestment. d Includes amounts paid through expense offset and/or brokerage/service arrangements, if any (Note 2). Also excludes acquired fund fees and expenses, if any. e Reflects a voluntary waiver of certain fund expenses in effect during the period. As a result of such waivers, the expenses of each class reflect a reduction of less than 0.01% as a percentage of average net assets (Note 2). The accompanying notes are an integral part of these financial statements. 10Putnam VT Growth and Income Fund Notes to financial statements 6/30/16 (Unaudited) Within the following Notes to financial statements, references to “State Street” represent State Street Bank and Trust Company, references to “the SEC” represent the Securities and Exchange Commission, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “OTC”, if any, represent over-the-counter. Unless otherwise noted, the “reporting period” represents the period from January 1, 2016 through June 30, 2016. Putnam VT Growth and Income Fund (the fund) is a diversified series of Putnam Variable Trust (the Trust), a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The goal of the fund is to seek capital growth and current income. The fund invests mainly in common stocks of large U.S. companies, with a focus on value stocks that offer the potential for capital growth, current income, or both. Value stocks are issued by companies that Putnam Management believes are currently undervalued by the market. If Putnam Management is correct and other investors ultimately recognize the value of the company, the price of its stock may rise. Putnam Management may consider, among other factors, a company’s valuation, financial strength, growth potential, competitive position in its industry, projected future earnings, cash flows and dividends when deciding whether to buy or sell investments. The fund offers class IA and class IB shares of beneficial interest. Class IA shares are offered at net asset value and are not subject to a distribution fee. Class IB shares are offered at net asset value and pay an ongoing distribution fee, which is identified in Note 2. In the normal course of business, the fund enters into contracts that may include agreements to indemnify another party under given circumstances. The fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be, but have not yet been, made against the fund. However, the fund’s management team expects the risk of material loss to be remote. The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent and custodian, who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund. Under the fund’s Declaration of Trust, any claims asserted against or on behalf of the Putnam Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts. Note 1 — Significant accounting policies The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations. Actual results could differ from those estimates. Subsequent events after the Statement of assets and liabilities date through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. Investment income, realized and unrealized gains and losses and expenses of the fund are borne pro-rata based on the relative net assets of each class to the total net assets of the fund, except that each class bears expenses unique to that class (including the distribution fees applicable to such classes). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. If the fund were liquidated, shares of each class would receive their pro-rata share of the net assets of the fund. In addition, the Trustees declare separate dividends on each class of shares. Security valuation Portfolio securities and other investments are valued using policies and procedures adopted by the Board of Trustees. The Trustees have formed a Pricing Committee to oversee the implementation of these procedures and have delegated responsibility for valuing the fund’s assets in accordance with these procedures to Putnam Management. Putnam Management has established an internal Valuation Committee that is responsible for making fair value determinations, evaluating the effectiveness of the pricing policies of the fund and reporting to the Pricing Committee. Investments for which market quotations are readily available are valued at the last reported sales price on their principal exchange, or official closing price for certain markets, and are classified as Level 1 securities under Accounting Standards Codification 820 Fair Value Measurements and Disclosures (ASC 820). If no sales are reported, as in the case of some securities that are traded OTC, a security is valued at its last reported bid price and is generally categorized as a Level 2 security. Investments in open-end investment companies (excluding exchange-traded funds), if any, which can be classified as Level 1 or Level 2 securities, are valued based on their net asset value. The net asset value of such investment companies equals the total value of their assets less their liabilities and divided by the number of their outstanding shares. Many securities markets and exchanges outside the U.S. close prior to the scheduled close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the scheduled close of the New York Stock Exchange. Accordingly, on certain days, the fund will fair value foreign equity securities taking into account multiple factors including movements in the U.S. securities markets, currency valuations and comparisons to the valuation of American Depository Receipts, exchange-traded funds and futures contracts. These securities, which would generally be classified as Level 1 securities, will be transferred to Level 2 of the fair value hierarchy when they are valued at fair value. The number of days on which fair value prices will be used will depend on market activity and it is possible that fair value prices will be used by the fund to a significant extent. At the close of the reporting period, fair value pricing was used for certain foreign securities in the portfolio. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate. Short-term securities with remaining maturities of 60 days or less are valued using an independent pricing service approved by the Trustees, and are classified as Level 2 securities. To the extent a pricing service or dealer is unable to value a security or provides a valuation that Putnam Management does not believe accurately reflects the security’s fair value, the security will be valued at fair value by Putnam Management in accordance with policies and procedures approved by the Trustees. Certain investments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures, recovery rates, sales and other multiples and resale restrictions. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs. To assess the continuing appropriateness of fair valuations, the Valuation Committee reviews and affirms the reasonableness of such valuations on a regular basis after considering all relevant information that is reasonably available. Such valuations and procedures are reviewed periodically by the Trustees. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount. Security transactions and related investment income Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis. Interest income, net of any applicable withholding taxes, is recorded on the accrual basis. Dividend income, net of any applicable withholding taxes, is recognized on the ex-dividend date except that certain dividends from foreign securities, if any, are recognized as soon as the fund is informed of the ex-dividend date. Non-cash dividends, if any, are recorded at the fair value of the securities received. Dividends representing a return of capital or capital gains, if any, are reflected as a reduction of cost and/or as a realized gain. All premiums/discounts are amortized/accreted on a yield-to-maturity basis. Putnam VT Growth and Income Fund11 Foreign currency translation The accounting records of the fund are maintained in U.S. dollars. The fair value of foreign securities, currency holdings, and other assets and liabilities is recorded in the books and records of the fund after translation to U.S. dollars based on the exchange rates on that day. The cost of each security is determined using historical exchange rates. Income and withholding taxes are translated at prevailing exchange rates when earned or incurred. The fund does not isolate that portion of realized or unrealized gains or losses resulting from changes in the foreign exchange rate on investments from fluctuations arising from changes in the market prices of the securities. Such gains and losses are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net realized exchange gains or losses on closed forward currency contracts, disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions and the difference between the amount of investment income and foreign withholding taxes recorded on the fund’s books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized appreciation and depreciation of assets and liabilities in foreign currencies arise from changes in the value of open forward currency contracts and assets and liabilities other than investments at the period end, resulting from changes in the exchange rate. Forward currency contracts The fund buys and sells forward currency contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date. These contracts are used to hedge foreign exchange risk. The U.S. dollar value of forward currency contracts is determined using current forward currency exchange rates supplied by a quotation service. The fair value of the contract will fluctuate with changes in currency exchange rates. The contract is marked to market daily and the change in fair value is recorded as an unrealized gain or loss. The fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed when the contract matures or by delivery of the currency. The fund could be exposed to risk if the value of the currency changes unfavorably, if the counterparties to the contracts are unable to meet the terms of their contracts or if the fund is unable to enter into a closing position. Risks may exceed amounts recognized on the Statement of assets and liabilities. Forward currency contracts outstanding at period end, if any, are listed after the fund’s portfolio. Master agreements The fund is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements (Master Agreements) with certain counterparties that govern OTC derivative and foreign exchange contracts entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral posted to the fund is held in a segregated account by the fund’s custodian and, with respect to those amounts which can be sold or repledged, is presented in the fund’s portfolio Collateral pledged by the fund is segregated by the fund’s custodian and identified in the fund’s portfolio. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the fund and the applicable counterparty. Collateral requirements are determined based on the fund’s net position with each counterparty. Termination events applicable to the fund may occur upon a decline in the fund’s net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term and short-term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the fund’s counterparties to elect early termination could impact the fund’s future derivative activity. At the close of the reporting period, the fund did not have a net liability position on open derivative contracts subject to the Master Agreements. Securities lending The fund may lend securities, through its agent, to qualified borrowers in order to earn additional income. The loans are collateralized by cash in an amount at least equal to the fair value of the securities loaned. The fair value of securities loaned is determined daily and any additional required collateral is allocated to the fund on the next business day. The remaining maturities of the securities lending transactions are considered overnight and continuous. The risk of borrower default will be borne by the fund’s agent; the fund will bear the risk of loss with respect to the investment of the cash collateral. Income from securities lending is included in investment income on the Statement of operations. Cash collateral is invested in Putnam Cash Collateral Pool, LLC, a limited liability company managed by an affiliate of Putnam Management. Investments in Putnam Cash Collateral Pool, LLC are valued at its closing net asset value each business day. There are no management fees charged to Putnam Cash Collateral Pool, LLC. At the close of the reporting period, the fund received cash collateral of $35,815,593 and the value of securities loaned amounted to $35,270,554. Interfund lending The fund, along with other Putnam funds, may participate in an interfund lending program pursuant to an exemptive order issued by the SEC. This program allows the fund to borrow from or lend to other Putnam funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. Interest earned or paid on the interfund lending transaction will be based on the average of certain current market rates. During the reporting period, the fund did not utilize the program. Lines of credit The fund participates, along with other Putnam funds, in a $392.5 million syndicated unsecured committed line of credit provided by State Street ($292.5 million) and Northern Trust Company ($100 million) and a $235.5 million unsecured uncommitted line of credit provided by State Street. Borrowings may be made for temporary or emergency purposes, including the funding of shareholder redemption requests and trade settlements. Interest is charged to the fund based on the fund’s borrowing at a rate equal to the higher of (1) the Federal Funds rate and (2) the overnight LIBOR plus 1.25% for the committed line of credit and the Federal Funds rate plus 1.30% for the uncommitted line of credit. A closing fee equal to 0.04% of the committed line of credit and 0.04% of the uncommitted line of credit has been paid by the participating funds. In addition, a commitment fee of 0.16% per annum on any unutilized portion of the committed line of credit is allocated to the participating funds based on their relative net assets and paid quarterly. During the reporting period, the fund had no borrowings against these arrangements. Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time period and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended (the Code), applicable to regulated investment companies. The fund is subject to the provisions of Accounting Standards Codification 740 Income Taxes (ASC 740). ASC 740 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The fund did not have a liability to record for any unrecognized tax benefits in the accompanying financial statements. No provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains. Each of the fund’s federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. The fund may also be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or capital gains are earned. In some cases, the fund may be entitled to reclaim all or a portion of such taxes, and such reclaim amounts, if any, are reflected as an asset on the fund’s books. In many cases, however, the fund may not receive such amounts for an extended period of time, depending on the country of investment. The aggregate identified cost on a tax basis is $889,059,789, resulting in gross unrealized appreciation and depreciation of $186,835,852 and $70,464,491, respectively, or net unrealized appreciation of $116,371,361. Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Distributions from capital gains, if any, are recorded on the ex-dividend date and paid at least annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year. Reclassifications are made to the fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. 12Putnam VT Growth and Income Fund Expenses of the Trust Expenses directly charged or attributable to any fund will be paid from the assets of that fund. Generally, expenses of the Trust will be allocated among and charged to the assets of each fund on a basis that the Trustees deem fair and equitable, which may be based on the relative assets of each fund or the nature of the services performed and relative applicability to each fund. Beneficial interest At the close of the reporting period, insurance companies or their separate accounts were record owners of all but a de minimis number of the shares of the fund. Approximately 41.1% of the fund is owned by accounts of one insurance company. Note 2 — Management fee, administrative services and other transactions The fund pays Putnam Management a management fee (based on the fund’s average net assets and computed and paid monthly) at annual rates that may vary based on the average of the aggregate net assets of all open-end funds sponsored by Putnam Management (excluding net assets of funds that are invested in, or that are invested in by, other Putnam funds to the extent necessary to avoid “double counting” of those assets). Such annual rates may vary as follows: 0.630% of the first $5 billion, 0.580% of the next $5 billion, 0.530% of the next $10 billion, 0.480% of the next $10 billion, 0.430% of the next $50 billion, 0.410% of the next $50 billion, 0.400% of the next $100 billion and 0.395% of any excess thereafter. For the reporting period, the management fee represented an effective rate (excluding the impact from any expense waivers in effect) of 0.236% of the fund’s average net assets. Putnam Management has contractually agreed, through April 30, 2018, to waive fees or reimburse the fund’s expenses to the extent necessary to limit the cumulative expenses of the fund, exclusive of brokerage, interest, taxes, investment-related expenses, extraordinary expenses, acquired fund fees and expenses and payments under the fund’s investor servicing contract, investment management contract and distribution plans, on a fiscal year-to-date basis to an annual rate of 0.20% of the fund’s average net assets over such fiscal year-to-date period. During the reporting period, the fund’s expenses were not reduced as a result of this limit. Putnam Management may from time to time voluntarily undertake to waive fees and/or reimburse certain fund expenses. Any such waiver or reimbursement would be voluntary and may be modified or discontinued by Putnam Management at any time without notice. For the reporting period, Putnam Management voluntarily waived $14,681. Putnam Investments Limited (PIL), an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund as determined by Putnam Management from time to time. PIL did not manage any portion of the assets of the fund during the reporting period. If Putnam Management were to engage the services of PIL, Putnam Management would pay a quarterly sub-management fee to PIL for its services at an annual rate of 0.35% of the average net assets of the portion of the fund managed by PIL. The fund reimburses Putnam Management an allocated amount for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees. Custodial functions for the fund’s assets are provided by State Street. Custody fees are based on the fund’s asset level, the number of its security holdings and transaction volumes. Putnam Investor Services, Inc., an affiliate of Putnam Management, provides investor servicing agent functions to the fund. Putnam Investor Services, Inc. was paid a monthly fee for investor servicing at an annual rate of 0.07% of the fund’s average daily net assets. During the reporting period, the expenses for each class of shares related to investor servicing fees were as follows: Class IA $272,481 Class IB 60,864 Total $333,345 The fund has entered into expense offset arrangements with Putnam Investor Services, Inc. and State Street whereby Putnam Investor Services, Inc.’s and State Street’s fees are reduced by credits allowed on cash balances. The fund also reduced expenses through brokerage/service arrangements. For the reporting period, the fund’s expenses were reduced by $42 under the expense offset arrangements and by $53,461 under the brokerage/service arrangements. Each Independent Trustee of the fund receives an annual Trustee fee, of which $708, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees also are reimbursed for expenses they incur relating to their services as Trustees. The fund has adopted a Trustee Fee Deferral Plan (the Deferral Plan) which allows the Trustees to defer the receipt of all or a portion of Trustees fees payable on or after July 1, 1995. The deferred fees remain invested in certain Putnam funds until distribution in accordance with the Deferral Plan. The fund has adopted an unfunded noncontributory defined benefit pension plan (the Pension Plan) covering all Trustees of the fund who have served as a Trustee for at least five years and were first elected prior to 2004. Benefits under the Pension Plan are equal to 50% of the Trustee’s average annual attendance and retainer fees for the three years ended December 31, 2005. The retirement benefit is payable during a Trustee’s lifetime, beginning the year following retirement, for the number of years of service through December 31, 2006. Pension expense for the fund is included in Trustee compensation and expenses in the Statement of operations. Accrued pension liability is included in Payable for Trustee compensation and expenses in the Statement of assets and liabilities. The Trustees have terminated the Pension Plan with respect to any Trustee first elected after 2003. The fund has adopted a distribution plan (the Plan) with respect to its class IB shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Plan is to compensate Putnam Retail Management Limited Partnership, an indirect wholly-owned subsidiary of Putnam Investments, LLC, for services provided and expenses incurred in distributing shares of the fund. The Plan provides for payment by the fund to Putnam Retail Management Limited Partnership at an annual rate of up to 0.35% of the average net assets attributable to the fund’s class IB shares. The Trustees have approved payment by the fund at an annual rate of 0.25% of the average net assets attributable to the fund’s class IB shares. During the reporting period, the class specific expenses related to distribution fees were as follows: Class IB $216,236 Note 3 — Purchases and sales of securities During the reporting period, the cost of purchases and the proceeds from sales, excluding short-term investments, were as follows: Cost of purchases Proceeds from sales Investments in securities (Long-term) $179,118,347 $231,861,562 U.S. government securities (Long-term) — — Total The fund may purchase or sell investments from or to other Putnam funds in the ordinary course of business, which can reduce the fund’s transaction costs, at prices determined in accordance with SEC requirements and policies approved by the Trustees. During the reporting period, purchases or sales from or to other Putnam funds, if any, did not represent more than 5% of the fund’s total cost of purchases and/or total proceeds from sales. Putnam VT Growth and Income Fund 13 Note 4 — Capital shares At the close of the reporting period, there were an unlimited number of shares of beneficial interest authorized. Subscriptions and redemptions are presented at the omnibus level. Transactions in capital shares were as follows: Class IA shares Class IB shares Six months ended 6/30/16 Year ended 12/31/15 Six months ended 6/30/16 Year ended 12/31/15 Shares Amount Shares Amount Shares Amount Shares Amount Shares sold 46,381 $1,053,081 125,765 $3,182,316 112,223 $2,508,319 339,646 $8,453,387 Shares issued in connection with reinvestment of distributions 1,779,216 39,925,616 777,190 20,152,530 376,894 8,438,655 151,788 3,925,247 1,825,597 40,978,697 902,955 23,334,846 489,117 10,946,974 491,434 12,378,634 Shares repurchased (2,471,617) (56,005,001) (5,532,766) (140,483,949) (737,057) (16,674,478) (1,531,645) (38,922,470) Net decrease Note 5 — Affiliated transactions Transactions during the reporting period with Putnam Short Term Investment Fund, which is under common ownership and control, were as follows: Fair value at the beginning of Fair value at the end of the Name of affiliate the reporting period Purchase cost Sale proceeds Investment income reporting period Putnam Short Term Investment Fund* $36,135,744 $81,435,100 $86,864,772 $61,412 $30,706,072 Totals * Management fees charged to Putnam Short Term Investment Fund have been waived by Putnam Management. Note 6 — Market, credit and other risks In the normal course of business, the fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the fund has unsettled or open transactions will default. Investments in foreign securities involve certain risks, including those related to economic instability, unfavorable political developments, and currency fluctuations. Note 7 — Summary of derivative activity The volume of activity for the reporting period for any derivative type that was held during the period is listed below and was based on an average of the holdings at the end of each fiscal quarter: Forward currency contracts (contract amount) $33,300,000 The following is a summary of the fair value of derivative instruments as of the close of the reporting period: Fair value of derivative instruments as of the close of the reporting period Asset derivatives Liability derivatives Derivatives not accounted for as hedging instruments Statement of assets and Statement of assets and under ASC 815 liabilities location Fair value liabilities location Fair value Foreign exchange contracts Receivables $1,847,880 Payables $— Total $— The following is a summary of realized and change in unrealized gains or losses of derivative instruments in the Statement of operations for the reporting period (see Note 1): Amount of realized gain or (loss) on derivatives recognized in net gain or (loss) on investments Derivatives not accounted for as hedging instruments under ASC 815 Forward currency contracts Total Foreign exchange contracts $202,482 $202,482 Total Change in unrealized appreciation or (depreciation) on derivatives recognized in net gain or (loss) on investments Derivatives not accounted for as hedging instruments under ASC 815 Forward currency contracts Total Foreign exchange contracts $1,687,167 $1,687,167 Total 14 Putnam VT Growth and Income Fund Note 8 — Offsetting of financial and derivative assets and liabilities The following table summarizes any derivatives, repurchase agreements and reverse repurchase agreements, at the end of the reporting period, that are subject to an enforceable master netting agreement or similar agreement. For securities lending transactions or borrowing transactions associated with securities sold short, if any, see Note 1. For financial reporting purposes, the fund does not offset financial assets and financial liabilities that are subject to the master netting agreements in the Statement of assets and liabilities. Credit Suisse International JPMorgan Chase Bank N.A. Total Assets: Forward currency contracts # $1,797,285 $50,595 $1,847,880 Total Assets Liabilities: Forward currency contracts # — — — Total Liabilities $— $— $— Total Financial and Derivative Net Assets Total collateral received (pledged)† ## $1,797,285 $50,595 Net amount $— $— †Additional collateral may be required from certain brokers based on individual agreements. # Covered by master netting agreement (Note 1). ## Any over-collateralization of total financial and derivative net assets is not shown. Collateral may include amounts related to unsettled agreements. Putnam VT Growth and Income Fund15 Trustee approval of management contract General conclusions The Board of Trustees of The Putnam Funds oversees the management of each fund and, as required by law, determines annually whether to approve the continuance of your fund’s management contract with Putnam Investment Management, LLC (“Putnam Management”) and the sub-management contract with respect to your fund between Putnam Management and its affiliate, Putnam Investments Limited (“PIL”). The Board, with the assistance of its Contract Committee, requests and evaluates all information it deems reasonably necessary under the circumstances in connection with its annual contract review. The Contract Committee consists solely of Trustees who are not “interested persons” (as this term is defined in the Investment Company Act of 1940, as amended (the “1940 Act”)) of The Putnam Funds (“Independent Trustees”). At the outset of the review process, members of the Board’s independent staff and independent legal counsel discussed with representatives of Putnam Management the annual contract review materials furnished to the Contract Committee during the course of the previous year’s review, identifying possible changes in these materials that might be necessary or desirable for the coming year. Following these discussions and in consultation with the Contract Committee, the Independent Trustees’ independent legal counsel requested that Putnam Management and its affiliates furnish specified information, together with any additional information that Putnam Management considered relevant, to the Contract Committee. Over the course of several months ending in June 2016, the Contract Committee met on a number of occasions with representatives of Putnam Management, and separately in executive session, to consider the information that Putnam Management provided, as well as supplemental information provided in response to an additional request made by the Contract Committee. Throughout this process, the Contract Committee was assisted by the members of the Board’s independent staff and by independent legal counsel for The Putnam Funds and the Independent Trustees. In May 2016, the Contract Committee met in executive session to discuss and consider its recommendations with respect to the continuance of the contracts. At the Trustees’ June 24, 2016 meeting, the Contract Committee met in executive session with the other Independent Trustees to review a summary of the key financial, performance and other data that the Contract Committee considered in the course of its review. The Contract Committee then presented its written report, which summarized the key factors that the Committee had considered and set forth its recommendations. The Contract Committee then recommended, and the Independent Trustees approved, the continuance of your fund’s management and sub-management contracts, effective July 1, 2016. (Because PIL is an affiliate of Putnam Management and Putnam Management remains fully responsible for all services provided by PIL, the Trustees have not attempted to evaluate PIL as a separate entity, and all subsequent references to Putnam Management below should be deemed to include reference to PIL as necessary or appropriate in the context.) The Independent Trustees’ approval was based on the following conclusions: • That the fee schedule in effect for your fund represented reasonable compensation in light of the nature and quality of the services being provided to the fund, the fees paid by competitive funds, the costs incurred by Putnam Management in providing services to the fund, and the continued application of certain reductions and waivers noted below; and • That the fee schedule in effect for your fund represented an appropriate sharing between fund shareholders and Putnam Management of such economies of scale as may exist in the management of the fund at current asset levels. These conclusions were based on a comprehensive consideration of all information provided to the Trustees and were not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations and how the Trustees considered these factors are described below, although individual Trustees may have evaluated the information presented differently, giving different weights to various factors. It is also important to recognize that the management arrangements for your fund and the other Putnam funds are the result of many years of review and discussion between the Independent Trustees and Putnam Management, that some aspects of the arrangements may receive greater scrutiny in some years than others, and that the Trustees’ conclusions may be based, in part, on their consideration of fee arrangements in previous years. For example, with some minor exceptions, the funds’ current fee arrangements under the management contracts were first implemented at the beginning of 2010 following extensive review by the Contract Committee and discussions with representatives of Putnam Management, as well as approval by shareholders. Management fee schedules and total expenses The Trustees reviewed the management fee schedules in effect for all Putnam funds, including fee levels and breakpoints. The Trustees also reviewed the total expenses of each Putnam fund, recognizing that in most cases management fees represented the major, but not the sole, determinant of total costs to shareholders. (In a few instances, funds have implemented so-called “all-in” management fees covering substantially all routine fund operating costs.) In reviewing fees and expenses, the Trustees generally focus their attention on material changes in circumstances — for example, changes in assets under management, changes in a fund’s investment style, changes in Putnam Management’s operating costs or profitability, or changes in competitive practices in the mutual fund industry — that suggest that consideration of fee changes might be warranted. The Trustees concluded that the circumstances did not indicate that changes to the management fee structure for your fund would be appropriate at this time. Under its management contract, your fund has the benefit of breakpoints in its management fee schedule that provide shareholders with economies of scale in the form of reduced fee rates as assets under management in the Putnam family of funds increase. The Trustees concluded that the fee schedule in effect for your fund represented an appropriate sharing of economies of scale between fund shareholders and Putnam Management. As in the past, the Trustees also focused on the competitiveness of each fund’s total expense ratio. In order to support the effort to have fund expenses meet competitive standards, the Trustees and Putnam Management have implemented a contractual expense limitation applicable to specified open-end funds, including your fund, of 16 Putnam VT Growth and Income Fund 20 basis points on so-called “other expenses” (i.e., all expenses exclusive of management fees, distribution fees, investor servicing fees, investment-related expenses, interest, taxes, brokerage commissions, acquired fund fees and expenses and extraordinary expenses). This expense limitation attempts to maintain competitive expense levels for the funds. Most funds, including your fund, had sufficiently low expenses that this expense limitation was not operative during their fiscal years ending in 2015. Putnam Management has agreed to maintain this expense limitation until at least April 30, 2018. Putnam Management’s support for this expense limitation arrangement was an important factor in the Trustees’ decision to approve the continuance of your fund’s management and sub-management contracts. The Trustees reviewed comparative fee and expense information for a custom group of competitive funds selected by Lipper Inc. (“Lipper”). This comparative information included your fund’s percentile ranking for effective management fees and total expenses (excluding any applicable 12b-1 fee), which provides a general indication of your fund’s relative standing. In the custom peer group, your fund ranked in the first quintile in effective management fees (determined for your fund and the other funds in the custom peer group based on fund asset size and the applicable contractual management fee schedule) and in the first quintile in total expenses (excluding any applicable 12b-1 fees) as of December 31, 2015. The first quintile represents the least expensive funds and the fifth quintile the most expensive funds. The fee and expense data reported by Lipper as of December 31, 2015 reflected the most recent fiscal year-end data available in Lipper’s database at that time. In connection with their review of fund management fees and total expenses, the Trustees also reviewed the costs of the services provided and the profits realized by Putnam Management and its affiliates from their contractual relationships with the funds. This information included trends in revenues, expenses and profitability of Putnam Management and its affiliates relating to the investment management, investor servicing and distribution services provided to the funds. In this regard, the Trustees also reviewed an analysis of Putnam Management’s revenues, expenses and profitability, allocated on a fund-by-fund basis, with respect to the funds’ management, distribution, and investor servicing contracts. For each fund, the analysis presented information about revenues, expenses and profitability for each of the agreements separately and for the agreements taken together on a combined basis. The Trustees concluded that, at current asset levels, the fee schedules in place represented reasonable compensation for the services being provided and represented an appropriate sharing between fund shareholders and Putnam Management of such economies of scale as may exist in the management of the Putnam funds at that time. The information examined by the Trustees as part of their annual contract review for the Putnam funds included information regarding fees charged by Putnam Management and its affiliates to institutional clients such as defined benefit pension plans, college endowments, sub-advised third-party mutual funds, and the like. This information included comparisons of those fees with fees charged to the Putnam funds, as well as an assessment of the differences in the services provided to these different types of clients. The Trustees observed that the differences in fee rates between these clients and the Putnam funds are by no means uniform when examined by individual asset sectors, suggesting that differences in the pricing of investment management services to these types of clients may reflect, among other things, historical competitive forces operating in separate markets. The Trustees considered the fact that in many cases fee rates across different asset classes are higher on average for mutual funds than for institutional clients, as well as the differences between the services that Putnam Management provides to the Putnam funds and those that it provides to its other clients. The Trustees did not rely on these comparisons to any significant extent in concluding that the management fees paid by your fund are reasonable. Investment performance The quality of the investment process provided by Putnam Management represented a major factor in the Trustees’ evaluation of the quality of services provided by Putnam Management under your fund’s management contract. The Trustees were assisted in their review of the Putnam funds’ investment process and performance by the work of the investment oversight committees of the Trustees, which meet on a regular basis with the funds’ portfolio teams and with the Chief Investment Officer and other senior members of Putnam Management’s Investment Division throughout the year. The Trustees concluded that Putnam Management generally provides a high-quality investment process — based on the experience and skills of the individuals assigned to the management of fund portfolios, the resources made available to them, and in general Putnam Management’s ability to attract and retain high-quality personnel — but also recognized that this does not guarantee favorable investment results for every fund in every time period. The Trustees considered that 2015 was a year of mixed performance results for the Putnam funds, with generally strong results for the international equity, global sector and global asset allocation funds, but generally disappointing results for the U.S. and small-cap equity, Spectrum and fixed income funds. They noted that the longer-term performance of the Putnam funds generally continued to be strong, exemplified by the fact that the Putnam funds were ranked by the Barron’s/Lipper Fund Families survey as the 18th-best performing mutual fund complex out of 58 complexes for the five-year period ended December 31, 2015. They also noted, however, the disappointing investment performance of some funds for periods ended December 31, 2015 and considered information provided by Putnam Management regarding the factors contributing to the underperformance and actions being taken to improve the performance of these particular funds. The Trustees indicated their intention to continue to monitor performance trends to assess the effectiveness of these efforts and to evaluate whether additional actions to address areas of underperformance are warranted. For purposes of evaluating investment performance, the Trustees generally focus on a competitive industry ranking of each fund’s total net return over a one-year, three-year and five-year period. For a number of Putnam funds with relatively unique investment mandates for which meaningful competitive performance rankings are not considered to be available, the Trustees evaluated performance based on their total gross and net returns and, in most cases, comparisons of those returns with the returns of selected investment benchmarks. In the case of your fund, the Trustees considered that its class IA share cumulative total return performance at net asset value was in the following quartiles of its Lipper peer group (Lipper VP (Underlying Funds) — Large-Cap Value Funds) for the one-year, three-year and five-year periods ended December 31, 2015 (the Putnam VT Growth and Income Fund 17 first quartile representing the best-performing funds and the fourth quartile the worst-performing funds): One-year period Three-year period Five-year period 4th 3rd 3rd Over the one-year, three-year and five-year periods ended December 31, 2015, there were 120, 115 and 108 funds, respectively, in your fund’s Lipper peer group. (When considering performance information, shareholders should be mindful that past performance is not a guarantee of future results.) The Trustees expressed concern about your fund’s fourth quartile performance over the one-year period ended December 31, 2015 and considered the circumstances that may have contributed to this disappointing performance. The Trustees considered Putnam Management’s observation that the fund’s underperformance over the one-year period was due in significant part to security selection within the utilities and energy sectors. The Trustees also considered Putnam Management’s view that the fund’s performance in 2015 was attributable to the fund’s relative emphasis on investing in securities that the fund’s portfolio manager believed were undervalued by the market, which detracted from the fund’s performance at a time when value-based investment strategies generally underperformed growth-based investment strategies. The Trustees considered that Putnam Management remained confident in the fund’s portfolio manager and his investment process. The Trustees also considered Putnam Management’s continued efforts to support fund performance through initiatives including structuring compensation for portfolio managers and research analysts to enhance accountability for fund performance, emphasizing accountability in the portfolio management process, and affirming its commitment to a fundamental-driven approach to investing. The Trustees noted further that Putnam Management continued to strengthen its fundamental research capabilities by adding new investment personnel. As a general matter, the Trustees believe that cooperative efforts between the Trustees and Putnam Management represent the most effective way to address investment performance issues that may arise from time to time. The Trustees noted that investors in the Putnam funds have, in effect, placed their trust in the Putnam organization, under the oversight of the funds’ Trustees, to make appropriate decisions regarding the management of the funds. Based on past responsiveness of Putnam Management to Trustee concerns about investment performance, the Trustees concluded that it is preferable to seek change within Putnam Management to address performance shortcomings. In the Trustees’ view, the alternative of engaging a new investment adviser for an underperforming fund would entail significant disruptions and would not likely provide any greater assurance of improved investment performance. Brokerage and soft-dollar allocations; investor servicing The Trustees considered various potential benefits that Putnam Management may receive in connection with the services it provides under the management contract with your fund. These include benefits related to brokerage allocation and the use of soft dollars, whereby a portion of the commissions paid by a fund for brokerage may be used to acquire research services that are expected to be useful to Putnam Management in managing the assets of the fund and of other clients. Subject to policies established by the Trustees, soft dollars generated by these means are used primarily to acquire brokerage and research services (including third-party research and market data) that enhance Putnam Management’s investment capabilities and supplement Putnam Management’s internal research efforts. However, the Trustees noted that a portion of available soft dollars continues to be used to pay fund expenses. The Trustees indicated their continued intent to monitor regulatory and industry developments in this area with the assistance of their Brokerage Committee and also indicated their continued intent to monitor the allocation of the Putnam funds’ brokerage in order to ensure that the principle of seeking best price and execution remains paramount in the portfolio trading process. Putnam Management may also receive benefits from payments that the funds make to Putnam Management’s affiliates for investor or distribution services. In conjunction with the annual review of your fund’s management and sub-management contracts, the Trustees reviewed your fund’s investor servicing agreement with Putnam Investor Services, Inc. (“PSERV”) and its distributor’s contracts and distribution plans with Putnam Retail Management Limited Partnership (“PRM”), both of which are affiliates of Putnam Management. The Trustees concluded that the fees payable by the funds to PSERV and PRM, as applicable, for such services are reasonable in relation to the nature and quality of such services, the fees paid by competitive funds, and the costs incurred by PSERV and PRM, as applicable, in providing such services. 18 Putnam VT Growth and Income Fund This page intentionally left blank. Putnam VT Growth and Income Fund19 This page intentionally left blank. 20Putnam VT Growth and Income Fund Other important information Proxy voting Putnam is committed to managing our mutual funds in the best interests of our shareholders. The Putnam funds’ proxy voting guidelines and procedures, as well as information regarding how your fund voted proxies relating to portfolio securities during the 12-month period ended June30, 2016, are available in the Individual Investors section of putnam.com and on the Securities and Exchange Commission’s [SEC] website, www.sec.gov. If you have questions about finding forms on the SEC’s website, you may call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds’ proxy voting guidelines and procedures at no charge by calling Putnam’s Shareholder Services at 1-800-225-1581. Fund portfolio holdings Each Putnam VT fund will file a complete schedule of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Shareholders may obtain the fund’s Form N-Q on the SEC’s website at www.sec.gov. In addition, the fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. You may call the SEC at 1-800-SEC-0330 for information about the SEC’s website or the operation of the Public Reference Room. Fund information Investment Manager Investor Servicing Agent Trustees Putnam Investment Management, LLC Putnam Investor Services, Inc. Jameson A. Baxter, Chair One Post Office Square Mailing address: Liaquat Ahamed Boston, MA 02109 P.O. Box 8383 Ravi Akhoury Boston, MA 02266-8383 Barbara M. Baumann Investment Sub-Advisor 1-800-225-1581 Robert J. Darretta Putnam Investments Limited Katinka Domotorffy 57–59 St James’s Street Custodian John A. Hill London, England SW1A 1LD State Street Bank and Trust Company Paul L. Joskow Kenneth R. Leibler Marketing Services Legal Counsel Robert E. Patterson Putnam Retail Management Ropes & Gray LLP George Putnam, III One Post Office Square Robert L. Reynolds Boston, MA 02109 W. Thomas Stephens The fund’s Statement of Additional Information contains additional information about the fund’s Trustees and is available without charge upon request by calling 1-800-225-1581. Putnam VT Growth and Income Fund 21 This report has been prepared for the shareholders H509 of Putnam VT Growth and Income Fund. VTSA022 301605 8/16 Item 2. Code of Ethics: Not applicable Item 3. Audit Committee Financial Expert: Not applicable Item 4. Principal Accountant Fees and Services: Not applicable Item 5. Audit Committee of Listed Registrants Not applicable Item 6. Schedule of Investments: The registrant's schedule of investments in unaffiliated issuers is included in the report to shareholders in Item 1 above. Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End Management Investment Companies: Not applicable Item 8. Portfolio Managers of Closed-End Investment Companies Not Applicable Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers: Not applicable Item 10. Submission of Matters to a Vote of Security Holders: Not applicable Item 11. Controls and Procedures: (a) The registrant's principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms. (b) Changes in internal control over financial reporting: Not applicable Item 12. Exhibits: (a)(1) Not applicable (a)(2) Separate certifications for the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are filed herewith. (b) The certifications required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended, are filed herewith. Putnam Variable Trust By (Signature and Title): /s/ Janet C. SmithJanet C. SmithPrincipal Accounting Officer Date: August 26, 2016 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title): /s/ Jonathan S. HorwitzJonathan S. HorwitzPrincipal Executive Officer Date: August 26, 2016 By (Signature and Title): /s/ Steven D. KrichmarSteven D. KrichmarPrincipal Financial Officer Date: August 26, 2016
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SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Schedule 13G Under the Securities Exchange Act of 1934 (Amendment No.: 2 )* Name of issuer: Mueller Industries Inc Title of Class of Securities:Common Stock CUSIP Number:624756102 Date of Event Which Requires Filing of this Statement: December 31, 2013 Check the appropriate box to designate the rule pursuant to which this Schedule is filed: (X) Rule 13d-1(b) ( ) Rule 13d-1(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 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 ("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). (Continued on the following page(s)) 13G CUSIP No.:624756102 1.NAME OF REPORTING PERSON S.S.
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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): August 20, 2014 LIQUIDMETAL TECHNOLOGIES, INC. ( Exact name of registrant as specified in its charter ) Delaware (State or other jurisdiction of incorporation) 001-31332 (Commission File Number) 33-0264467 (I.R.S. Employer Identification No.) 30452 Esperanza Rancho Santa Margarita, California 92688 (Address of principal executive offices, including zip code) Registrant’s telephone number, including area code: (949) 635-2100 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: ☐ 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)) Item 1.01.Entry into a Material Definitive Agreement. Purchase Agreement and Registration Rights Agreement with Aspire Capital On August 20, 2014, Liquidmetal Technologies, Inc. (the “ Company ”) entered into a common stock purchase agreement (the “ Purchase Agreement ”) with Aspire Capital Fund LLC, an Illinois limited liability company (“ Aspire Capital ”), which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $30.0 million of shares of the Company’s common stock over the approximately 36 month term of the Purchase Agreement. Concurrently with entering into the Purchase Agreement, the Company also entered into a registration rights agreement with Aspire Capital (the “ Registration Rights Agreement ”), in which the Company agreed to file one or more registration statements, as permissible and necessary to register under the Securities Act of 1933, as amended (the “ Securities Act ”), the sale of the shares of the Company’s common stock that have been and may be issued to Aspire Capital under the Purchase Agreement. Under the Purchase Agreement, after the Securities and Exchange Commission (the “
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EXHIBIT32.1 CERTIFICATION Pursuant to 18 U.S.C. 1350 (Section 302 of the Sarbanes-Oxley Act of 2002) In connection with the Quarterly Report on Form10-Q of SOKO Fitness & Spa Group, Inc. (the “Company”) for the quarter ended November 30, 2008, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Tong Liu, Chief Executive Officer of the Company, hereby certifies, pursuant to 18U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section13(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:
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EXHIBIT (10-10)
Company’s Form of Separation Agreement & Release
A-1
SEPARATION AGREEMENT AND RELEASE
To: «Employee_Name»
Date: «Actual_Offer_Date»
«Company» (“P&G”) is willing to provide you with certain assistance in
connection with your employment separation from the Company. The following,
which is subject to your approval, sets forth our proposed agreement to do so.
Your receipt of the benefits described below is conditioned upon your accepting,
and abiding by, the terms of this Agreement.
Last Day of Employment:
Your last day of employment will be «Exit_Date», referred to as your “Last Day
of Employment.” Unless otherwise noted below, your pay and benefits will cease
as of your Last Day of Employment.
Separation Payment:
As soon as administratively practical after your Last Day of Employment, P&G
will provide you with a Separation Payment of «Total_Amount», less legally
required withholdings and deductions. In no event will payment be made before
expiration of the seven-day revocation period discussed below or later than the
March 15th of the year following the year which includes your last day of
employment.
Amounts you owe to P&G as of your Last Day of Employment, including, but not
limited to, wage and/or benefit overpayments and unpaid loans, will also be
deducted from the Separation Payment.
Payment for Unvested PST:
If you are not fully-vested in the Procter & Gamble Profit Sharing Trust and
Employee Stock Ownership Plan (“PST”) as of your Last Day of Employment, as soon
as administratively practical after your Last Day of Employment, but no later
than the March 15th of the year following the year which includes your Last Day
of Employment, you will receive a lump sum payment in an amount substantially
equivalent to the non-vested credits in your account in the PST.
STAR Awards:
As of your Last Day of Employment, if you were otherwise eligible for a STAR
award and you worked at least 28 days (4 calendar weeks) during that fiscal
year, you will receive a pro-rated STAR award for that fiscal year. Your STAR
award will be pro-rated by dividing the number of calendar days during the
fiscal year from July 1 through your Last Day of Employment by 365. Your STAR
award will be paid in cash in the September (but no later than September 15th)
immediately following the end of the fiscal year in which you terminate.
A-1
Equity Awards
(including Recognition Shares):
Your separation will be treated as a Special Separation for purposes of any
outstanding equity awards granted under the Procter & Gamble 2009 Stock and
Incentive Compensation Plan, the Procter & Gamble 2001 Stock and Incentive
Compensation Plan, the Procter & Gamble 1992 Stock Plan, or the Gillette Company
2004 Long-Term Incentive Plan and as a result the awards will be retained
subject to the original terms and conditions of the awards.
Awards granted under the Procter & Gamble 2014 Stock & Incentive Compensation
Plan are retained subject to the terms and conditions of the Awards.
This agreement does not alter the rights and obligations that you may have under
the Procter & Gamble 2014 Stock & Incentive compensation Plan, the Procter &
Gamble 2009 Stock and Incentive Compensation Plan, the Procter & Gamble 2001
Stock and Incentive Plan, the Procter & Gamble 1992 Stock Plan, and the Gillette
Company 2004 Long-Term Incentive Plan.
Current Health, Dental, and Life Insurance Benefits:
If you are enrolled in P&G’s active health (including medical, prescription
drug, and EAP coverage), active dental, and company-paid life insurance
coverage, that coverage will continue under the same terms until
«Benefits_End_Date». Note: Any life insurance coverage other than company-paid
life insurance coverage will not continue during this time.
When your extended coverage ends, you may be entitled to continue your health
and dental coverage under COBRA. If you are entitled to COBRA continuation
coverage, you will receive a notice of your right to elect COBRA.
Retiree Medical and Dental Benefits:
If you were eligible for P&G retiree healthcare coverage on your Last Day of
Employment, you will be eligible to enroll in P&G’s retiree medical and dental
insurance coverage. You are eligible for P&G retiree healthcare coverage if you
satisfy the regular retiree eligibility rules (i.e., you are a Regular Retiree)
as of your Last Day of Employment. Under the terms of this Agreement, you also
are eligible for P&G retiree healthcare coverage as a Special Retiree by
satisfying the Rule of 70 as of your Last Day of Employment. You satisfy the
Rule of 70 when your full years of age plus your full years of service equal
70. Special rules apply to Gillette Heritage Employees with regard to retiree
medical eligibility and the retiree medical cost sharing under the retiree
medical plan. If you are a Gillette Heritage Employee, you will receive a
separate handout on your retiree medical eligibility. If you are eligible for
P&G’s retiree healthcare coverage as either a Regular Retiree or a Special
Retiree as of your Last Day of Employment, you should contact P&G Employee Care
before your extension of coverage ends to request retiree healthcare enrollment
information. For details regarding the terms and conditions of your retiree
health coverage, please refer to and review the summary plan descriptions,
available at PGOneLife and Career
Important Note: If you become employed by a direct competitor of P&G (as
determined by P&G’s Chief Human Resources Officer) in an officer and/or director
capacity, you will not be eligible for coverage under P&G’s retiree healthcare
coverage as long as you remain employed by such competitor. If you have
questions, please contact P&G Employee Care at 1-833-441-4357.
1 Special rules apply to Gillette Heritage Employees with regard to retiree
separate handout on your retiree medical eligibility.
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Outplacement Services:
P&G’s outplacement supplier, Right Management Consultants, will provide services
to assist you in managing your transition to a new future, based on your
interest. Services include pre-decision counseling, career transition programs,
and job development opportunities. Right Management Consultants will also assist
you in preparing for your job search, including résumé preparation, cover
letters, other written materials and interview and networking training.
After accepting this Agreement, and after obtaining your manager’s approval, you
may begin utilizing outplacement services on a limited basis prior to your Last
Day of Employment, consistent with the needs of the business and your
responsibilities to complete and/or transition your work. Note that you
must begin utilizing outplacement services within 45 days of your Last Day of
Employment to be eligible for this benefit.
Retraining:
You are eligible for reimbursement (up to $5,000) for the cost of tuition,
registration and laboratory fees for courses taken at accredited colleges and
universities, or at 2-year colleges, trade schools, or vocational schools
approved by appropriate accrediting boards. Correspondence courses which result
in credit towards diplomas, degrees, etc. may be acceptable if offered by
eligible non-profit institutions.
You must have courses approved in advance and submit proof of payment of covered
fees and proof (such as a transcript) that the courses were completed
successfully. Courses that are recreational in nature, such as golf lessons,
will not be approved.
All expenses for retraining must be incurred within twenty-four (24) months of
your Last Day of Employment. The retraining reimbursement benefit is
administered by Right Management Consultants.
No Consideration Without Executing this Agreement:
You affirm that you understand and agree that you would not receive the
separation payment and/or benefits specified in this Agreement without executing
this Agreement and fulfilling the promises contained in it. Except as provided
in this Agreement or under the terms and conditions of an applicable benefit
plan or policy sponsored by P&G, you shall not be due any payments or benefits
from P&G in connection with the termination of your employment.
Continued Employment Through Your Last Day of Employment:
You agree to perform your work and responsibilities as an employee in a
satisfactory manner up to and including your Last Day of Employment, including
compliance with all provisions of this “Separation Agreement and Release.” If
P&G determines that you have engaged in serious misconduct during your
employment, you understand and agree that P&G may terminate your employment
immediately and will not provide, nor will it be obligated to provide, you with
the Separation payment, medical benefits, outplacement, retraining and other
benefits described above. If you have already received any such pay or benefits,
you agree to repay them to P&G upon demand.
Nonadmission of Wrongdoing:
You affirm that you understand and agree that neither this Agreement nor the
furnishing of the consideration for this Agreement, including the Separation
Payment, shall be deemed or construed at any time for any purpose as an
admission by P&G of wrongdoing or evidence of any liability or unlawful conduct
of any kind.
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Release of Claims - Including Age Discrimination and Employment Claims:
In consideration of the Separation Payment and other benefits provided above to
which you would not have been entitled under any existing P&G Policy, you
release P&G from any and all claims you have against P&G. The term “P&G”
includes «Company» and any of its present, former and future owners, parents,
affiliates and subsidiaries, and its and their directors, officers,
shareholders, employees, agents, servants, representatives, predecessors,
successors and assigns and their employee benefit plans and programs and their
administrators and fiduciaries.
This release applies to claims about which you now know or may later discover,
and includes but is not limited to: (1) claims arising under the Age
Discrimination in Employment Act, 29 U.S.C. § 621, et seq.; (2) claims arising
out of or relating in any way to your employment with P&G or the conclusion of
that employment; (3) claims arising under any federal, state and local
employment discrimination laws, regulations or ordinances or other orders that
relate to the employment relationship and/or employee benefits; and (4) any
other federal, state or local law, rule, regulation or ordinance, public policy,
contract, tort or common law.
This release does not apply to claims that may arise after the date you accept
this Agreement or that may not be released under applicable law.
You are not waiving any rights you may have to: (a) your own vested accrued
employee benefits under the P&G health, welfare, or retirement benefit plans as
of the Last Day of Employment; (b) benefits and/or the right to seek benefits
under applicable workers’ compensation and/or unemployment compensation
statutes; (c) pursue claims which by law cannot be waived by signing this
Agreement; (d) enforce this Agreement; and/or (e) challenge the validity of this
Agreement.
You agree that the decision that your last day of employment would be on the
Last Day of Employment was made prior to your accepting and executing this
Agreement, and you agree that you are releasing any claim in connection with the
separation of your employment.
If any claim is not subject to release, to the extent permitted by law, you
agree that you waive any right or ability to be a class or collective action
representative or to otherwise participate in any putative or certified class,
collective or multi-party action or proceeding based on such a claim in which
P&G is a party.
Governmental Agencies: Nothing in this Agreement prohibits or prevents you from
filing a charge with or participating, testifying, or assisting in any
investigation, hearing, or other proceeding before the U.S. Equal Employment
Opportunity Commission, the National Labor Relations Board or a similar agency
enforcing federal, state or local anti-discrimination laws. However, to the
maximum extent permitted by law, you agree that if such an administrative claim
is made to such an anti-discrimination agency, you shall not be entitled to
recover any individual monetary relief or other individual remedies. Nothing in
this Agreement, including but not limited to the “Release of Claims - Including
Age Discrimination and Employment Claims” and the “Confidential, Proprietary,
Trade Secret Information & Period of Non-Competition” sections of this
Agreement, prohibits you from: (1) reporting possible violations of federal law
or regulations, including any possible securities laws violations, to any
governmental agency or entity, including but not limited to the U.S. Department
of Justice, the U.S. Securities and Exchange Commission, the U.S. Congress, or
any agency Inspector General; (2) making any other disclosures that are
protected under the whistleblower provisions of federal law or regulations; or
(3) otherwise fully participating in any federal whistleblower programs,
including but not limited to any such programs managed by the U.S. Securities
and Exchange Commission and/or the Occupational Safety and Health
Administration. You understand you do not need the prior authorization from the
Company to make any such reports or disclosures, and you are not required to
notify the Company that you have made such reports or disclosures. Moreover,
nothing in this Agreement prohibits or prevents you from receiving individual
monetary awards or other individual relief by virtue of participating in such
federal whistleblower programs
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Confidential, Proprietary, Trade Secret Information & Period of Non-Competition:
Subject to the “Governmental Agencies” portion of the “Release of Claims -
Including Age Discrimination and Employment Claims” above, you agree that you
will not use or share any confidential, proprietary or trade secret information
about any aspect of P&G’s business with any non-P&G employee or business entity
at any time in the future. You further agree that you will not obtain or have in
your possession any confidential, proprietary or trade secret information on or
after your last day of employment. Confidential, proprietary or trade secret
information includes, but is not limited to, marketing and advertising plans,
pricing information, upstream plans, specific areas of research and development,
project work, product formulation, processing methods, assignments of individual
employees, testing and evaluation procedures, cost figures, construction plans,
and special techniques or methods of any kind.
Notwithstanding the requirements of confidentiality contained in this section,
the federal Defend Trade Secrets Act of 2016 immunizes you against criminal and
civil liability under federal or state trade secret laws for your disclosure of
trade secrets that is made i) in confidence to a federal, state, or local
government official, either directly or indirectly, or to an attorney solely for
the purpose of reporting or investigating a suspected violation of law; ii) in a
complaint or other document filed in a lawsuit or other proceeding, if such
filing is made under seal; or iii) to your attorney for use in a lawsuit
alleging retaliation for reporting a suspected violation of law, provided that
any document containing the trade secret is filed under seal and you do not
otherwise disclose the trade secret, except pursuant to court order.
Additional non-compete obligation for management employees only: You understand
and agree that, unless you have prior written consent from P&G, you will not
engage in any activity or provide any services for a period of three (3) years
following your Last Day of Employment in connection with the manufacture,
development, advertising, promotion or sale of any product which is the same as,
similar to, or competitive with any products of P&G or its subsidiaries
(including both existing products as well as products in development which are
known to you, as a consequence of your employment with P&G):
With respect to which your work has been directly concerned at any time during
the two (2) years preceding your Last Day of Employment; or
With respect to which during that period of time you, as a consequence of your
job performance and duties, acquired knowledge of trade secrets or other
confidential information of P&G.
For the purposes of this section, it shall be conclusively presumed that you
have knowledge or information to which you were directly exposed through the
actual receipt of memos or documents containing such information or through
actual attendance at meetings at which such information was discussed or
disclosed. The provisions of this section are not in lieu of, but are in
addition to, your continuing obligation to not use or disclose P&G’s trade
secrets and confidential information known to you until any particular trade
secret or confidential information becomes generally known (through no fault of
yours). Information regarding products in development, in test market or being
marketed or promoted in a discrete geographic region, which information P&G is
considering for a broader use, shall not be deemed generally known until such
broader use is actually commercially implemented. Also, “generally known” means
known throughout the domestic United States industry or, if you have job
responsibilities outside of the United States, the appropriate foreign country
or countries’ industry.
If any restriction in this section is found by any court of competent
jurisdiction or arbitrator to be unenforceable because it extends for too long a
period of time or over too great a range of activities or in too broad a
geographic area, it will be modified and interpreted to extend only over the
maximum period of time, range of activities or geographic area so that it may be
enforceable.
If you are a participant in the 2009 Stock and Incentive Compensation Plan, the
2001 Stock and Incentive Compensation Plan, or the 1992 Stock Plan, you are also
bound by the terms of Article F - Restrictions & Covenants of those plans, which
are incorporated herein by reference.
If you are a participant in the 2014 Stock & Incentive Compensation Plan, you
are also bound by the terms of Article 6 - Restrictions and Covenants of this
plan which are incorporated herein by reference.
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Acknowledgements and Affirmations:
Including Age Discrimination and Employment Claims” above, you affirm that you
have not filed, caused to be filed, or presently are a party to any claim
against P&G.
You affirm that you have been paid and/or have received all compensation, wages,
bonuses, commissions, and/or benefits which are due and payable as of the date
you sign this Agreement. To the extent that you are required to report hours
worked, you affirm that you have reported all hours worked as of the date you
sign this Agreement.
You affirm that you have been granted any leave to which you were entitled under
the Family and Medical Leave Act or related state or local leave or disability
accommodation laws.
You further affirm that you have no known workplace injuries or occupational
diseases that have not been reported.
Assignment of Intellectual Property:
You will promptly and fully disclose, transfer and assign to P&G all inventions
and any other intellectual property (collectively “Intellectual Property”) made
or conceived by you during your employment with P&G. You agree to fully
cooperate in executing any papers required for establishing or protecting the
Intellectual Property and for establishing P&G’s ownership, even if such
cooperation is necessary after your Last Day of Employment.
Return of P&G Property:
You agree that on or before your Last Day of Employment, you will return to P&G
in good condition all of its equipment, materials and information that were in
your possession, custody or control (including, but not limited to, computers,
files, documents, credit cards, keys and identification badges). You further
agree that you will provide your manager with all passwords to P&G electronic
communication and data systems before your Last Day of Employment. You further
agree that on or before your Last Day of Employment, you will return or if
directed to do so by your immediate manager, delete (i.e., destroy all copies
of) any and all P&G confidential, proprietary or trade secret information you
have maintained in your possession, custody, or control in paper, electronic
and/or digital formats, including but not limited to, any such confidential,
proprietary, or trade secret information (e.g., files, documents, etc.) that you
may have electronically or digitally processed or stored on P&G-issued or on
personally-owned or maintained digital devices and/or service accounts. Such
digital devices and/or service accounts may include, but are not limited to
desktop and laptop computers, notebooks, tablets, iPads, mobile phones,
smartphones, personal digital assistants (PDAs), USB and flash drives, external
hard drives, CDs, DVDs, and/or external file processing or storage provided by
cloud service providers such as box.net, dropbox, Google docs, etc.
Ethics Compliance:
provided P&G all information known to you regarding any violations of the
Procter & Gamble Worldwide Business Conduct Manual and/or any other violations
of P&G policy or the law.
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Agreement to Arbitrate Disputes:
Resolving any future differences we may have in the courts can take a long time
and be expensive. You and P&G therefore agree that the only remedy for all
disputes that are not released by this Agreement or that arise out of your
employment with or separation from P&G, or any aspect of this Agreement, will be
to submit any such disputes (with the exception noted at the end of this
section) to final and binding arbitration in accordance with the National Rules
for Resolution of Employment Disputes of the American Arbitration Association
then in effect.
You and P&G agree that the aggrieved party must send written notice of any claim
to the other party by certified mail, return receipt requested. Written notice
for P&G will be sent to: Secretary, One Procter & Gamble Plaza, Cincinnati, OH
45202, and to you at the most current address shown for you in P&G’s records.
The arbitrator will apply Ohio law. At your written request, P&G will reimburse
you for all fees and costs charged by the American Arbitration Association and
its arbitrator to the extent they exceed the applicable fees and costs that
would have been charged by a court of competent jurisdiction had your claim been
filed in court.
There is one exception to this section. P&G may seek injunctive relief in any
court of competent jurisdiction if it has reason to believe that you have
violated or are about to violate (1) the terms of the “Confidential,
Proprietary, Trade Secret Information & Period of Non-Competition” section
above, or (2) if you are a participant in the 2009 Stock and Incentive
Compensation Plan, the 2001 Stock and Incentive Compensation Plan, or the 1992
Stock Plan, the terms of Article F - Restrictions & Covenants of those plans or
(3) if you are a participant in the 2014 Stock and Incentive Compensation Plan,
the terms of Article 6 - Restrictions & Covenants of that plan.
Severability:
If any court of competent jurisdiction or arbitrator should later find that any
portion of this Agreement is invalid, that invalidity will not affect the
enforceability of any other portion of this Agreement.
Employment References:
You understand that P&G’s historical policy is to not provide employment
references to prospective employers. However, P&G is willing to waive that
policy in your case on the following basis: You authorize your manager or human
resources representative to provide an employment reference upon written or
verbal request. In return, you release any claim against P&G and will not bring
a lawsuit in court against P&G based upon that employment reference (or lack
thereof). You agree that you will refer all reference inquiries to your manager
or human resources representative only. You further understand that all disputes
regarding employment references or the lack thereof must be resolved through the
arbitration process described above.
No Reliance:
This Agreement sets forth the entire agreement between you and P&G and fully
supersedes any prior agreements or understanding between the parties except that
if you are a participant in the 2009 Stock and Incentive Compensation Plan, the
2001 Stock and Incentive Compensation Plan, or the 1992 Stock Plan, the terms of
Article F - Restrictions & Covenants of those plans remain in full force and
effect and are incorporated herein by reference and if you are a participant in
the 2014 Stock Plan, the terms of Article 6 - Restrictions & Covenants of the
plan remain in full force and are in effect and are incorporated herein by
reference. In deciding to accept this Agreement, you agree that you have not
relied upon any statements or promises by P&G, its managers, agents or
employees, other than those set forth in this Agreement. No other promises or
agreements concerning the matters described in this Agreement shall be binding
unless in a subsequent document signed by these parties.
Your Attorney:
You acknowledge that you have been and hereby are advised to consult with legal
counsel before accepting this Agreement and have either done so or have
voluntarily declined to do so.
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Timing for Acceptance or Revocation:
You have forty-five (45) calendar days in which to consider this Agreement in
which you waive important rights, including those under the Age Discrimination
in Employment Act of 1967. If you choose to sign this Agreement, please do so by
indicating your acceptance of this Agreement with your electronic signature in
P&G’s electronic system. We advise you to consult with an attorney of your
choosing prior to signing this Agreement. Further, you may within seven (7)
calendar days following the date you accept this Agreement, cancel and terminate
the Agreement by giving written notice of your intention to revoke the Agreement
to your immediate manager, and by returning to P&G any remuneration or benefits
that have been advanced to you in anticipation of your not revoking your
Agreement and to which you are not entitled. If notice of your revocation is
mailed, it must be postmarked within seven (7) calendar days after you sign this
Agreement.
You agree that any modifications, material or otherwise, made to this Agreement,
do not restart or affect in any manner the original up to forty-five (45)
calendar day consideration period.
The benefits described in this Agreement and pursuant to the summary plan
description for the Procter & Gamble Basic Separation Program for U.S. Employees
(see embedded document below), are the special benefits you will receive by
signing this Agreement. To the extent this Agreement describes benefits under
other benefit plans and policies sponsored by P&G, these special benefits are
also described in the summary plan descriptions for those plans. As such,
nothing in this Agreement amends or changes the terms of any P&G-sponsored
employee benefit plan or policy.
[Embedded SPD, reproduced below]
After your Last Day of Employment, you will no longer be an active P&G employee,
which may affect your coverage under those plans and policies. For example,
plans may require that you enroll in Medicare to be eligible for coverage. For
more information on how not being an active P&G employee may affect your
coverage, please refer to and review the summary plan descriptions for each
plan.
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Procter & Gamble
Basic Separation Program for
U.S. Employees
Summary Plan Description
April 1, 2019
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BASIC INFORMATION
Plan Name: The Procter & Gamble Basic Separation Program for U.S. Employees
(Basic U.S. Separation Program, Basic Separation Program, Program, or Plan) is a
component of the Procter & Gamble Insured-Unfunded Welfare Plan
(Insured-Unfunded Plan).
Plan Effective Date: July 1, 2014
SPD Effective Date: January 1, 2019
Plan Sponsor: The Procter & Gamble Company, P&G Plaza, Cincinnati, OH 45202
Employer/Sponsor Tax ID: 31-0411980
Plan Number: 556
Plan Year: For purposes of operating the Insured-Unfunded Plan, the plan year is
January 1 through December 31. For purposes of financial reporting (i.e., Form
5500 filing), the plan year is July 1 through June 30
Plan Type: The Basic Separation Program provides severance benefits to eligible
employees of the Company (and its subsidiaries). The Insured-Unfunded Plan also
provides other employee benefits, the terms of which are described in separate
summary plan descriptions.
Plan Administrator: The Procter & Gamble U.S. Business Services Company, c/o
U.S. Benefits Manager, P&G Plaza, TE-3, Cincinnati, OH 45202, [phone].
Claims Administrator: The Company’s Director of Global Employee Relations (or
appropriate delegate) handles initial claims for separation benefits under the
Basic Separation Program. The Policy Committee handles appeals.
Plan Administration Type:
The Plan Administrator, Employee Relations, and the Policy
Committee share responsibility for administering the Basic Separation Program.
Other benefits under the Plan (not described in this booklet) are provided
through a combination of contract administration, insurer administration, and
self-administration.
Plan Funding: The Company provides from its general assets 100% of the funding
for the benefits under the Basic Separation Program.
Agent for Legal Service of Process: CT Corporation System, 4400 Easton Commons
Way, Suite 125, Columbus, OH 43219. Legal service of process may also be served
on the Plan Administrator.
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INTRODUCTION
The Procter & Gamble Company (Company or P&G) sponsors The Procter & Gamble
Insured-Unfunded Welfare Plan (Plan), which includes the Procter & Gamble Basic
Separation Program for U.S. Employees (Program). Under the Program, the Company
provides certain eligible employees with financial support and other benefits
upon termination of employment with the Company.
This summary plan description (SPD) provides the specific terms and conditions
of the Program’s benefits. You should read this SPD carefully as it gives you a
detailed description of the Program, how it works, what benefits it provides,
how those benefits may be obtained, and how those benefits may be lost. If this
SPD does not answer your questions or if you need further information, contact
the Associate Director, NA Employee Relations Manager, The Procter & Gamble
Company, P&G Plaza, TN-3, Cincinnati, OH 45202, [email] or [phone].
You may examine the SPD during regular business hours at the Plan
Administrator’s office and obtain a copy of the SPD by written request to the
Plan Administrator. You may be charged a fee to cover copying costs.
ELIGIBILITY, PARTICIPATION & BENEFITS
Who is Eligible? An individual is eligible for benefits under the Program if the
individual is an employee of the Company who is based in the United States. For
purposes of the Program, the United States means only the 50 states and the
District of Columbia (but not territories of the United States, such as Puerto
Rico). An employee is based in the United States if the employee’s home country
(as designated by the Company) is the United States, including an employee who
is on an expatriate assignment outside the United States.
What triggers an employee’s right to Separation Benefits? An employee of the
Company who is otherwise eligible for separation benefits under the Program
becomes entitled to such benefits if the Company, acting through its Chief Human
Resources Officer or appropriate delegate, and the employee enter into a
Negotiated Separation Agreement and the employee signs it. Employees may sign a
Negotiated Separation Agreement via electronic signature through the Global
Separation System.
IMPORTANT NOTE: Only the Company can initiate the process of entering a
Negotiated Separation Agreement. If the Company wants to provide an employee
with an incentive to leave the Company earlier than the employee planned, the
Company may choose to initiate the process by offering the employee a Negotiated
Separation Agreement.
What is a Negotiated Separation Agreement? For purposes of the Program, a
Negotiated Separation Agreement is an agreement between the Company and an
employee that provides the terms of an employee’s termination of employment from
the Company and must include (1) a Release of Claims; (2) a Last Day of
Employment agreed to by the Company; and (3) all other necessary provisions in
accordance with the Program. A Negotiated Separation Agreement may include some
of the benefits listed in Appendix A, all of which are in addition to the normal
benefits an employee would already be entitled to upon separation from the
Company. For more information on how separating from the Company impacts your
benefits, refer to the applicable summary plan descriptions and policies for
such benefits.
IMPORTANT NOTE: Except for certain limited situations involving extenuating
circumstances, the Company will not enter a Negotiated Separation Agreement with
an individual who is no longer an employee of the Company.
What if an employee refuses to sign (or signs and later revokes) the Release of
Claims? If an employee refuses to sign (or signs and later revokes) the Release
of Claims, the employee will be disqualified from receiving any benefits under
the Program, to the extent permitted by law and the terms of the Program.
If an employee signs a Negotiated Separation Agreement, when does his or her
employment with the Company end? If an employee signs a Negotiated Separation
Agreement with the Company, his or her
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employment with the Company ends at the conclusion of the Last Day of Employment
specified in the Negotiated Separation Agreement.
If an employee signs a Negotiated Separation Agreement, when does participation
in the Program begin? If an employee signs a Negotiated Separation Agreement
with the Company, his or her participation in the Program begins on the day he
or she signs the agreement. However, certain Program benefits will not be
provided until after an employee’s Last Day of Employment.
If an employee signs a Negotiated Separation Agreement, what impact will it have
on his or her Company sponsored employee benefits? Except to the extent
otherwise described in this document and/or an applicable Negotiated Separation
Agreement, the employee benefits for an employee who separates from the Company
under the terms of a Negotiated Separation Agreement are impacted in the same
manner as other separations from the Company. For example, if an employee signs
a Negotiated Separation Agreement, in addition to the normal benefits he or she
would otherwise be entitled to after terminating employment, the employee will
also be entitled to the benefits specified in the Negotiated Separation
Agreement. For more information on how separating from the Company impacts your
benefits, refer to the applicable summary plan descriptions and policies.
IMPORTANT CONSIDERATIONS: Signing a Negotiated Separation Agreement may have a
significant impact on your benefits. For example, if you (or your spouse or
dependents) are eligible for Medicare, after your Last Day of Employment, P&G
medical coverage will be treated as secondary to Medicare, even if you are not
enrolled in Medicare. This means that P&G’s medical coverage will cover expenses
only after Medicare has covered its share of the expenses. If you (or your
spouse or dependents) are not enrolled in Medicare, P&G’s medical coverage will
determine what portion of the expense Medicare would have covered when
determining the portion that P&G’s medical coverage will pay. This is just one
example of how your benefits may be affected by signing a Negotiated Separation
Agreement. Therefore, you are encouraged to consult with your family, as well as
your legal and financial advisors, before you sign a Negotiated Separation
Agreement.
How can an employee who is otherwise eligible for benefits under the Program
lose his or her eligibility for such benefits? An employee who is otherwise
eligible for benefits under the Program will lose his or her eligibility for
such benefits if he or she:
•
Unilaterally and voluntarily resigns from the Company;1
•
Is terminated from the Company for cause;2 or
•
Fails to comply with the terms of the Negotiated Separation Agreement,
including, but not limited to, failing to (a) continue working through the Last
Day of Employment without prior written approval from the Company, (b) continue
to perform all the required duties of the employee’s position and complete all
required reporting and other documentation associated with such position, as
determined by the employee’s manager, through the Last Day of Employment, (c)
comply with the terms of the non-compete provisions, or (d) return all Company
property.
To the extent an employee has received any benefits under this Program and later
loses his or eligibility for benefits under this Program, the employee may be
required to repay the value of such benefits received.
NON-ASSIGNABILITY OF PLAN BENEFITS
No benefits under this Program may be assigned or transferred by you or any
other person entitled to benefits. If any person attempts to assign, sell, or
otherwise transfer any benefits under the Program, the Plan Administrator may
terminate that person’s interest in the benefit and dispose of that interest for
the benefit of such person or such person’s dependents as it sees fit.
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CLAIMS PROCEDURES
The Claims Administrator determines the right of any person to benefits under
the Program. If you do not receive a benefit to which you believe you are
entitled under the Program, you may file a written claim for benefits with the
Claims Administrator. Claims should be sent to: Claims Administrator, Basic
Separation Program, The Procter & Gamble Company, c/o Global Employee Relations,
P&G Plaza, TN-3, Cincinnati, OH 45202.
The Claims Administrator will process your claim and notify you in writing of
its decision within a reasonable time, normally within 90 days after you
submitted your written claim. When the Claims Administrator requires additional
time (up to an additional 90 days) to process your claim
__________________________
1 If you unilaterally and voluntarily resign from the Company, you will not be
eligible for benefits under the Program. For purposes of the Program, if you
unilaterally and voluntarily submit an Intent to Retire, the Company will
consider such submission to be a unilateral and voluntary resignation.
2 "Cause" means the participant’s (a) conviction or plea of guilty, nolo
contendere, or no contest, to a felony;
(b) willful misconduct; (c) violation of a material written Company policy; or
(d) willful and continued failure or refusal to substantially perform essential
job functions.
because of special circumstances, it may obtain an extension by notifying you
within the initial 90-day period that a decision on the claim will be delayed
and when a decision can be expected. If your claim is denied, you will receive a
written explanation of the specific findings and conclusions on which the denial
is based.
If you do not agree with the Claims Administrator’s decision, you or your
authorized representative may appeal the decision to the Policy Committee. Your
appeal must be submitted in writing within 60 days after you receive the initial
claim decision. Appeals should be sent to: Policy Committee, Basic Separation
Program, The Procter & Gamble Company, c/o Corporate Secretary’s Office, P&G
Plaza, C9-159, Cincinnati, OH 45202.
The Policy Committee will review the decision and issue a final written
decision, normally within 60 days after the receipt of your appeal, specifying
the reasons for its decision. If special circumstances require an extension, the
Policy Committee may obtain such an extension by notifying you within the
initial 60-day period that the decision on review of the denied claim will be
delayed (for up to an additional 60 days), and why and when a decision can be
expected.
The claim and appeal procedures are available to any employee or beneficiary who
wishes to submit a claim for benefits or request an appeal. To the extent
permitted by law, the Policy Committee’s decision on appeal is final, binding,
and conclusive as to any fact or interpretation of the Program.
A claim or action to recover benefits, clarify rights under the Program or Plan,
or enforce rights under the Program or Plan (collectively, Action) may not be
filed in any court or other forum3 until these claim procedures have been
exhausted with respect to such Action. No Action may be filed in any court or
other forum if more than two (2) years has passed since the earlier of (a) the
date the first benefit payment was actually made, (b) the date the first benefit
payment was allegedly due, (c) for a reimbursement claim, the date on which the
expense was incurred, or (d) the date the Plan, the Program, the Company, the
Claims Administrator, or the Policy Committee first denied the alleged
obligation to provide such benefits. A denial described in (d) above may be made
by way of a direct communication with you or a more general oral or written
communication related to benefits payable under the Program (such as this
summary plan description). If at the end of the two (2) year period described
above, the Claims Procedures described above are pending, the deadline for
filing an Action will be extended to the date that is 60 calendar days after the
final denial (including a deemed denial) by the Policy Committee.
A-1
FUTURE OF THE PROGRAM
Consistent with the terms of the Plan, the Company intends to continue the
benefits under this Program indefinitely. However, the Company reserves the
right to amend, modify, suspend, or terminate the Program to any extent and in
any manner that it may deem advisable at any time or times. Any such action
shall be taken by the Board of Directors, or its appropriate delegate, through a
formal written statement or through formal action at a Board of Directors
meeting.
______________________________
3 If a Negotiated Separation Agreement includes a provision that requires the
employee (or former
employee) to settle all disputes arising from the Negotiated Separation
Agreement through arbitration, then such employee (or former employee) is
limited to pursuing such Action in accordance with the terms of such provision
(including, but not limited to, whether such arbitration is final and binding).
DEFINITIONS
Last Day of Employment. The Last Day of Employment means the date specified in a
Negotiated Separation Agreement as the employee’s last day being employed by the
Company. The date must be a date to which the Company has agreed and which will
be the last day the employee is employed with the Company. If an employee dies
after executing a Negotiated Separation Agreement, but before the Last Day of
Employment, such employee’s Last Day of Employment shall be considered the
employee’s date of death. All Negotiated Separation Agreements must have a
specified Last Day of Employment.
Release of Claims ("Release"). A Release of Claims means a provision in a
Negotiated Separation Agreement in which the employee releases legal and other
claims against the Company. All Negotiated Separation Agreements must include a
Release, which will be in a form approved by the Company. By executing a
Negotiated Separation Agreement, an employee also executes and agrees to the
terms of the Release therein. Each Release becomes effective in accordance with
its terms.
Regular Retiree. A Regular Retiree means a former employee of the Company who
was, on his or her Last Day of Employment, (1) at least 55 years old with his or
her full years of age plus full Years of Service equal to at least 75, or (2) at
least 60 years old with at least 10 full Years of Service. Regular Retirees are
eligible to enroll in retiree medical and dental coverage under The Procter &
Gamble Retiree Welfare Benefits Plan (Retiree Plan), subject to the terms and
conditions of the Retiree Plan, including any amendments to the Retiree Plan.
Special Retiree. A Special Retiree means a former employee of the Company who
executed a Negotiated Separation Agreement and satisfied the Rule of 70 on his
or her Last Day of Employment. The Rule of 70 is satisfied if an employee’s full
years of age plus full Years of Service equal at least 70. Special Retirees are
Special Separation. Special Separation means a former employee of the Company
who executed a Negotiated Separation Agreement and was neither a Regular Retiree
nor a Special Retiree on his or her Last Day of Employment.
Years of Service. Years of Service means an employee’s adjusted years of service
with the Company, as determined by the Company.
A-1
YOUR RIGHTS UNDER ERISA
As a participant in the Plan, you are entitled to certain rights and protection
under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA
provides that all Plan participants shall be entitled to:
•
Examine without charge, at the Plan Administrator’s office and at other
specified locations, such as work sites, all documents governing the Plan.
•
Obtain a copy of the latest annual report (Form 5500 Series) filed by the Plan
with the U.S. Department of Labor, which is available at the Public Disclosure
Room of the Employee Benefits Security Administration.
•
Obtain, upon written request to the Plan Administrator, copies of documents
governing the operation of the Plan, including insurance contracts and
collective bargaining agreements, copies of the latest annual report (Form 5500
Series) and an updated Summary Plan Description. The Plan Administrator may make
a reasonable charge for the copies.
•
Receive a summary of the Plan’s annual financial report. The Plan Administrator
is required by law to furnish each participant with a copy of this summary
annual report.
Prudent Actions by Plan Fiduciaries
In addition to creating rights for Plan participants, ERISA imposes duties upon
the people who are responsible for the operation of the employee benefit plan.
The people who operate your Plan, called fiduciaries of the Plan, have a duty to
do so responsibly and in the interest of you and other Plan participants and
beneficiaries. No one, including your employer, your union or any other person,
may terminate your employment or otherwise discriminate against you in any way
to prevent you from obtaining a benefit or exercising your rights under ERISA.
Enforce Your Rights
If your claim for a benefit is denied or ignored, in whole or in part, you have
a right to know why this was done, to obtain copies of documents relating to the
decision without charge and to appeal any denial, all within certain time
schedules.
Under ERISA, there are steps you can take to enforce the above rights. For
instance, if you make a written request for a copy of Plan documents or the
latest annual report from the Plan and do not receive them within 30 days, you
may file suit in a federal court. In such a case, the court may require the Plan
Administrator to provide the materials and pay you up to $110 a day until you
receive the materials, unless the materials were not sent because of reasons
beyond the control of the Plan Administrator.
If you have a claim for benefits that is denied or ignored, in whole or in part,
you may file suit in a state or federal court. In addition, if you disagree with
the Plan’s decision or lack thereof concerning the qualified status of a medical
child support order, you may file suit in federal court. If it should happen
that the Plan fiduciaries misuse the Plan’s money, or if you are discriminated
against for asserting your rights, you may seek assistance from the U.S.
Department of Labor, or you may file suit in a federal court. The court will
decide who should pay court costs and legal fees. If you are successful, the
court may order the person you have sued to pay these costs and fees. If you
lose, the court may order you to pay these costs and fees, for example, if it
finds your claim is frivolous.
Assistance with Your Questions
If you have questions about your Plan, you should contact the Plan
Administrator. If you have questions about this statement or about your rights
under ERISA, or if you need assistance in obtaining documents from the Plan
Administrator, you should contact the nearest office of the Employee Benefits
Security Administration, U.S.
A-1
Department of Labor (listed in your local telephone directory), or the Division
of Technical Assistance and Inquiries, Employee Benefits Security
Administration, U.S. Department of Labor, 200 Constitution Avenue, NW,
Washington, DC 20210. You may also obtain certain publications about your rights
and responsibilities under ERISA by calling the publications hotline of the
Employee Benefits Security Administration.
A-1
APPENDIX A*:
SEPARATION BENEFITS
* If you are an employee who is or was working at either the Kansas City, Kansas
or Iowa City, Iowa (Beauty Care) plants during the execution of the North
America Supply Chain Redesign (NASCAR) program (i.e., during the period from
2018-2021) and you were determined to be eligible to receive separation package
under the NASCAR program as a result of related job reductions at the respective
plan, a special Appendix A applies to you. If you did not receive the special
Appendix A, please ask your HR manager or NASCAR program HR AD.
A-1
The benefits described in this Appendix A are the separation benefits available
under the Program. Whether and to what extent you are entitled to any of the
benefits below is solely within the Company’s discretion, subject to the
limitations described below.
SEPARATION PAYMENT
If the Company offers you Separation Payment as part of your Negotiated
Separation Agreement, the amount of the Separation Payment will be specified in
the terms of your Negotiated Separation Agreement, but shall not exceed the
percentage of your Annual Base Pay provided below, based on your full Years of
Service.
Years of Service % Annual Base Pay
0 years, 0 months - 2 years, 0 months 25.00%
2 years, 1 month - 8 years, 0 months 50.00%
8 years, 1 month - 14 years, 0 months 75.00%
14 years, 1 month - 19 years, 11 months 99.65%
20 years, 0 months or more 100.00%
Separation Payments are payable in one lump sum, less tax withholding, and are
issued as soon as administratively practical (typically, four to six weeks)
after your Last Day of Employment. Separation Payments are not considered
“compensation” for purposes of determining any benefits provided under any
pension, savings, or other benefit plan sponsored by the Company.
PAYMENT FOR
UNVESTED PST
EXTENSION OF MEDICAL, DENTAL, AND BASIC LIFE COVERAGE
If you are enrolled in medical, dental, or basic life insurance benefits on your
Last Day of Employment, such benefits will be extended through the end of the
month in which the Last Day of Employment occurs.
If the Company offers you a further extension of these benefits as part of your
Negotiated Separation Agreement, the extension period will begin on the first
day of the month following your Last Day of Employment and last for the number
of months specified in the terms of your Negotiated Separation Agreement, but
such period shall not exceed the number of months provided below, based on your
full Years of Service.
Years of Service # Months
0 years, 0 months - 2 years, 0 months 3
2 years, 1 month - 8 years, 0 months 6
8 years, 1 month - 14 years, 0 months 9
14 years, 1 month - 18 years, 0 months 11
18 years, 1 month or more 12
If the Company offers you a further extension of benefits, you are required to
continue paying for those benefits at the same rate you paid while you were
employed, but on an after-tax basis.
COBRA: When your medical and dental benefits terminate after your Last Day of
Employment (either at the end of that month or, if provided, at the end of your
extension of benefits period) you may be eligible for continuation coverage
under COBRA, which generally requires a greater premium payment for coverage. If
you are a Regular Retiree or Special Retiree, in addition to COBRA, you will be
Gamble Retiree Welfare Benefits Plan. For more information, see definitions of
Regular Retiree and Special Retiree.
Surviving Spouse/Domestic Partner & Dependents: If you die during an extension
of benefits period and your spouse/domestic partner and other dependents were
enrolled in P&G medical or dental coverage at the time of your death, they may
continue such coverage for 12 months after your death at the same rate on an
after-tax basis. This 12-month continuation period begins on the first of the
month following the month in which your death occurs. If you are Regular Retiree
or Special Retiree, after the 12-month extension of benefits period, your
spouse/domestic partner is eligible to enroll in the National Surviving Spouse
Program for medical and dental coverage under The Procter & Gamble Retiree
Welfare Benefits Plan.
A-1
OUTPLACEMENT SERVICES
If the Company offers you outplacement services as part of you Negotiated
Separation Agreement, you must contact the Company’s third-party outplacement
services provider, Right Management Consultants (“RMC”),
within 45 days of your Last Day of Employment to use those services. RMC
provides outplacement assistance through pre-decision counseling, career
transition programs, job development services, and reimbursement for tuition and
registration/lab fees for courses taken at accredited institutions (up to
$5,000). RMC will only reimburse tuition and registration/lab fees for each
course if (1) RMC has pre-approved the course, and (2) you complete the course
within the 2-year period immediately following your Last Day of Employment. RMC
will provide outplacement services for up to two years following your Last Day
of Employment.
A-1 |
ITEMID: 001-75144
LANGUAGEISOCODE: ENG
RESPONDENT: TUR
BRANCH: CHAMBER
DATE: 2006
DOCNAME: CASE OF AHMET METE v. TURKEY
IMPORTANCE: 4
CONCLUSION: Violation of Art. 5-3;Remainder inadmissible;Non-pecuniary damage - financial award;Costs and expenses partial award - domestic proceedings;Costs and expenses partial award - Convention proceedings
TEXT: 6. The applicant was born in 1950 and lives in Aydın.
7. The applicant was arrested in Nusaybin on 8 July 2001 by the Prevention of Terrorism Department of the Nusaybin Security Directorate, on suspicion of aiding and abetting the PKK.
8. On the same day the applicant signed a form whereby his rights as a detainee were explained to him. The form included his right to inform one of his relatives about his detention and his right to request the assistance of a lawyer.
9. According to the custody records (nezaret kayıt defteri), the police informed the husband of the applicant’s sister about his detention. Moreover, it was noted in these records that the applicant did not request the assistance of a lawyer.
10. During his interrogation by the police officers at the Nusaybin Security Directorate, the applicant confessed in detail to his involvement in the activities of the PKK. According to the interrogation minutes dated 9 July 2001, drafted by the police and signed by the applicant, he was informed of his right to have access to legal assistance of one or more lawyers at any stage and level of the investigation.
11. On 10 July 2001 the applicant was transferred to the Prevention of Terrorism Department of the İzmir Security Directorate, for further questioning.
12. On 11 July 2001, upon the request of the İzmir Security Directorate, the İzmir Public Prosecutor authorised the applicant’s detention in police custody until 13 July 2001.
13. On 13 July 2001, during his questioning by the İzmir Public Prosecutor at the State Security Court, the applicant described the work that he carried out for the PKK. He confessed that he was working as a courier for the members of the organisation who were in prison. On the same day the applicant was brought before the İzmir Magistrate’s Court. He denied his statement given in Nusaybin Security Directorate, as he alleged that he had signed it under duress. He confirmed his statement given before the public prosecutor. The magistrate’s court ordered his detention on remand.
14. On 14 August 2001 the İzmir Public Prosecutor at the State Security Court filed a bill of indictment charging the applicant with membership of a terrorist organization, the PKK, and with assisting and abetting the said organisation, contrary to Articles 169 of the Turkish Criminal Code and Article 5 of the Prevention of Terrorism Act of 12 April 1991. Before the İzmir State Security Court, the applicant was represented by his lawyer.
15. On 19 September 2002, the court convicted the applicant under Article 168 § 2 of the Criminal Code and sentenced him to twelve years and six months’ imprisonment. The court held that during his questioning by the police and the public prosecutor, the applicant had described his involvement with the activities of the PKK. Moreover, although in his statements given during the hearings he had claimed that he was not a member of the PKK, he had explained in detail his involvement with the activities of the organisation. Moreover, the other accused had also confirmed the fact that the applicant took new members of the organisation to the east of the country to join the guerrilla fight carried out in the mountains and acted as a courier for PKK members who were in prison.
16. On 4 March 2003 the Court of Cassation upheld the decision of 19 September 2002.
17. The fourth paragraph of Article 128 of the Code of Criminal Procedure (as amended by Law no. 3842/9 of 18 November 1992) provides that any person who has been arrested and/or in respect of whom a prosecutor has made an order for his or her continued detention may challenge that measure before the appropriate district judge and, if successful, be released.
18. Section 1 of Law no. 466 on the Payment of Compensation to Persons Unlawfully Arrested or Detained provides:
“Compensation shall be paid by the State in respect of all damage sustained by persons:
(1) who have been arrested, or detained under conditions or in circumstances incompatible with the Constitution or statute;
(2) who have not been immediately informed of the reasons for their arrest or detention;
(3) who have not been brought before a judicial officer after being arrested or detained within the time allowed by statute for that purpose;
(4) who have been deprived of their liberty without a court order after the statutory time allowed for being brought before a judicial officer has expired;
(5) whose close family have not been immediately informed of their arrest or detention;
(6) who, after being arrested or detained in accordance with the law, are not subsequently committed for trial ..., or are acquitted or discharged after standing trial; or
(7) who have been sentenced to a term of imprisonment shorter than the period spent in detention or ordered to pay a pecuniary penalty only...”
VIOLATED_ARTICLES: 5
VIOLATED_PARAGRAPHS: 5-3
|
Exhibit 10.1
Employment Agreement
This Agreement is entered into between RMD Technologies, Inc. (RMDT). a
California corporation, and Patrick A. Galliher ("Galliher" herein).
RMDT Corp. is an electronics recycling firm chartered and authorized to do
business in the State of California... Galliher has been serving as RMDT's
President and Chief Executive Officer. These parties wish to provide in this
Agreement for terms of continued employment of Galliher as President and CEO of
RMD Technologies, Inc. (RMDT).
The parties hereby agree as follows:
1. Duties of Galliher: RMDT employs Galliher as President and Chief Executive
Officer to perform the customary duties of those positions set forth in the
By-laws, and as RMDT, by action of its Board of Directors, may provide from time
to time. During the term of this Agreement, Galliher shall devote his full time,
ability and attention to the business of RMDT on a regular, "best efforts," and
professional basis and at all times such efforts shall be under the direction of
the Board of Directors.
2. Noncompetition: During the term of this Agreement, Galliher shall not,
directly or indirectly, engage in any business, commercial or professional
activity which the Board of Directors of RMDT deems to interfere with the
business of RMDT or with the performance of duties by Galliher hereunder.
Galliher agrees not to have or enter into any other written or oral agreement of
employment with any entity or person other than RMDT during the term of this
Agreement. Galliher further agrees not to provide any services for any other
entity on a formal or informal basis which may compete, directly or indirectly,
with any of the services RMDT currently provides or may provide during the
term...
3. Nondisclosure of Confidential Information: Galliher agrees that he will not,
at any time during or after the termination of his employment under this
Agreement, use for his own benefits, either directly or indirectly, or disclose
or communicate in any manner to any individual, corporation, or other entity,
other than RMDT, any confidential information acquired by him during his
employment, regarding any actual or intended business activity, product,
service, plan or strategy of RMDT.
4. Period of Employment: RMDT employs Galliher and Galliher accepts employment
for the calendar years 2008, 2009, and 2010. The effective date of this
agreement is January 2nd, 2008
5. Compensation:
a. Salary: As compensation for the services rendered by Galliher under this
Agreement during the employment year 2008 and during the employment years 2009
and 2010 RMDT shall pay Galliher a salary in equal semimonthly installments as
follows:
Employment year 2008 - Base Salary = $175,000
Employment year 2009 - Base Salary = $192,500
Employment year 2010 - Base Salary = $211,750
b. Stock: In addition to the foregoing RMDT shall issue to Galliher 1,500,000
shares of common stock upon the acceptance of this agreement and an additional
1,500,000 shares of common stock on each anniversary of the acceptance of this
agreement...
c. Director's Fees: Subject to the approval of the stockholders, Galliher shall
be a member of the Board of Directors of RMD Technologies, Inc. (RMDT)
throughout the term hereof and shall be entitled to any approved "directors'
fees".
d. Compensation During Illness: RMDT will continue to pay Galliher in accordance
with the provisions of Paragraph 5 ("Compensation") for a period of twelve
months from the date of the commencement of any illness which renders Galliher
unable to fulfill the duties specified.
a. Insurance: During the term of his employment, RMDT shall provide Galliher and
his immediate family medical and dental insurance.
b. Retirement Plan: It is anticipated that RMDT’s Board of Directors will
establish a retirement plan based upon reasonable criteria appropriate to other
such companies, and shall provide for the participation of Galliher in that
plan. If no plan is established, Galliher shall be entitled to the following in
lieu of a retirement plan:
1. Galliher shall receive a yearly payment of a sum equal to 10% of his highest
year’s salary multiplied by the total number of years Galliher as worked for the
company in any capacity.
c. Vacation: Galliher shall receive four weeks paid vacation in the employment
year 2008 and, beginning in 2009 six weeks per year for the balance of this
agreement.
d. Continuation of Benefits During Illness: RMDT will continue to provide
Galliher with the full pay and benefits described above during the period of any
illness which renders Galliher unable to fulfill the duties specified in this
Agreement
7. Expenses: Galliher shall be entitled to reimbursement for any and all
expenses incurred during the course of his duties.
8. Termination of Employment: The Board of Directors may terminate Galliher's
employment at any time, with or without cause.
a. Termination by RMDT: If Galliher's employment is terminated for any reason by
RMDT prior to the expiration of this Agreement, Galliher shall be paid a lump
sum severance payment in an amount equal to the amount Galliher would have
earned were he employed through the entire agreement, including stock, benefits
and any bonuses.
b. Termination Without Cause by Galliher: If Galliher's employment is terminated
for any reason by Galliher prior to the expiration of this Agreement, Galliher
shall be paid a lump sum severance payment in an amount equal to the amount
Galliher would have earned were he employed through the entire agreement,
including stock, benefits and any bonuses.
9. Rights Subsequent to Acquisition of Control: If a third party acquires
control of RMDT, whether by merger, purchase or otherwise during the term of
this Agreement, Galliher shall be entitled to a lump sum payment equal to double
the amount specified under paragraph 8a. Additionally, Galliher shall be
immediately issued 10,000,000 shares of common stock.
10. Place of Employment: The place of employment shall be Holtville, CA.
Galliher shall be entitled to moving expenses if the place of employment
changes.
11. Entire Agreement: This Agreement supersedes any and all other agreements
between the parties with respect to...
12. Actions By RMDT: Any notice, consent, authorization, waiver, or other action
which is permitted or required under this Agreement shall be the responsibility
of RMDT.
13. Law Governing Agreement: The Laws of the State of California shall govern
this agreement.
14. Waiver: If either party shall waive a breach of this agreement, the balance
of the agreement will remain in full force and effect.
______________________________________
RMDT
____________________________________
Galliher
|
EXHIBIT 99.1 UMeWorld New Trading Symbol "UMEWF" to be Effective From April 18, 2013 April 18, 2013 HONG KONG (Marketwired - Apr 18, 2013) – UMeWorld Limited (OTCQB: ALRXF) - today announced that the company's new trading symbol "UMEWF" will become effective at the opening of trading on the OTC QB on April 18, 2013. The new trading symbol is the result of the company's new name, which was previously announced on April 15, 2013. The change to UMeWorld and the new trading symbol will not affect existing AlphaRx stock certificates. Shareholders are not required to submit their current certificate for new UMeWorld stock certificates. About UMeWorld UMeWorld’s mission is to facilitate the interaction between people - “You” and “Me,” through its digital platform. Currently, UMeWorld operates UMeLook (www.umelook.com), an online video platform focused on bringing foreign video content to China. UMeLook is deployed through a sophisticated CDN (Content Delivery Network) with broad coverage throughout mainland China, Hong Kong & Taiwan. UMeLook plans to be a source of foreign video content for the Chinese viewer across any Internet-enabled device in China. UMeWorld intends to focus its future operations on digital media and the digital education market. Forward-looking statements Certain statements made herein, including statements relating to matters that are not historical facts and statements of our beliefs, intentions and expectations about developments, results and events which will or may occur in the future, constitute "forward-looking statements" within the meaning of the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words such as "anticipate", "could", "should", "expect", "seek", "may", "intend", "likely", "plan", "estimate", "will", "believe" and similar expressions suggesting future outcomes or statements regarding an outlook. All such forward-looking statements are based on certain assumptions and analyses made by issuer's management in light of their experience and perception of historical trends, current conditions and expected future developments, as well as other factors management believes are appropriate in the circumstances. These statements, however, are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements include those described under the heading "Risk Factors" included in the issuer's reports filed from time to time with the Securities and Exchange Commission. The reader is cautioned not to place undue reliance on forward-looking statements.
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC20549 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 29, 2013 MICRONET ENERTEC TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) Delaware 001-35850 27-0016420 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 70 Kinderkamack Road, Emerson, New Jersey (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (201) 225-0190 (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): 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)) Item2.02.Results of Operations and Financial Condition. On May 30, 2013, Micronet Enertec Technologies, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter ended March 31, 2013 and other financial information.A copy of the press release is attached as Exhibit 99.2 to this report and is incorporated herein by reference. The information in this Item 2.02, including the exhibit attached hereto, is being furnished and 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, and shall not be deemed incorporated by reference into any filing by the Company under the Securities Act of 1933, as amended, or the Exchange Act, unless specifically identified therein as being incorporated by reference therein. Item8.01.Other Events. On May 29, 2013, the Company issued a press release announcing that the underwriter of its previously announced public offering of 1,620,000 shares of common stock, $0.001 par value per share, and warrants to purchase up to 810,000 shares of common stock, has partially exercised its over-allotment option pursuant to which the underwriter will purchase 121,500 shares of the Company’s common stock at a public offering price of $5.00 per share.The underwriter previously exercised its option to purchase warrants to purchase 121,500 shares of common stock on April 29, 2013.A copy of the press release is attached hereto as Exhibit 99.1. Item 9.01.Financial Statements and Exhibits. (d) Exhibits. Exhibit No. Description Press Release dated May 29, 2013 Press Release dated May 30, 2013 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. MICRONET ENERTEC TECHNOLOGIES, INC. Dated: May 30, 2013 By: /s/ David Lucatz Name: David Lucatz Title: President and Chief Executive Officer Exhibit Index Exhibit No. Description Press Release dated May 29, 2013 Press Release dated May 30, 2013
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Name: Commission Regulation (EEC) No 3485/88 of 10 November 1988 fixing the import levies on cereals and on wheat or rye flour, groats and meal
Type: Regulation
Date Published: nan
No L 306/6 Official Journal of the European Communities 11 . 11 . 88 COMMISSION REGULATION (EEC) No 3485/88 of 10 November 1988 fixing the import levies on cereals and on wheat or rye flour, groats and meal 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 these exchange rates being those recorded on 9 November 1988 ; Whereas the aforesaid corrective factor affects the entire calculation basis for the levies, including the equivalence coefficients ; Whereas it follows from applying the detailed rules contained in Regulation (EEC) No 2401 /88 to today's offer prices and quotations known to the Commission that the levies at present in force should be altered to the amounts set out in the Annex hereto, THE COMMISSION OF TH]E 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 2727/75 of 29 October 1975 on the common organization of the market in cereals ('), as last amended by Regulation (EEC) 2221 /88 (2), and in particular Article 13 (5) thereof, Having regard to Council Regulation (EEC) No 1676/85 of 11 June 1985 on the value of the unit of account and the exchange rates to be applied for the purposes of the common agricultural policy (3), as last amended by Regu lation (EEC) No 1636/87 (4), and in particular Article 3 thereof, Having regard to the opinion of the Monetary Committee, Whereas the import levies on cereals, wheat and rye flour, and wheat groats and meal were fixed by Commission Regulation (EEC) No 2401 /88 (*) and subsequent amend ing Regulations ; Whereas, if the levy system is to operate normally, levies should be calculated on the following basis : in the case of currencies which are maintained in rela tion to each 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 Regulation (EEC) No 1676/85, HAS ADOPTED THIS REGULATION : ..Article 1 The import levies to be charged on products listed in Article 1 (a), (b) and (c) of Regulation (EEC) No 2727/75 shall be as set out in the Annex hereto. Article 2 This Regulation shall enter into force on 11 November 1988 . This Regulation shall be binding in its entirety and directly applicable in all Member States . Done at Brussels, 10 November 1988 . For the Commission Frans ANDRIESSEN Vice-President (') OJ No L 281 , 1 . 11 . 1975, p. 1 . (2) OJ No L 197, 26. 7 . 1988 , p. 16 . (3) OJ No L 164, 24. 6 . 1985, p. 1 . (4) OJ No L 153, 13 . 6 . 1987, p. 1 . 0 OJ No L 205, 30 . 7. 1988 , p. 96. 11 . 11 . 88 Official Journal of the European Communities No L 306/7 ANNEX to the Commission Regulation of 10 November 1988 fixing the import levies on cereals and on wheat or rye flour, groats and meal (ECU/tonne) CN code Levies Portugal Third country 0709 90 60 0712 90 19 1001 10 10 1001 10 90 1001 90 91 , 1001 90 99 1002 00 00 1003 00 10 1003 00 90 1004 00 10 1004 00 90 1005 10 90 1005 90 00 1007 00 90 1008 10 00 1008 20-00 1008 30 00 1008 90 10 1008 90 90 1101 00 00 110210 00 1103 11 10 1103 11 90 0,00 0,00 29,07 29,07 0,00 0,00 33,13 26,87 26,87 83,03 83,03 0,00 0,00 21,52 26,87 26,87 26,87 0 26,87 2,95 60,06 58,31 3,91 127,43 127,43 182,73 (') O 182,73(')0 125,73 125,73 115,62 0 119,67 119,67 ¢ 60,04 60,04 127,43 0 0 127,43 (2)0 139,31 0 39,43 99,53 0 0,000 0 0,00 189,70 176,54 297,25 204,15 (') Where durum wheat originating in Morocco is transported directly from that country to the Community, the levy is reduced by 0,60 ECU/tonne. s (2) In accordance with Regulation (EEC) No 486/85 the levies are not applied to imports into the French overseas departments of products originating in the African, Caribbean and Pacific States or in the 'overseas countries and territories'. (3) Where maize originating in the ACP or OCT is imported into the Community the levy is reduced by 1,81 ECU/tonne . (4) Where millet and sorghum originating in the ACP or OCT is imported into the Community the levy is reduced by 50 % . (*) Where durum wheat and canary seed produced in Turkey are transported directly from that country to the Community, the levy is reduced by 0,60 ECU/tonne . (<) The import levy charged on rye produced in Turkey and transported directly from that country to the Commu nity is laid down in Council Regulation (EEC) No 1180/77 and Commission Regulation (EEC) No 2622/71 . O The levy applicable to rye shall be charged on imports of the product falling within subheading 1008 90 10 (triti cale). |
EXHIBIT 99.1 PRESS RELEASE CHARMING SHOPPES, INC. TO PARTICIPATE IN THE THOMAS WEISEL PARTNERS CONSUMER CONFERENCE 2008 Bensalem, PA.,September 22, 2008 - Charming Shoppes, Inc.,(NASDAQ: CHRS) a leading multi-brand, multi-channel specialty apparel retailer specializing in women's plus-size apparel, is scheduled to participate in the
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Name: COMMISSION REGULATION (EEC) No 1247/93 of 19 May 1993 concerning the stopping of fishing for Atlantic redfish by vessels flying the flag of the United Kingdom
Type: Regulation
Date Published: nan
25. 5 . 93 Official Journal of the European Communities No L 127/7 COMMISSION REGULATION (EEC) No 1247/93 of 19 May 1993 concerning the stopping of fishing for Atlantic redfish by vessels flying the flag of the United Kingdom 1993 ; whereas it is therefore necessary to abide by that date, THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Economic Community, Having regard to Council Regulation (EEC) No 2241 /87 of 23 July 1987 establishing certain control measures for fishing activities ('), as amended by Regulation (EEC) No 3483/88 (2), and in particular Article 1 1 (3) thereof, Whereas Council Regulation (EEC) No 3921 /92 of 20 December 1992 allocating, for 1993, certain catch quotas between Member States for vessels fishing in the Norwegian exclusive economic zone and the fishing zone around Jan Mayen (3), provides for Atlantic redfish quotas for 1993 ; Whereas, in order to ensure compliance with the provi sions relating to the quantitative limitations on catches of stocks subject to quotas, it is necessary for the Commis sion to fix the date by which catches made by vessels flying the flag of a Member State are deemed to have exhausted the quota allocated ; Whereas, according to the information communicated to the Commission, catches of Atlantic redfish in the waters of ICES divisions I, II a, b (Norwegian waters north of 62 ° N) by vessels flying the flag of the United Kingdom or registered in the United Kingdom have reached the quota allocated for 1993 ; whereas the United Kingdom has prohibited fishing for the stock as from 13 April HAS ADOPTED THIS REGULATION : Article 1 Catches of Atlantic redfish in the waters of ICES divisions I , II a, b (Norwegian waters north of 62 ° N) by vessels flying the flag of the United Kingdom or registered in the United Kingdom are deemed to have exhausted the quota allocated to the United Kingdom for 1993. Fishing for Atlantic redfish in the waters of ICES divi sions I, II a, b (Norwegian waters north of 62 ° N) by vessels flying the flag of the United Kingdom or regis tered in the United Kingdom is prohibited, as well as the retention on board, the transhipment and the landing of such stock captured by the abovementioned vessels after the date of application of this Regulation . Article 2 This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Communities. It shall apply with effect from 13 April 1993 . This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 19 May 1993 . For the Commission Yannis PALEOKRASSAS Member of the Commission O OJ No L 207, 29. 7. 1987, p. 1 . (2) OJ No L 306, 11 . 11 . 1988, p. 2. (3) OJ No L 397, 31 . 12. 1992, p . 44. |
Exhibit 32.1 CERTIFICATIONS UNDER SECTION 906 In connection with the Quarterly Report of Trunity Holdings, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Nicole Fernandez-McGovern, Interim Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that: (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 result of operations of the Company. TRUNITY HOLDINGS, INC. Dated: November 25, 2014 By: /s/ Nicole Fernandez-McGovern Nicole Fernandez-McGovern Interim Chief Executive Officer (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 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certifications are accompanying the Company’s Form 10-Q solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document.
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended March 31, 2007 OR ¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-11735 99¢ Only Stores (Exact name of registrant as specified in its charter) California (State or other Jurisdiction of Incorporation or Organization) 95-2411605 (I.R.S. Employer Identification No.) 4000 Union Pacific Avenue, City of Commerce, California (Address of Principal Executive Offices) 90023 (zip code) Registrant's telephone number, including area code: (323) 980-8145 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange On Which Registered Common Stock, no par value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 the Securities Act.Yes¨Nox 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¨Nox 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 last 90 days.YesxNo¨ 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 registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one) Large accelerated filer¨ Accelerated filer x Non-accelerated filer ¨ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes¨Nox The aggregate market value of Common Stock held by non-affiliates of the Registrant on September 30, 2006 was $554,394,779 based on a $11.83 closing price for the Common Stock on such date. For purposes of this computation, all executive officers and directors have been deemed to be affiliates. Such determination should not be deemed to be an admission that such executive officers and directors are, in fact, affiliates of the Registrant. Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date. Common Stock, No Par Value, 69,981,377 Shares as of May 31, 2007 DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant’s Proxy Statement for its 2007 Annual Meeting of Shareholders are incorporated by reference into Part III of this Annual Report on Form 10-K. Table of Contents Part I Page Item 1. Business 3 Item 1A. Risk Factors 11 Item 1B. Unresolved Staff Comments 17 Item 2. Properties 17 Item 3. Legal Proceedings 19 Item 4. Submission of Matters to a Vote of Security Holders 19 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 20 Item 6. Selected Financial Data 23 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 25 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 35 Item 8. Financial Statements and Supplementary Data 36 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 66 Item 9A. Controls and Procedures 66 Item 9B. Other Information 69 Part III Item 10. Directors and Executive Officers of the Registrant 70 Item 11. Executive Compensation 70 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 70 Item 13. Certain Relationships and Related Transactions 70 Item 14. Principal Accounting Fees and Services 70 Part IV 70 Item 15. Exhibits, Financial Statement Schedules 70 Signatures 74 Exhibit Index 72 2 Table of Contents SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION This Report contains statements that constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act and Section 27A of the Securities Act. The words “expect,” “estimate,” “anticipate,” “predict,” “believe” and similar expressions and variations thereof are intended to identify forward-looking statements. Such statements appear in a number of places in this filing and include statements regarding the intent, belief or current expectations of 99¢ Only Stores (the “Company”), its directors or officers with respect to, among other things, (a) trends affecting the financial condition or results of operations of the Company and (b) the business and growth strategies of the Company. The potential investors and shareholders of the Company are cautioned not to put undue reliance on such forward-looking statements. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those projected in this Annual Report, for the reasons, among others, discussed in the Section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors.” The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risk factors described in this Annual Report and other documents the Company files from time to time with the Securities and Exchange Commission, including the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K. EXPLANATORY NOTE REGARDING CHANGE IN FISCAL YEAR On December 30, 2005 the Company changed its fiscal year-end from December 31 to March 31.Unless specifically indicated otherwise, any reference to “2006” or “fiscal 2006” relates to as of or for the year ended March 31, 2006 and any reference to “2004” or “fiscal 2004” relates to as of or for the year ended December 31, 2004.References to fiscal 2007 refer to the period from April 1, 2006 to March 31, 2007.The transition period, January 1 to March 31, 2005, is referred to as the “transition period”. PART I Item 1. Business 99¢
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Exhibit 10.35
June 1, 2015
Joseph Boitano
[Address Omitted]
Dear Joe,
We are pleased to confirm an offer of employment to you as EVP, Chief
Merchandising and Design Officer. As part of the Lands’ End Executive team, you
will report directly to Federica Marchionni, Chief Executive Officer. We all
believe the future of Lands' End will provide us with many opportunities for
growth and the company is well positioned for continued success.
Some key elements of the position are as follows:
•
Your start date will be June 8, 2015, contingent upon a satisfactory completion
of a criminal background check, employment authorization and verification and
written confirmation, in a form acceptable to Lands’ End, that you are not
subject to any restrictions arising out of your prior employment which would be
breached or violated by your accepting a position with Lands’ End.
•
The primary work location will be in our New York office. During the first month
of onboarding, you will need to spend the majority of your time in our
Dodgeville, Wisconsin headquarters. After the first month, on an ongoing basis,
we expect that you will spend approximately one to two weeks per month in the
Dodgeville, Wisconsin offices.
•
Annual base salary of $430,000 paid in bi-weekly payments. Increases will be
determined based on a number of factors, with your performance typically being
the most significant factor. The first eligibility for a merit review would be
with the fiscal 2016 cycle.
•
Participation in the Lands’ End, Inc. Annual Incentive Bonus Plan (“AIP”) with
an annual target incentive opportunity of 65% of your base salary which is
$279,500 annualized. Your target incentive under the 2015 AIP will be prorated
from your start date through January 29, 2016, the last day of Lands’ End’s 2015
fiscal year. Any incentive payable with respect to a fiscal year will be paid on
or about April 15th of the following fiscal year, provided that you are actively
employed at the payment date. The portion of the bonus target paid each year is
based on your performance and the Company’s fiscal results. Further details
regarding your 2015 AIP target award will be provided to you following your
start date.
•
You will be eligible to receive a Special Incentive Award with respect to Lands’
End’s 2015 fiscal year (payable on or about April 15th of the fiscal year
following the applicable fiscal year), provided that you are actively employed
on the payment date, subject to the following terms:
•
2015 fiscal year: $106,438, 100% of which is subject to reduction by any amount
payable to you under the 2015 AIP.
•
Eligibility to participate in the Lands' End Retirement Plan includes a 401(k)
contribution feature and currently includes a Company Match. Eligibility will
start on the first calendar quarter following hire date. Lands’ End will begin
matching contributions at 50% on the first 6% of eligible earnings, beginning
with the first calendar quarter after completing a year of service and subject
to the continued availability of the match under the plan.
•
In recognition of your previous related experience, you will receive (4) weeks
of vacation as of your start date.
•
Subject to approval by the Compensation Committee of the Lands’ End Board of
Directors, with this position, it is our intent to offer an annual long-term
incentive with a target value of 100% of your base salary which is $430,000
annualized. The long-term incentive is proposed to include two components: 75%
($322,500) of the target value being Performance Cash under our Long-Term
Incentive Program and 25% ($107,500) at grant date of the target value being
time-vested Restricted Stock Units. Further details regarding the Fiscal 2015
LTI target award will be provided following approval by the Compensation
Committee.
•
As a condition of employment, you will be required to sign an Executive
Severance Agreement (ESA). While the terms and conditions of the ESA will
govern, here is a summary of some of the items covered by the ESA: If your
employment with Lands’ End is terminated by LE (other than for Cause, death or
Disability) or by you for Good Reason (as such capitalized terms are defined in
the ESA), you will receive twelve (12) months of salary continuation, equal to
your base salary at the time of termination, reduced by any interim earnings you
may otherwise receive.
Under the ESA, you agree, among other things, not to disclose confidential
information and, for eighteen (18) months following termination of employment,
not to solicit our employees. You also agree not to aid, assist or render
services for any “Competitive Business” (as defined in the ESA) for twelve (12)
months following termination of employment. The non-disclosure,
non-solicitation and non-compete provisions apply regardless of whether you are
eligible for severance benefits under the ESA.
If you need additional information or clarification, please call me at
608-935-4377.
Sincerely,
/s/ Kelly Ritchie
Kelly Ritchie /s/ Joseph M. Boitano________________
SVP -Employee Services Joseph Boitano
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Name: Commission Regulation (EC) No 667/2003 of 11 April 2003 amending Regulation (EC) No 716/96 adopting exceptional support measures for the beef market in the United Kingdom
Type: Regulation
Subject Matter: trade policy; Europe; food technology; European Union law; agricultural policy; animal product
Date Published: nan
Avis juridique important|32003R0667Commission Regulation (EC) No 667/2003 of 11 April 2003 amending Regulation (EC) No 716/96 adopting exceptional support measures for the beef market in the United Kingdom Official Journal L 096 , 12/04/2003 P. 0013 - 0013Commission Regulation (EC) No 667/2003of 11 April 2003amending Regulation (EC) No 716/96 adopting exceptional support measures for the beef market in the United KingdomTHE COMMISSION OF THE EUROPEAN COMMUNITIES,Having regard to the Treaty establishing the European Community,Having regard to Council Regulation (EC) No 1254/1999 of 17 May 1999 on the common organisation of the market in beef and veal(1), as last amended by Commission Regulation (EC) No 2345/2001(2), and in particular Article 39 thereof,Whereas:(1) Article 2(1) and (3) of Commission Regulation (EC) No 716/96(3), as last amended by Regulation (EC) No 1176/2000(4), lays down, respectively, the price to be paid per kilogram of animals going into the scheme provided by that Regulation, and the rate per animal at which the Community shall co-finance the purchases of the animals.(2) In order to establish the current estimated value of the relevant animals, account should be taken of the evolution in market prices in the United Kingdom since 1997, date of the last amendment of prices and rates. However, in that period no price quotations were registered for cows in that Member State and it is therefore appropriate instead to take account of the price evolution for such animals in neighbouring markets.(3) Consequently, the purchase price for cows should be reduced by 20 %, and the purchase price for other animals over 30 months, by 8 %. The rate of Community co-financing should be reduced accordingly.(4) Regulation (EC) No 716/96 should be amended accordingly.(5) The measures provided for in this Regulation are in accordance with the opinion of the Management Committee for Beef and Veal,HAS ADOPTED THIS REGULATION:Article 1Article 2 of Regulation (EC) No 716/96 is amended as follows:1. Paragraph 1 is replaced by the following:"1. The price to be paid to producers or their agents by the United Kingdom competent authority pursuant to Article 1(1) shall be:- EUR 0,64 per kilogram live weight for cows,- EUR 0,83 per kilogram live weight for other animals."2. The first subparagraph of paragraph 3 is replaced by the following:"3. The Community shall cofinance the expenditure incurred by the United Kingdom for the purchases referred to under Article 1(1) at a rate of EUR 233 per head in the case of cows, and EUR 302 per head in the case of animals other than cows, for each purchased animal destroyed in accordance with the provisions of Article 1."Article 2This Regulation shall enter into force on the third day following that of its publication in the Official Journal of the European Union.It shall apply to animals purchased from 28 April 2003.This Regulation shall be binding in its entirety and directly applicable in all Member States.Done at Brussels, 11 April 2003.For the CommissionFranz FischlerMember of the Commission(1) OJ L 160, 26.6.1999, p. 21.(2) OJ L 315, 1.12.2001, p. 29.(3) OJ L 99, 20.4.1996, p. 14.(4) OJ L 131, 1.6.2000, p. 37. |
Exhibit 10.64.5
AMENDMENT TO EMPLOYMENT AGREEMENT
The Employment Agreement between Cinergy Corp., its subsidiaries and/or its
affiliates (“Cinergy”) and James L. Turner (the “Executive”) dated as of
September 24, 2002, as amended (the “Agreement”) is hereby amended effective as
of December 14, 2005.
Section 3b(ii) of the Agreement is hereby amended by adding the following new
subsection (5) at the end thereof:
“(5) Special Change in Control Payment Election With Respect to Amounts Earned
and Vested After 2004. Notwithstanding anything herein to the contrary, the
Executive may make an election during 2005, on a form provided by Cinergy, to
receive a single lump sum cash payment in an amount equal to the Actuarial
Equivalent (as defined above in Section 3b(ii)(3)(D)) of his supplemental
retirement benefit (or the remaining portion thereof if payment of such benefit
has already commenced) payable after the later of the occurrence of a Change in
Control or his termination of employment. If the Executive’s termination of
employment occurs prior to a Change in Control, payment under this Subsection
shall be made on the fifth business day after the occurrence of a Change in
Control. If the Executive’s termination of employment occurs after the Change in
Control, payment under this Subsection shall occur on the fifth business day
after such termination, or if necessary to comply with Code Section 409A, on the
first business day after the sixth month anniversary of the termination of
employment. Notwithstanding anything to the contrary, this Subsection shall only
apply with respect to the portion of the Executive’s benefit, if any, which is
treated as “deferred” after December 31, 2004 (within the meaning of
Section 409A of the Code (the “Post-2004 Deferrals”)), and shall be interpreted
accordingly. Notwithstanding any other provision to the contrary, the Post-2004
Deferrals shall be administered in a manner that complies with the provisions of
Section 409A of the Code, so as to prevent the inclusion in gross income of any
amount in a taxable year that is prior to the taxable year or years in which
such amount would otherwise actually be distributed or made available to the
Executive or his beneficiaries. An election made pursuant to this Subsection
shall become operative only upon the occurrence of a Change in Control and only
if the Executive’s termination of employment occurs either (1) prior to the
occurrence of a Change in Control or (2) during the 24-month period commencing
upon the occurrence of a Change in Control. Once operative, such special payment
election shall override any other payment election made by the Executive with
respect to his Post-2004 Deferrals. In the event an amount is paid to or on
behalf of the Executive pursuant to this Subsection, such payment shall
discharge any liability under this Agreement to or on behalf of the Executive
with respect to his Post-2004 Deferrals.”
1
IN WITNESS WHEREOF, the Executive and Cinergy have caused this Amendment to the
Agreement to be executed as of the date first specified above.
CINERGY SERVICES, INC. By:
\s\ James E. Rogers
James E. Rogers Chairman and Chief Executive Officer EXECUTIVE
\s\ James L. Turner
2 |
Exhibit 10.2 NON-EXCLUSIVE LICENSE AGREEMENT PREAMBLE This Non-Exclusive License Agreement (this “Agreement”) is made and entered into effective as of December 10, 2014 (the “Effective Date”) by and among World Surveillance Group Inc. (hereinafter referred to as “World”), Global Telesat Corp. (hereinafter referred to as “GTC”), a wholly-owned subsidiary of World, Great West Resources, Inc. (hereinafter referred to as “Parent”), and Orbital Satcom Corp., a wholly owned subsidiary of Parent (hereinafter referred to as “Licensee” and, together with GTC, World and Parent, the “Parties”). RECITALS Whereas, GTC owns certain appliques identified on Schedule A hereto (the “Licensed Appliques”); Whereas, Licensee desires to use the Licensed Appliques in its business operations; and Whereas, GTC desires to allow Licensee the right to use the Licensed Appliques, and Licensee desires the right to use the Licensed Appliques, subject to and in accordance with the terms set forth herein. TERMS AND CONDITIONS NOW, THEREFORE, in consideration of the premises, covenants and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: 1. Authority and Relationship of the Parties Licensee, on the one hand, and GTC, on the other hand, are and shall remain independent contractors throughout the term of this Agreement. Nothing in this Agreement shall be construed to constitute Licensee on the one hand, and GTC, on the other hand, as partners, joint venturers, agents or anything other than independent contractors. 2.GTC License 2.1Grant of Non-Exclusive License to Licensee Subject to the terms and conditions of this Agreement, GTC hereby grants to and Licensee hereby accepts a fully-paid and irrevocable non-exclusive license to use the Licensed Appliques identified in more detail on Schedule A hereto (“GTC License”) which shall include the full right to utilize the Licensed Appliques as heretofore or hereafter used by GTC.Licensee acknowledges that (i) this Agreement does not transfer any interest in the ownership or title of any portion of the Licensed Appliques and (ii) Licensee does not own any portion of the Licensed Appliques.GTC shall take no action that shall in any manner diminish or cause any third party to diminish the use of the Licensed Appliques by Licensee. 2.2Term of License The GTC License shall have a term (the “Term”) equal to ten (10) years following the Effective Date. 3.GTC Obligations GTC shall maintain the Licensed Appliques in a manner consistent with past practice and as required by any contract related to the Licensed Appliques for the Term at its or Globalstar’s sole cost and expense. 4. Consideration. 4.1Shares On the Effective Date, in consideration of the licenses and the other agreements of GTC hereunder, Parent shall issue to GTC or its designee $2.0 million (USD) of shares of Parent’s common stock (the “Shares”), which shares shall be valued on the basis of the closing price for the day immediately preceding the Effective Date for the Company, as reported on Bloomberg. 4.2 Most Favored Nation Pricing On the Effective Date, GTC and Parent and Licensee shall enter into a non-assignable VAR or distributor agreement whereby GTC shall for a period of 10 years from the Effective Date receive a discount of 25% off the standard pricing given to any of Licensee’s or Parent’s VARs or distributors on messaging air-time. 5.Right of First Refusal. 5.1Grant.GTC hereby unconditionally and irrevocably grants to Licensee, or its permitted transferees or assigns,(i) a right of first refusal to purchase some or all of the Licensed Appliques at the depreciated book value of such Licensed Appliques set forth on World’s balance sheets contained in World’s most recently filed Form 10-Q or Form 10-K with the Securities and Exchange Commission (the “Depreciated Book Value Price”), if GTC or World shall apply for or consent to the appointment of a receiver, trustee or liquidator of all or substantially all of its assets, file a voluntary petition in bankruptcy or admit in writing the inability to pay its debts as they become due, or make a general assignment for the benefit of creditors or take advantage of any insolvency law, and (ii) a right to receive notice if a third party has made an offer to purchase some or all of the Licensed Appliques (a “Proposed Applique Transfer”) and the right to make a competing offer to purchase some or all of the Licensed Appliques, such competing offer to contain a price no lower than the Depreciated Book Value Price. 5.2 Notice.Each time GTC receives an offer relating to a Proposed Applique Transfer it must deliver a written notice to Licensee indicating that it has received such an offer (the “Proposed Transfer Notice”) not later than fifteen (15) days prior to the consummation of such Proposed Applique Transfer.Such Proposed Transfer Notice shall indicate only that an offer has been made, but shall not be required to include any of the terms of the offer.To exercise its right under this Section 5, the Licensee must deliver a written notice to GTC conveying the terms of its competing offer to purchase some or all of the Licensed Appliques within five (5) days after delivery of the Proposed Transfer Notice. 6. Confidentiality The Parties acknowledge and agree that any information including customer names, vendors, pricing schedules, models, data, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, tracings, diagrams, samples, flow charts, computer programs, disks, diskettes, tapes, marketing plans, and/or other technical, financial, or business information related to the GTC License and use of the Licensed Appliques in the operations of GTC’s business constitute valuable trade secrets and confidential information of GTC and World (“Confidential Information”).Parent and Licensee agree that each shall take all reasonable steps to preserve and protect the confidentiality of such Confidential Information. Parent and Licensee agree to maintain as confidential the Confidential Information and further agree not to disclose the Confidential Information other than as specifically permitted by this Agreement or as required by any governmental law rule or regulation in the United States. At no time shall Parent and Licensee use, or allow others to use or have access to, the Confidential Information for any purpose other than the performance of Parent’s or Licensee’s obligations or exercise of Parent’s or Licensee’s rights under and in accordance with this Agreement or disclose the Confidential Information to any third party without the prior written consent of GTC and World, which may be withheld in their sole discretion, and then only after the party to whom such disclosure will be made has agreed in writing to comply with and be bound by the applicable terms of this Agreement. 7. Representations and Warranties 7.1 Authority Each of GTC and World, on the one hand, and Licensee and Parent, on the other hand, represents and warrants to the other of them that (a)this Agreement has been duly executed and delivered and, assuming the due and valid execution and delivery of this Agreement by the other Parties hereto, constitutes a valid and binding agreement enforceable against such Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors’ rights generally from time to time in effect, and to general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law, (b)no authorization or approval from any third party is required in connection with such party’s execution, delivery, or performance of this Agreement, other than the consent of Globalstar, Inc., and (c)the execution, delivery, and performance of this Agreement does not violate the laws of any jurisdiction applicable to such Party or the terms or conditions of any other agreement to which it is a party or by which it is otherwise bound. 7.2 Ownership of the Licensed Appliques GTC and World, jointly and severally, represent and warrant that GTC owns the Licensed Appliques free and clear of any liens and as of the Effective Date, it has received no notice of any third party claims against or challenging GTC’s ownership or control of the Licensed Appliques. 7.3 Sufficiency of Licensed Appliques. The Licensed Appliques are in good working condition and repair, consistent with their current use as conducted by GTC, normal wear and tear excepted.To GTC’s knowledge, there are no material defects in, or conditions with, the Licensed Appliques that will negatively impact Licensee’s ability to use the Licensed Appliques as they are currently used. 7.4 Finder’s Fee Each of GTC, on the one hand, and Licensee and Parent, on the other hand, represents and warrants to the other of them that no person is entitled to receive a finder’s fee in connection with this Agreement as a result of any action taken by GTC, on the one hand, and Licensee or Parent, on the other hand, respectively, pursuant to this Agreement, and agrees to indemnify and hold harmless the other of them and its or their respective employees, and affiliates, in the event of a breach of this representation and warranty by it.This representation and warranty shall survive the Effective Date. 7.5 Accredited Investor GTC (and each of its designees to be issued Parent restricted stock) (i) is an “accredited investor,” as that term is defined in Regulation D under the Securities Act of 1933, as amended; (ii) has such knowledge, skill and experience in business and financial matters, based on actual participation, that GTC is capable of evaluating the merits and risks of an investment in Parent and the suitability thereof as an investment for GTC; (iii) has received such documents and information as it has requested and has had an opportunity to ask questions of representatives of Parent concerning the terms and conditions of the investment proposed herein, and such questions were answered to the satisfaction of GTC; and (iv) is in a financial position to hold the Shares for an indefinite time and is able to bear the economic risk and withstand a complete loss of his investment in Parent. 8 Indemnification 8.1 Indemnification by GTC and World GTC and World shall defend, protect, indemnify and hold harmless Licensee and Parent and all of their respective stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing persons’ agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Licensee Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Licensee Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Licensee Indemnified Liabilities”), incurred by any Licensee Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by GTC or World in this Agreement, (b) any breach of any covenant, agreement or obligation of GTC or World contained in this Agreement or (c) any cause of action, suit or claim brought or made against such Licensee Indemnitee by a third party (including for these purposes a derivative action brought on behalf of GTC or World) and arising out of or resulting from the execution, delivery, performance or enforcement of this Agreement by Licensee or Parent (unless such action is based upon a misrepresentation or breach of Parent or Licensee’s representations, warranties or covenants under this Agreement or any of the documents contemplated hereby, or any violation by Parent or Licensee of any securities laws, or any conduct by Parent or Licensee which constitutes fraud, gross negligence, willful misconduct or malfeasance). To the extent that the foregoing undertaking by GTC or World may be unenforceable for any reason, GTC and World shall make the maximum contribution to the payment and satisfaction of each of the Licensee Indemnified Liabilities which is permissible under applicable law. 8.2 Indemnification by Parent and Licensee Parent and Licensee shall defend, protect, indemnify and hold harmless GTC and World and all of their respective stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing persons’ agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “GTC Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such GTC Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “GTC Indemnified Liabilities”), incurred by any GTC Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by Parent or Licensee in this Agreement, (b) any breach of any covenant, agreement or obligation of Parent or Licensee contained in this Agreement or (c) any cause of action, suit or claim brought or made against such GTC Indemnitee by a third party (including for these purposes a derivative action brought on behalf of Parent or Licensee or any subsidiary) and arising out of or resulting from the execution, delivery, performance or enforcement of this Agreement by GTC or World(unless such action is based upon a misrepresentation or breach of GTC or World’s representations, warranties or covenants under this Agreement or any of the documents contemplated hereby, or any violation by GTC or World of any securities laws, or any conduct by GTC or World which constitutes fraud, gross negligence, willful misconduct or malfeasance). To the extent that the foregoing undertaking by Parent and Licensee may be unenforceable for any reason, Parent and Licensee shall make the maximum contribution to the payment and satisfaction of each of the GTC Indemnified Liabilities which is permissible under applicable law. 9Termination 9.1Termination by Licensee or Parent Licensee or Parent may terminate this Agreement under the following circumstances: If GTC or World shall apply for or consent to the appointment of a receiver, trustee or liquidator of all or substantially all of its assets, file a voluntary petition in bankruptcy or admit in writing the inability to pay its debts as they become due, make a general assignment for the benefit of creditors or take advantage of any insolvency law, subject to a thirty (30) day cure period after written notice of termination by Licensee or Parent. If GTC or World materially defaults in its performance of any of its material obligations under this Agreement, subject to a thirty (30) day cure period. If GTC or World materially breaches any of its representations and warranties set forth in Section 7. 9.2Termination by GTC or World GTC or World may terminate this Agreement under the following circumstances: If Licensee or Parent shall apply for or consent to the appointment of a receiver, trustee or liquidator of all or substantially all of its assets, file a voluntary petition in bankruptcy or admit in writing the inability to pay its debts as they become due, make a general assignment for the benefit of creditors or take advantage of any insolvency law, subject to a thirty (30) day cure period after written notice of termination by GTC or World. If Licensee or Parent materially defaults in its performance of any of its material obligations under this Agreement, subject to a thirty (30) day cure period. If Licensee or Parent materially breaches any of its representations and warranties set forth in Section 7. 10. General Provisions 10.1 Entire Agreement; Amendment.This Agreement embodies the entire understanding of the Parties and supersedes all other past and present communications and agreements relating to the subject matter. No amendment or modification of this Agreement shall be valid unless made in writing and signed by authorized representatives of both Parties. 10.2Applicable Law, Venue and Jury Trial Waiver.This Agreement, the construction, interpretation, and enforcement hereof, and the rights of the parties hereto with respect to all matters arising hereunder or related hereto shall be determined under, governed by, and construed in accordance with the laws of the State of New York without regard to the choice of law principles thereof. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of New York located in The City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby, and hereby irrevocably waives any objection that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. 10.3 Survival.Each provision of this Agreement that would by its nature or terms survive, shall survive any termination or expiration of this Agreement, regardless of the cause. 10.4 Notices.Notices pursuant to this Agreement shall be sent to the Parties at the addresses on the signature page hereto and are effective when sent if sent by a commercial carrier’s overnight delivery service or when received if sent otherwise. 10.5 Construction.The recitals and preamble to this Agreement, if any, are hereby incorporated as an integral part of this Agreement as if restated herein in full. Headings are included for convenience and reference only and are not incorporated as an integral part of this Agreement. This Agreement may be executed in any number of counterparts each of which shall be deemed an original and as executed shall constitute one agreement, binding on all Parties, even though all Parties do not sign the same counterpart. 10.6 Severability.If any provision in this Agreement is held invalid, illegal, or unenforceable in any respect, such holding shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if it had never contained the invalid, illegal, or unenforceable provisions. 10.7 Remedies.The failure of any Party to insist upon or enforce strict performance by the other Parties of any provision of this Agreement, or to exercise any right or remedy under this Agreement will not be interpreted or construed as a waiver or relinquishment of that Party's right to assert or rely upon any such provision, right or remedy in that or any other instance; rather, the same will be and remain in full force and effect.All rights and remedies under this Agreement are cumulative of every other such right or remedy and may be exercised concurrently or separately from time-to-time. 10.8 Further Acts.Each Party shall, at the reasonable request of the others, execute and deliver to the others such instruments and/or documents and shall take such actions as may be required to more effectively carry out the terms of this Agreement. GTC and World shall use commercially reasonable efforts to obtain the consent of Globalstar, Inc. to the transactions contemplated herein as soon as possible following the Effective Date. [signature page follows immediately] The signatures of the undersigned indicate that they have read, understand and agree with the terms of this Agreement and have the authority to execute this Agreement on behalf of their represented Party and to bind their Party to all the terms of this Agreement. GLOBAL TELESAT CORP. By: /s/ Glenn D. Estrella Name: Glenn D. Estrella Title: Director Address for U.S. mail delivery: Mail Code: SWC Kennedy Space Center, FL 32899 Attn:President Address for personal or courier delivery: State Road 405, Building M6-306A, Room 1400 Kennedy Space Center, FL 32815 Attn: President WORLD SURVEILLANCE GROUP INC. By: /s/ Glenn D. Estrella Name: Glenn D. Estrella Title: President Address for U.S. mail delivery: Mail Code: SWC Kennedy Space Center, FL 32899 Attn:President Address for personal or courier delivery: State Road 405, Building M6-306A, Room 1400 Kennedy Space Center, FL 32815 Attn: President ORBITAL SATCOM CORP. By: /s/ David Rector Name: David Rector Title: Chief Executive Officer Address: 1alifornia Blvd., 8thFloor Walnut Creek, California 94596 GREAT WEST RESOURCES, INC. By: /s/ David Rector Name: David Rector Title: Chief Executive Officer Address: 1alifornia Blvd., 8thFloor Walnut Creek, California
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Name: 82/43/EEC: Commission Decision of 9 December 1981 relating to the setting up of an Advisory Committee on Equal Opportunities for Women and Men
Type: Decision
Subject Matter: rights and freedoms; EU institutions and European civil service; European Union law
Date Published: 1982-01-28
Avis juridique important|31982D004382/43/EEC: Commission Decision of 9 December 1981 relating to the setting up of an Advisory Committee on Equal Opportunities for Women and Men Official Journal L 020 , 28/01/1982 P. 0035 - 0037 Finnish special edition: Chapter 5 Volume 2 P. 0164 Spanish special edition: Chapter 05 Volume 3 P. 0003 Swedish special edition: Chapter 5 Volume 2 P. 0164 Portuguese special edition Chapter 05 Volume 3 P. 0003 *****COMMISSION DECISION of 9 December 1982 relating to the setting up of an Advisory Committee on Equal Opportunities for Women and Men (82/43/EEC) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Economic Community, Whereas the application in practice of the principle of equal treatment for women and men must be encouraged by improved cooperation and exchanges of views and experience between those bodies which have special responsibility in the Member States for promoting equality of opportunity, and the Commission; Whereas the full implementation in practice of Council Directives 75/117/EEC of 10 February 1975 on the approximation of the laws of the Member States relating to the application of the principle of equal pay for men and women (1), 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions (2) and 79/7/EEC of 19 December 1978 on the progressive implementation of the principle of equal treatment for men and women in matters of social security (3) will be speeded up considerably as a result of the assistance of national bodies with a network of specialized information at their disposal; Taking account of Directive 72/161/EEC of 17 April 1972 concerning the provision of socio-economic guidance for and the acquisition of occupational skills by persons engaged in agriculture (4); Whereas the preparation and implementation of Community measures concerning the employment of women, the improvement of the position of women who are self-employed and those engaged in agriculture, and the promotion of equal opportunities require close cooperation with the specialized bodies in Member States; Whereas, therefore, an institutional framework should be set up for the purpose of regular consultations with those bodies, HAS DECIDED AS FOLLOWS: Article 1 The Commission hereby establishes an Advisory Committee on Equal Opportunities for Women and Men, hereinafter called 'the Committee'. Article 2 1. The Committee shall advise the Commission on the formulation and implementation of its policy to promote women's employment and equal treatment and ensure the continuous exchange of information on experience gained and measures undertaken in the Community in the fields in question. 2. To achieve the aims referred to in paragraph 1 above, the Committee: - shall exchange information with the Commission on action taken at Community and national level and where appropriate on the follow-up to be given such action, - shall issue opinions or forward reports to the Commission, particularly in regard to the equal opportunities policy, either at the latter's request or on its own initiative, and to this end shall promote exchanges of information on experience in Member States in sectors within its competence. 3. Procedures for the circulation of the Committee's opinions and reports shall be determined in agreement with the Commission. Article 3 1. The Committee shall have 20 members. 2. It shall be composed of two representatives from each Member State appointed from among the members of national committees or bodies set up by official decision, specifically responsible for questions of women's employment and/or equal opportunities for women and men and representing the sectors concerned. Where there are several such committees or bodies dealing with this subject in a Member State, the Commission shall determine which body, by its objectives, structure, representativeness and degree of independence is best qualified to be represented on the Committee. Any country without such a committee shall be represented by members of bodies considered by the Commission to perform analogous duties. 3. The members of the Committee shall be appointed individually by the Commission, acting on a proposal from the bodies referred to in paragraph 2 above, from among the members of those bodies or their secretariats. 4. The representatives of the two sides of industry at Community level may attend meetings of the Committee as observers, according to the procedure to be determined by their organizations and the Commission. Article 4 An alternate shall be appointed for each member of the Committee under the same conditions as those laid down in Article 3. Without prejudice to the provisions of Article 7, the alternate shall not attend meetings of the Committee nor participate in its work unless the relevant member is prevented from doing so. Article 5 The term of office of members of the Committee shall be three years and shall be renewable. At the end of the three-year period, the members of the Committee shall continue in office until a replacement is provided or their term of office is renewed. A member's term of office shall come to an end before the expiry of the three-year period in the event of her/his resignation, the termination of her/his membership of the organization which she/he represents, or her/his death. A member's terms of office may also be terminated if the organization which nominated her/him requests her/his replacement. The member shall be replaced for the remainder of the term of office in accordance with the procedure laid down in Article 4. No remuneration shall be attachd to member's duties; travelling and subsistence expenses for meetings of the Committee and the working parties set up under Article 8 shall be met by the Commission in accordance with the administrative rules in force. Article 6 The Committee shall elect a chairperson from among its members for a period of one year. Election shall be by a majority of two-thirds of the members present; a minimum of 10 votes in favour shall, nevertheless, be required. The Committee shall elect two vice-chairpersons by the same majority and under the same conditions. In the absence of the chairperson, one of the vice-chairpersons shall take the Chair. The chairperson and vice-chairpersons shall belong to different Member States. The Commission shall organize the work of the Committee in close cooperation with the chairperson, and secretarial services shall be provided by the Bureau for questions concerning employment and equal treatment for women of the Commission. Article 7 The chairperson may invite any person who is specially qualified in a particular subject on the agenda to take part in its work as an expert. Experts shall only take part in the work on the particular subject for which their attendance is requested. Article 8 1. The Committee may set up working parties. 2. For the preparation of its opinions, the Committee may entrust a rapporteur or an outside expert with the task of drawing up reports in accordance with procedures to be determined. Article 9 Measures adopted under Article 7 and 8 having financial implications for the budget of the European Communities shall be submitted for the prior agreement of the Commission and shall be implemented in accordance with the administrative rules in force. Article 10 1. The Committee shall be convened by the Commission and shall meet on its premises. It shall meet at least three times a year. 2. Representatives of the Commission shall be entitled to take part in meetings of the Committee and its working parties. Article 11 Where the Committee's deliberations are followed by a vote, a two-thirds majority of the members present shall be required. The minimum shall, however, be 10 votes in favour. Where any minority views are expressed, they shall be recorded in the minutes which shall form an Annex to the opinion. Article 12 Without prejudice to the provisions of Article 214 of the Treaty, members of the Committee are required not to disclose information obtained in the course of their work on the Committee or its working parties when informed by the Commission that the opinion requested or question asked concerns a confidential matter. In such cases, only members of the Committee and representatives of the Commission departments shall attend meetings. Article 13 This Decision shall enter into force on 1 January 1982. Done at Brussels, 9 December 1981. For the Commission The President G. THORN (1) OJ No L 45, 19. 2. 1975, p. 19. (2) OJ No L 39, 14. 2. 1976, p. 40. (3) OJ No L 6, 10. 1. 1979, p. 24. (4) OJ No L 96, 23. 4. 1972, p. 15. |
EXHIBIT 10.7
Change in Control Severance Agreement with Raymond C. Kubacki, Jr.
dated November 17, 2003
November 17, 2003
CONFIDENTIAL
Mr. Raymond C. Kubacki, Jr.
c/o Psychemedics Corporation
1280 Massachusetts Avenue
Suite 200
Cambridge, MA 02138
Dear Ray:
This letter sets forth the agreements we have made regarding your
employment with Psychemedics Corporation (the “Company”).
1. If after the effective date hereof, your employment is terminated by the
Company without “Cause” (as defined in paragraph 13 below), or you voluntarily
terminate your employment for “Good Reason” (as defined in paragraph 13 below),
in either case at the time of, or within twelve (12) months following, a “Change
of Control of the Company” (as defined in paragraph 13 below), then you will
continue to be paid monthly an amount equal to your average monthly compensation
for the twelve full months preceding the date of such termination (“Termination
Pay”) for a period of twelve (12) months from the date of such termination,
provided that in the case of your voluntary termination of your employment for
the “Good Reason” defined in clause (iv) of paragraph 13(d) below, then such
Termination Pay shall be for a period of six (6) months from the date of
termination. For purposes of the foregoing sentence, average monthly
compensation shall be determined with reference to the aggregate base salary and
bonus compensation earned by you during such period, including any bonus
compensation accrued for such period or any portion of such period but not paid
as of the date of such termination). Your Termination Pay will be subject to
normal deductions for taxes, benefit plan contributions, other payroll
deductions and any amount due the Company as a result of cash advances. The
Company agrees to continue to make health insurance available to you, under such
health insurance plan as the Company has in effect, for twelve months so long as
you contribute such portion of the premiums for such insurance as is required of
employees under such plan. You agree, however, that if you obtain health
insurance coverage through another employer while you are eligible to receive
health insurance under this Agreement, the Company shall no longer be required
to make health insurance available to you under this Agreement. You agree to
give the Company at least fourteen (14) days prior written notice of the
termination of your employment in the
event of your voluntary termination without Good Reason. You shall not be
entitled to Termination Pay as a result of termination by reason of your death
or “Disability” (as defined in paragraph 13 below) following a Change of Control
of the Company.
2. Notwithstanding any other provision of this Agreement, the Termination Pay
contemplated to be paid to you under certain circumstances set forth in this
Agreement shall only be paid in consideration of the execution and delivery by
you of a release reasonably satisfactory to the Company waiving all claims you,
your heirs, or legal representatives have or may have against the Company or any
of its shareholders, officers, directors, employees or agents with respect to
your employment or the termination thereof, or any other claim. 3. You
acknowledge that, as the Company’s Chief Executive Officer, you are in
possession of specialized information concerning the total operations, conduct,
management, and strategy of the Company, as well as proprietary information
concerning the Company’s products and services and that the applicability of
your knowledge of these matters is applicable to all geographic areas in which
the Company does business. You further acknowledge that the Company has a
legitimate business interest in protecting its hair testing business from unfair
competition. 4. You shall not, without the prior and express written
approval of the Company, either during or subsequent to the term of your
employment, disclose or use or enable another to disclose or use any secret,
private or confidential information, trade secret or other proprietary knowledge
of the Company, or its subsidiaries, divisions, employees or agents. Upon
termination of your employment with the Company, you shall deliver to the
Company all equipment, records and copies of records, notes, data, memoranda,
prototypes, designs, customer lists and other information which is embodied in
physical media and documents belonging to the Company which are then in your
possession. You agree that all such information and documents shall be the
property of the Company and that the obligations set forth in this paragraph
shall survive termination of your employment. 5. You agree that, if you or
the Company shall terminate your employment in such a manner as to entitle you
to Termination Pay under paragraph 1, above, you shall not, for so long as you
are entitled to receive such Termination Pay: (a) directly or indirectly
own, manage, operate or control, or participate in the ownership, management,
operation or control of, or become associated in any capacity with any business
enterprise, firm, corporation or company related to the field of testing for the
detection of drug use, which is in competition with the business of the Company,
or directly or indirectly accept employment with or render services on behalf of
a competitor of the Company, or any other third party, in any capacity which may
reasonably be considered to be useful to the competitor or such
Other third party to become a competitor, without receiving the Company’s
prior written approval; or (b) induce or attempt to induce any employee,
officer, consultant, or agent of the Company to leave the employ thereof or in
any way interfere with the relationship between the Company and any employee,
officer, consultant, or agent thereof; hire directly or through another entity
any person who was an employee of the Company at any time during the six
(6) months prior to the date such person is to be so hired; or induce or attempt
to induce any customer, client, supplier, licensee, or other business relation
of the Company to cease doing business with the Company or in any way interfere
with the relationship between any such customer, client, supplier, licensee, or
business relation and the Company (including, without limitation, making any
negative statements or communications concerning the Company). 6. You agree
that your obligations under paragraphs 4, and 5 are special, unique, and
extraordinary and that any breach by you of such obligations shall be deemed
material, and shall be deemed to cause irreparable injury not properly
compensable by damages in an action at law, and the rights and remedies of the
Company under paragraphs 4, and 5 may, therefore, be enforced both at law and in
equity, by injunction or otherwise. For purposes of paragraphs 4, and 5, the
term “Company” shall include any and all subsidiaries or divisions of the
Company. 7. The Company’s obligations under paragraph 1 of this Agreement
shall expire five (5) years from the date hereof, unless the parties agree in
writing to the renewal of the provisions of such paragraph. All of the remaining
provisions of this Agreement shall remain in full force and effect during the
term of your employment and thereafter in accordance with their terms. 8. If
at any time a controversy between you and the Company arises as to the meaning
or operation of this Agreement, such controversy shall be submitted to
arbitration by either party in Boston, Massachusetts, before an arbitrator to be
named by the President of the Boston Branch of the American Arbitration
Association, provided however, that the Company shall also have the rights set
forth in paragraph 6 above. Such arbitration proceedings shall be conducted in
accordance with the rules and procedures then in effect of the American
Arbitration Association. The decision of the arbitrator shall be binding upon
the parties and judgment on any award made by the arbitrator may be entered in
any court having jurisdiction thereof. The costs of the arbitrator shall be
borne equally by you and the Company. Each party will bear his or its own legal
costs. 9. This Agreement shall be governed by and interpreted in accordance
with the laws of the Commonwealth of Massachusetts without reference to
principles of conflict of laws.
10. This Agreement contains the entire agreement of the parties in respect of
this transaction and supersedes any prior agreement or understanding relating to
your employment by the Company. No amendment or modification of any provision of
this Agreement will be valid unless in writing signed by both parties. Any
waiver must be in writing and signed by you or an authorized officer of the
Company, as the case may be. 11. This Agreement shall be binding upon and
inure to the benefit of: (a) the Company, and any successors or assigns of the
Company, whether by way of a merger or consolidation, or liquidation of the
Company, or by way of the Company selling all or substantially all of the assets
and business of the Company to a successor entity; and, subject to the Company’s
right to terminate your employment at any time, the Company agrees to require
any successor entity to expressly assume or unconditionally guarantee the
Company’s obligations under this Agreement (unless such obligations are assumed
by operation of law); and (b) you and your heirs, executors and administrators.
12. Any notice or other communication required hereunder shall be in
writing, shall be deemed to have been given and received when delivered in
person, or, if mailed, shall be deemed to have been given when deposited in the
United States mail, first class, registered or certified, return receipt
requested, with proper postage prepaid, and shall be deemed to have been
received on the third business day thereafter, and shall be addressed as
follows:
If to the Company, addressed to:
Psychemedics Corporation
1280 Massachusetts Avenue
Suite 200
Cambridge, MA 02138
Attn: General Counsel
If to you, addressed to:
Raymond C. Kubacki, Jr.
Psychemedics Corporation
1280 Massachusetts Avenue
Suite 200
Cambridge, MA 02138
or such other address as to which any party hereto may have notified the
other in writing.
13. Definitions. (a) “Cause” shall mean: (i) theft or embezzlement, or
attempted theft or embezzlement, by you of money or property of the Company,
your perpetration or attempted perpetration of fraud, or your participation in a
fraud or attempted fraud upon the Company; (ii) your unauthorized
appropriation of, or attempt to misappropriate, any tangible or intangible
assets or property of the Company, or your appropriation of, or attempt to
appropriate, a business opportunity of the Company, including but not limited to
attempting to secure or securing any profit for yourself or any of your family
members or personal associates in connection with any transaction entered into
on behalf of the Company; (iii) any act or acts of disloyalty, misconduct, or
moral turpitude by you, including but not limited to violation of the Company’s
sexual harassment or non-harassment policy, any of which the Board of Directors
of the Company determines in good faith has been or is likely to be materially
injurious to the interest, property, operations, business, or reputation of the
Company, or its directors, employees or shareholders; (iv) any act or omission
constituting gross negligence in connection with the performance of your duties
on behalf of the Company which is materially injurious to the interest,
property, operations, business, or reputation of the Company; (v) your
conviction of a crime other than minor traffic violations or other similar minor
offenses (including pleading guilty or entering a plea of no contest), or your
indictment for a felony or its equivalent, or your being charged with a violent
crime, a crime involving moral turpitude, or any other crime for which
imprisonment is a possible punishment; (vi) your willful refusal or material
failure (other than by reason of Disability) to carry out reasonable and lawful
instructions and directives from the Board of Directors and your failure to cure
or correct such refusal or failure within ten (10) days after receiving written
notice from the Board of Directors describing such refusal or failure; or
(vii) the material breach by you of your obligations under paragraphs 4, or 5
hereof or under any other confidentiality, non-compete, non-solicitation,
non-disparagement or similar agreement with the Company. (b)“Change in
Control of the Company” shall mean
(i) the number of shares of Common Stock directly or indirectly beneficially
owned, as defined in Rule 13d-3 under the Securities Exchange Act of 1934 (the
“Exchange Act”), by the Buyers and Permitted Assignees (as defined in the
Securities Purchase Agreement dated May 15, 1989, as amended from time to time,
by and among the Company, A. Clinton Allen, H. Wayne Huizenga, Donald F. Flynn,
Beverly L. Flynn, Patricia A. Flynn as Trustee, MW Partners and Psychemedics
Investments, Inc. as nominee), and the spouses or children of any of the
foregoing, and trusts for the benefit of any of the foregoing or for the benefit
of any partner or former partner in MW Partners (collectively the “Principal
1989 Shareholders”), in the aggregate, is less than the aggregate number of
shares of Common Stock directly or indirectly beneficially owned (as defined
above) at any time by any other person or group (as defined in Section 13(d) of
the Exchange Act); or (ii) the consummation of a reorganization, merger or
consolidation
or sale or disposition of all or substantially all of the assets of the
Company (a “Business Combination”), unless, in each case following such Business
were the beneficial owners of the Common Stock of the Company immediately before
the consummation of such Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation that as a result of the transaction owns the
Company or all or substantially all of the assets of the Company either directly
or indirectly through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination,
of the Common Stock of the Company; and (B) no person or group (as defined in
Section 13(d) of the Exchange Act) of the Company or the corporation resulting
from the Business Combination) beneficially owns, directly or indirectly, a
number of the then outstanding shares of the common stock of the corporation
resulting from the Business Combination or the combined voting power of the then
outstanding voting securities of the corporation greater than the number of such
shares owned by the Principal 1989 Shareholders; or (iii) Individuals who,
as of the date of this Agreement, constitute the Board of Directors of the
Company (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board of Directors of the Company, provided, however, that any
individual’s becoming a director after the date of this Agreement whose
election, or nomination for election by the stockholders of the Company, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board will be considered as though the individual were a member of the
Incumbent Board, but excluding, for this purpose, any individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board.
(c) “Disability” shall mean your inability because of physical or mental
incapacity to perform your usual duties at the Company for a period of one
hundred eighty (180) days in any consecutive twelve (12) month period. (d)
“Good Reason” shall mean: (i) reduction in your base salary below $275,000 or
such higher base salary as is in effect immediately prior to
such reduction; (ii) removal from your position as President of the Company,
or failure to re-elect or reappoint you to such position or, if the Company
shall no longer exist as a result of the Change of Control, failure to elect or
appoint you to the position of President of the division or separate entity
succeeding to the business of the Company; (iii) a material decrease in your
duties or responsibilities or the assignment to you of duties and
responsibilities, which are materially inconsistent with such position; or
(iv) the Company’s requiring you to relocate your work location outside the
Greater Boston, Massachusetts area.
If this letter correctly sets forth our understanding and agreement, please
indicate your acceptance by signing both copies of this letter and returning one
copy.
Very truly yours,
PSYCHEMEDICS CORPORATION
By: /s/ A. Clinton Allen
A. Clinton Allen, Chairman of the Board
Agreed to: November 17, 2003
/s/ Raymond C. Kubacki, Jr.
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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): October 29, 2007 Las Vegas Gaming, Inc. (Exact name of registrant as specified in its charter) Nevada 000-30375 88-0392994 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 4000 W. Ali Baba Lane, Suite D, Las Vegas, Nevada 89118 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: 702-871-7111 (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) 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)) SECTION 7 – REGULATION FD DISCLOSURE Item 7.01 Regulation FD Disclosure. On September 12, 2007, IGT filed a lawsuit against us in the United States District Court for the District of Nevada captioned IGT v. Las Vegas Gaming, Inc., Case 3:07-cv-00415-BES-VPC alleging copyright infringement, trademark infringement, trade dress infringement and false designation of origin relating to the operation of our PlayerVision system, formerly PortalVision, on IGT’s Game King® gaming machines.IGT is seeking injunctive and monetary relief in the case, including treble damages and profits, claiming that IGT would be irreparably harmed by LVGI if LVGI's PlayerVision were deployed in the marketplace.We believe we have meritorious defenses to these allegations and intend to vigorously defend these claims. Page 2 of 3 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. LAS VEGAS GAMING, INC. Date:October 29, 2007 By: /s/ Bruce A. Shepard Bruce A. Shepard Chief Financial Officer Page 3 of 3
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Exhibit 10.16 THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED. SERIES G TO PURCHASE SHARES OF COMMON STOCK OF XELR8 HOLDINGS, INC. Expires February 18, 2013 No.: W-G-08-005Number of Shares: 20,000 Date of Issuance: February 19, 2008 FOR VALUE RECEIVED, the undersigned, XELR8 Holdings, Inc., a Nevada corporation (together with its successors and assigns, the “Issuer”), hereby certifies that ANASTASIOS BELESIS or its registered assigns is entitled to subscribe for and purchase, during the Term (as hereinafter defined), up to twenty thousand (20,000) shares (subject to adjustment as hereinafter provided) of the duly authorized, validly issued, fully paid and non-assessable Common Stock of the Issuer, at an exercise price per share equal to the Warrant Price then in effect, subject, however, to the provisions and upon the terms and conditions hereinafter set forth.Capitalized terms used in this Warrant and not otherwise defined herein shall have the respective meanings specified in Section 9 hereof. 1.Term.The term of this Warrant shall commence on February 19, 2008 and shall expire at 6:00 p.m., eastern time, on February 18, 2013 (such period being the “Term”). 2. Method of Exercise; Payment; Issuance of New Warrant; Transfer and Exchange. (a)Time of Exercise.The purchase rights represented by this Warrant may be exercised in whole or in part during the Term. (b)Method of Exercise.The Holder hereof may exercise this Warrant, in whole or in part, by the surrender of this Warrant (with the exercise form attached hereto duly executed) at the principal office of the Issuer, and by the payment to the Issuer of an amount of consideration therefor equal to the Warrant Price in effect on the date of such exercise multiplied by the number of shares of Warrant Stock with respect to which this Warrant is then being exercised, payable at such Holder’s election (i) by certified or official bank check or by wire transfer to an account designated by the Issuer, (ii) by “cashless exercise” in accordance with the provisions of subsection (c) of this Section 2, but only when a registration statement under the Securities Act providing for the resale of the Warrant Stock is not then in effect, or (iii) by a combination of the foregoing methods of payment selected by the Holder of this Warrant. -1- (c)Cashless Exercise.Notwithstanding any provisions herein to the contrary and commencing one (1) year following the Original Issue Date if (i) the Per Share Market Value of one share of Common Stock is greater than the Warrant Price (at the date of calculation as set forth below) and (ii) a registration statement under the Securities Act providing for the resale of the Warrant Stock is not then in effect by the date such registration statement is required to be effective pursuant to the Registration Rights Agreement (as defined in the Purchase Agreement) or not effective at any time during the Effectiveness Period (as defined in the Registration Rights Agreement) in accordance with the terms of the Registration Rights Agreement, unless the registration statement is not effective as a result of the Issuer exercising its rights under Section 3(n) of the Registration Rights Agreement, in lieu of exercising this Warrant by payment of cash, the Holder may exercise this Warrant by a cashless exercise and shall receive the number of shares of Common Stock equal to an amount (as determined below) by surrender of this Warrant at the principal office of the Issuer together with the properly endorsed Notice of Exercise in which event the Issuer shall issue to the Holder a number of shares of Common Stock computed using the following formula: X Y - (A)(Y) B Where X the number of shares of Common Stock to be issued to the Holder. Y the number of shares of Common Stock purchasable upon exercise of all of the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised. A B the Warrant Price. the Per Share Market Value of one share of Common Stock. (d)Issuance of Stock Certificates.In the event of any exercise of this Warrant in accordance with and subject to the terms and conditions hereof, certificates for the shares of Warrant Stock so purchased shall be dated the date of such exercise and delivered to the Holder hereof within a reasonable time, not exceeding three (3) Trading Days after such exercise (the “Delivery Date”) or, at the request of the Holder (provided that a registration statement under the Securities Act providing for the resale of the Warrant Stock is then in effect), issued and delivered to the Depository Trust Company (“DTC”) account on the Holder’s behalf via the Deposit Withdrawal Agent Commission System (“DWAC”) within a reasonable time, not exceeding three (3) Trading Days after such exercise, and the Holder hereof shall be deemed for all purposes to be the holder of the shares of Warrant Stock so purchased as of the date of such exercise.Notwithstanding the foregoing to the contrary, the Issuer or its transfer agent shall only be obligated to issue and deliver the shares to the DTC on a holder’s behalf via DWAC if such exercise is in connection with a sale and the Issuer and its transfer agent are participating in DTC through the DWAC system.The Holder shall deliver this original Warrant, or an indemnification undertaking with respect to such Warrant in the case of its loss, theft or destruction, at such time that this Warrant is fully exercised.With respect to partial exercises of this Warrant, the Issuer shall keep written records of the number of shares of Warrant Stock exercised as of each date of exercise. -2- (e)Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise.In addition to any other rights available to the Holder, if the Issuer fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Stock pursuant to an exercise on or before the Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Stock which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Issuer shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of shares of Warrant Stock that the Issuer was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of shares of Warrant Stock for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Issuer timely complied with its exercise and delivery obligations hereunder.For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Issuer shall be required to pay the Holder $1,000. The Holder shall provide the Issuer written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Issuer.Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Issuer’s failure to timely deliver certificates representing shares of Common Stock upon exercise of this Warrant as required pursuant to the terms hereof. (f)Transferability of Warrant.Subject to Section 2(h) hereof, this Warrant may be transferred by a Holder, in whole or in part, without the consent of the Issuer.If transferred pursuant to this paragraph, this Warrant may be transferred on the books of the Issuer by the Holder hereof in person or by duly authorized attorney, upon surrender of this Warrant at the principal office of the Issuer, properly endorsed (by the Holder executing an assignment in the form attached hereto) and upon payment of any necessary transfer tax or other governmental charge imposed upon such transfer.This Warrant is exchangeable at the principal office of the Issuer for Warrants to purchase the same aggregate number of shares of Warrant Stock, each new Warrant to represent the right to purchase such number of shares of Warrant Stock as the Holder hereof shall designate at the time of such exchange.All Warrants issued on transfers or exchanges shall be dated the Original Issue Date and shall be identical with this Warrant except as to the number of shares of Warrant Stock issuable pursuant thereto. (g)Continuing Rights of Holder.The Issuer will, at the time of or at any time after each exercise of this Warrant, upon the request of the Holder hereof, acknowledge in writing the extent, if any, of its continuing obligation to afford to such Holder all rights to which such Holder shall continue to be entitled after such exercise in accordance with the terms of this Warrant, provided that if any such Holder shall fail to make any such request, the failure shall not affect the continuing obligation of the Issuer to afford such rights to such Holder. (h)Compliance with Securities Laws. (i)The Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and the shares of Warrant Stock to be issued upon exercise hereof are being acquired solely for the Holder’s own account and not as a nominee for any other party, and for investment, and that the Holder will not offer, sell or otherwise dispose of this Warrant or any shares of Warrant Stock to be issued upon exercise hereof except pursuant to an effective registration statement, or an exemption from registration, under the Securities Act and any applicable state securities laws. -3- (ii)Except as provided in paragraph (iii) below, this Warrant and all certificates representing shares of Warrant Stock issued upon exercise hereof shall be stamped or imprinted with a legend in substantially the following form: THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED. (iii)The Issuer agrees to reissue this Warrant or certificates representing any of the Warrant Stock, without the legend set forth above if at such time, prior to making any transfer of any such securities, the Holder shall give written notice to the Issuer describing the manner and terms of such transfer.Such proposed transfer will not be effected until: (a) either (i) the Issuer has received an opinion of counsel reasonably satisfactory to the Issuer, to the effect that the registration of such securities under the Securities Act is not required in connection with such proposed transfer, (ii) a registration statement under the Securities Act covering such proposed disposition has been filed by the Issuer with the Securities and Exchange Commission and has become effective under the Securities Act and the Holder has represented that the Warrant Stock has been or will be sold, (iii) the Issuer has received other evidence reasonably satisfactory to the Issuer that such registration and qualification under the Securities Act and state securities laws are not required, or (iv) the Holder provides the Issuer with reasonable assurances that such security can be sold pursuant to Rule 144 under the Securities Act; and (b) either (i) the Issuer has received an opinion of counsel reasonably satisfactory to the Issuer, to the effect that registration or qualification under the securities or “blue sky” laws of any state is not required in connection with such proposed disposition, or (ii) compliance with applicable state securities or “blue sky” laws has been effected or a valid exemption exists with respect thereto.The Issuer will respond to any such notice from a holder within three (3) Trading Days.In the case of any proposed transfer under this Section 2(h), the Issuer will use reasonable efforts to comply with any such applicable state securities or “blue sky” laws, but shall in no event be required, (x) to qualify to do business in any state where it is not then qualified, (y) to take any action that would subject it to tax or to the general service of process in any state where it is not then subject, or (z) to comply with state securities or “blue sky” laws of any state for which registration by coordination is unavailable to the Issuer.The restrictions on transfer contained in this Section 2(h) shall be in addition to, and not by way of limitation of, any other restrictions on transfer contained in any other section of this Warrant.Whenever a certificate representing the Warrant Stock is required to be issued to a the Holder without a legend, in lieu of delivering physical certificates representing the Warrant Stock, the Issuer shall use its reasonable best efforts to cause its transfer agent to electronically transmit the Warrant Stock to the Holder by crediting the account of the Holder’s Prime Broker with DTC through its DWAC system (to the extent not inconsistent with any provisions of this Warrant or the Purchase Agreement).Notwithstanding the foregoing to the contrary, the Issuer or its transfer agent shall only be obligated to issue and deliver the shares to the DTC on a holder’s behalf via DWAC if such exercise is in connection with a sale and the Issuer and its transfer agent are participating in DTC through the DWAC system. (i)Accredited Investor Status.In no event may the Holder exercise this Warrant in whole or in part unless the Holder is an “accredited investor” as defined in Regulation D under the Securities Act. -4- 3.Stock Fully Paid; Reservation and Listing of Shares; Covenants. (a)Stock Fully Paid.The Issuer represents, warrants, covenants and agrees that all shares of Warrant Stock which may be issued upon the exercise of this Warrant or otherwise hereunder will, when issued in accordance with the terms of this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by or through the Issuer.The Issuer further covenants and agrees that during the period within which this Warrant may be exercised, the Issuer will at all times have authorized and reserved for the purpose of issuance upon exercise of this Warrant a number of shares of Common Stock equal to at least one hundred twenty percent (120%) of the aggregate number of shares of Common Stock to provide for the exercise of this Warrant. (b)Reservation.If any shares of Common Stock required to be reserved for issuance upon exercise of this Warrant or as otherwise provided hereunder require registration or qualification with any governmental authority under any federal or state law before such shares may be so issued, the Issuer will in good faith use its best efforts as expeditiously as possible at its expense to cause such shares to be duly registered or qualified.If the Issuer shall list any shares of Common Stock on any securities exchange or market it will, at its expense, list thereon, maintain and increase when necessary such listing, of, all shares of Warrant Stock from time to time issued upon exercise of this Warrant or as otherwise provided hereunder (provided that such Warrant Stock has been registered pursuant to a registration statement under the Securities Act then in effect), and, to the extent permissible under the applicable securities exchange rules, all unissued shares of Warrant Stock which are at any time issuable hereunder, so long as any shares of Common Stock shall be so listed.The Issuer will also so list on each securities exchange or market, and will maintain such listing of, any other securities which the Holder of this Warrant shall be entitled to receive upon the exercise of this Warrant if at the time any securities of the same class shall be listed on such securities exchange or market by the Issuer. (c)Covenants.The Issuer shall not by any action including, without limitation, amending the Articles of Incorporation or the by-laws of the Issuer, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder hereof against dilution (to the extent specifically provided herein) or impairment.Without limiting the generality of the foregoing, the Issuer will (i) not permit the par value, if any, of its Common Stock to exceed the then effective Warrant Price, (ii) not amend or modify any provision of the Articles of Incorporation or by-laws of the Issuer in any manner that would adversely affect the rights of the Holders of the Warrants, (iii) take all such action as may be reasonably necessary in order that the Issuer may validly and legally issue fully paid and nonassessable shares of Common Stock, free and clear of any liens, claims, encumbrances and restrictions (other than as provided herein) upon the exercise of this Warrant, and (iv) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be reasonably necessary to enable the Issuer to perform its obligations under this Warrant. (d)Loss, Theft, Destruction of Warrants.Upon receipt of evidence satisfactory to the Issuer of the ownership of and the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction, upon receipt of indemnity or security satisfactory to the Issuer or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Issuer will make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representing the right to purchase the same number of shares of Common Stock. 4.Adjustment of Warrant Price and Number of Shares Issuable Upon Exercise.The Warrant Price and the Warrant Share Number shall be subject to adjustment from time to time as set forth in this Section 4. The Issuer shall give the Holder notice of any event described below which requires an adjustment pursuant to this Section 4 in accordance with the notice provisions set forth in Section 5. -5- (a)Recapitalization, Reorganization, Reclassification, Consolidation, Merger or Sale.In case the Issuer after the Original Issue Date shall do any of the following (each, a “Triggering Event”): (a) consolidate or merge with or into any other Person and the Issuer shall not be the continuing or surviving corporation of such consolidation or merger, or (b) permit any other Person to consolidate with or merge into the Issuer and the Issuer shall be the continuing or surviving Person but, in connection with such consolidation or merger, any Capital Stock of the Issuer shall be changed into or exchanged for Securities of any other Person or cash or any other property, or (c) transfer all or substantially all of its properties or assets to any other Person, or (d) effect a capital reorganization or reclassification of its Capital Stock, then, and as a condition to each such Triggering Event, proper and adequate provision shall be made so that, upon the basis and the terms and in the manner provided in this Warrant, the Holder of this Warrant shall be entitled upon the exercise hereof at any time after the consummation of such Triggering Event, to the extent this Warrant is not exercised prior to such Triggering Event, to receive at the Warrant Price in effect at the time immediately prior to the consummation of such Triggering Event in lieu of the Common Stock issuable upon such exercise of this Warrant prior to such Triggering Event, the Securities, cash and property to which such Holder would have been entitled upon the consummation of such Triggering Event if such Holder had exercised the rights represented by this Warrant immediately prior thereto (including the right of a shareholder to elect the type of consideration it will receive upon a Triggering Event), subject to adjustments (subsequent to such corporate action) as nearly equivalent as possible to the adjustments provided for elsewhere in this Section 4; provided, however, the Holder shall have the option to receive, in lieu of the foregoing right to receive such securities, cash and property, an amount in cash equal to the value of this Warrant calculated in accordance with the Black-Scholes formula.Notwithstanding the foregoing to the contrary, in the event of a Triggering Event, at the request of the Holder delivered before the ninetieth (90th) day after such Triggering Event, the Issuer shall pay to the Holder an amount in cash equal to the value of the unexercised portion of this Warrant as of the date of such Triggering Event calculated in accordance with the Black-Scholes formula within five (5) days of such request. (b)Stock Dividends, Subdivisions and Combinations.If at any time the Issuer shall: (i)make or issue or set a record date for the holders of the Common Stock for the purpose of entitling them to receive a dividend payable in, or other distribution of, shares of Common Stock, (ii)subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, or (iii)combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, then (1) the number of shares of Common Stock for which this Warrant is exercisable immediately after the occurrence of any such event shall be adjusted to equal the number of shares of Common Stock which a record holder of the same number of shares of Common Stock for which this Warrant is exercisable immediately prior to the occurrence of such event would own or be entitled to receive after the happening of such event, and (2) the Warrant Price then in effect shall be adjusted to equal (A) the Warrant Price then in effect multiplied by the number of shares of Common Stock for which this Warrant is exercisable immediately prior to the adjustment divided by (B) the number of shares of Common Stock for which this Warrant is exercisable immediately after such adjustment. (c)Certain Other Distributions.If at any time the Issuer shall make or issue or set a record date for the holders of the Common Stock for the purpose of entitling them to receive any dividend or other distribution of: (i)cash (other than a cash dividend payable out of earnings or earned surplus legally available for the payment of dividends under the laws of the jurisdiction of incorporation of the Issuer), -6- (ii)any evidences of its indebtedness, any shares of stock of any class or any other securities or property of any nature whatsoever (other than cash, Common Stock Equivalents or Additional Shares of Common Stock), or (iii)any warrants or other rights to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property of any nature whatsoever (other than cash, Common Stock Equivalents or Additional Shares of Common Stock), then (1) the number of shares of Common Stock for which this Warrant is exercisable shall be adjusted to equal the product of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such adjustment multiplied by a fraction (A) the numerator of which shall be the Per Share Market Value of Common Stock at the date of taking such record and (B) the denominator of which shall be such Per Share Market Value minus the amount allocable to one share of Common Stock of any such cash so distributable and of the fair value (as determined in good faith by the Board and supported by an opinion from an investment banking firm mutually agreed upon by the Issuer and the Holder) of any and all such evidences of indebtedness, shares of stock, other securities or property or warrants or other subscription or purchase rights so distributable, and (2) the Warrant Price then in effect shall be adjusted to equal (A) the Warrant Price then in effect multiplied by the number of shares of Common Stock for which this Warrant is exercisable immediately prior to the adjustment divided by (B) the number of shares of Common Stock for which this Warrant is exercisable immediately after such adjustment.A reclassification of the Common Stock (other than a change in par value, or from par value to no par value or from no par value to par value) into shares of Common Stock and shares of any other class of stock shall be deemed a distribution by the Issuer to the holders of its Common Stock of such shares of such other class of stock within the meaning of this Section 4(c) and, if the outstanding shares of Common Stock shall be changed into a larger or smaller number of shares of Common Stock as a part of such reclassification, such change shall be deemed a subdivision or combination, as the case may be, of the outstanding shares of Common Stock within the meaning of Section 4(b). (d)Issuance of Additional Shares of Common Stock. (i)In the event the Issuer shall at any time following the Original Issue Date issue any Additional Shares of Common Stock (otherwise than as provided in the foregoing subsections (a) through (c) of this Section 4), at a price per share less than the Warrant Price then in effect or without consideration, then the Warrant Price upon each such issuance shall be adjusted to that price determined by multiplying the Warrant Price then in effect by a fraction: (A)the numerator of which shall be equal to the sum of (x) the number of shares of Outstanding Common Stock immediately prior to the issuance of such Additional Shares of Common Stock plus (y) the number of shares of Common Stock (rounded to the nearest whole share) which the aggregate consideration for the total number of such Additional Shares of Common Stock so issued would purchase at a price per share equal to the Warrant Price then in effect, and (B)the denominator of which shall be equal to the number of shares of Outstanding Common Stock immediately after the issuance of such Additional Shares of Common Stock. (ii)No adjustment of the number of shares of Common Stock for which this Warrant shall be exercisable shall be made under paragraph (i) of Section 4(d) upon the issuance of any Additional Shares of Common Stock which are issued pursuant to the exercise of any Common Stock Equivalents, if any such adjustment shall previously have been made upon the issuance of such Common Stock Equivalents (or upon the issuance of any warrant or other rights therefor) pursuant to Section 4(e). -7- (e)Issuance of Common Stock Equivalents.If at any time the Issuer shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a distribution of, or shall in any manner (whether directly or by assumption in a merger in which the Issuer is the surviving corporation) issue or sell, any Common Stock Equivalents, whether or not the rights to exchange or convert thereunder are immediately exercisable, and the price per share for which Common Stock is issuable upon such conversion or exchange shall be less than the Warrant Price in effect immediately prior to the time of such issue or sale, or if, after any such issuance of Common Stock Equivalents, the price per share for which Additional Shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall be less than the Warrant Price in effect at the time of such amendment or adjustment, then the Warrant Price then in effect shall be adjusted as provided in Section 4(d).No further adjustments of the number of shares of Common Stock for which this Warrant is exercisable and the Warrant Price then in effect shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Common Stock Equivalents. (f)Superseding Adjustment.If, at any time after any adjustment of the number of shares of Common Stock for which this Warrant is exercisable and the Warrant Price then in effect shall have been made pursuant to Section 4(e) as the result of any issuance of Common Stock Equivalents, and (i) such Common Stock Equivalents, or the right of conversion or exchange in such Common Stock Equivalents, shall expire, and all or a portion of such or the right of conversion or exchange with respect to all or a portion of such Common Stock Equivalents, as the case may be, shall not have been exercised, or (ii) the consideration per share for which shares of Common Stock are issuable pursuant to such Common Stock Equivalents shall be increased, then such previous adjustment shall be rescinded and annulled and the Additional Shares of Common Stock which were deemed to have been issued by virtue of the computation made in connection with the adjustment so rescinded and annulled shall no longer be deemed to have been issued by virtue of such computation.Upon the occurrence of an event set forth in this Section 4(f), there shall be a recomputation made of the effect of such Common Stock Equivalents on the basis of: (i) treating the number of Additional Shares of Common Stock theretofore actually issued or issuable pursuant to the previous exercise of Common Stock Equivalents or any such right of conversion or exchange, as having been issued on the date or dates of any such exercise and for the consideration actually received and receivable therefor, and (ii) treating any such Common Stock Equivalents which then remain outstanding as having been granted or issued immediately after the time of such increase of the consideration per share for which Additional Shares of Common Stock are issuable under such Common Stock Equivalents; whereupon a new adjustment of the number of shares of Common Stock for which this Warrant is exercisable and the Warrant Price then in effect shall be made, which new adjustment shall supersede the previous adjustment so rescinded and annulled. (h)Other Provisions applicable to Adjustments under this Section.The following provisions shall be applicable to the making of adjustments of the number of shares of Common Stock for which this Warrant is exercisable and the Warrant Price then in effect provided for in this Section 4: -8- (i)Computation of Consideration.To the extent that any Additional Shares of Common Stock or any Common Stock Equivalents (or any warrants or other rights therefor) shall be issued for cash consideration, the consideration received by the Issuer therefor shall be the amount of the cash received by the Issuer therefor, or, if such Additional Shares of Common Stock or Common Stock Equivalents are offered by the Issuer for subscription, the subscription price, or, if such Additional Shares of Common Stock or Common Stock Equivalents are sold to underwriters or dealers for public offering without a subscription offering, the initial public offering price (in any such case subtracting any amounts paid or receivable for accrued interest or accrued dividends and without taking into account any compensation, discounts or expenses paid or incurred by the Issuer for and in the underwriting of, or otherwise in connection with, the issuance thereof).In connection with any merger or consolidation in which the Issuer is the surviving corporation (other than any consolidation or merger in which the previously outstanding shares of Common Stock of the Issuer shall be changed to or exchanged for the stock or other securities of another corporation), the amount of consideration therefore shall be, deemed to be the fair value, as determined reasonably and in good faith by the Board, of such portion of the assets and business of the nonsurviving corporation as the Board may determine to be attributable to such shares of Common Stock or Common Stock Equivalents, as the case may be.The consideration for any Additional Shares of Common Stock issuable pursuant to any warrants or other rights to subscribe for or purchase the same shall be the consideration received by the Issuer for issuing such warrants or other rights plus the additional consideration payable to the Issuer upon exercise of such warrants or other rights.The consideration for any Additional Shares of Common Stock issuable pursuant to the terms of any Common Stock Equivalents shall be the consideration received by the Issuer for issuing warrants or other rights to subscribe for or purchase such Common Stock Equivalents, plus the consideration paid or payable to the Issuer in respect of the subscription for or purchase of such Common Stock Equivalents, plus the additional consideration, if any, payable to the Issuer upon the exercise of the right of conversion or exchange in such Common Stock Equivalents.In the event of any consolidation or merger of the Issuer in which the Issuer is not the surviving corporation or in which the previously outstanding shares of Common Stock of the Issuer shall be changed into or exchanged for the stock or other securities of another corporation, or in the event of any sale of all or substantially all of the assets of the Issuer for stock or other securities of any corporation, the Issuer shall be deemed to have issued a number of shares of its Common Stock for stock or securities or other property of the other corporation computed on the basis of the actual exchange ratio on which the transaction was predicated, and for a consideration equal to the fair market value on the date of such transaction of all such stock or securities or other property of the other corporation.In the event any consideration received by the Issuer for any securities consists of property other than cash, the fair market value thereof at the time of issuance or as otherwise applicable shall be as determined in good faith by the Board.In the event Common Stock is issued with other shares or securities or other assets of the Issuer for consideration which covers both, the consideration computed as provided in this Section 4(h)(i) shall be allocated among such securities and assets as determined in good faith by the Board. (ii)When Adjustments to Be Made.The adjustments required by this Section 4 shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that any adjustment of the number of shares of Common Stock for which this Warrant is exercisable that would otherwise be required may be postponed (except in the case of a subdivision or combination of shares of the Common Stock, as provided for in Section 4(b)) up to, but not beyond the date of exercise if such adjustment either by itself or with other adjustments not previously made adds or subtracts less than one percent (1%) of the shares of Common Stock for which this Warrant is exercisable immediately prior to the making of such adjustment.Any adjustment representing a change of less than such minimum amount (except as aforesaid) which is postponed shall be carried forward and made as soon as such adjustment, together with other adjustments required by this Section 4 and not previously made, would result in a minimum adjustment or on the date of exercise. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence. (iii)Fractional Interests.In computing adjustments under this Section 4, fractional interests in Common Stock shall be taken into account to the nearest one share. -9- (iv)When Adjustment Not Required.If the Issuer shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution to stockholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled. (i)Form of Warrant after Adjustments.The form of this Warrant need not be changed because of any adjustments in the Warrant Price or the number and kind of Securities purchasable upon the exercise of this Warrant. (j)Escrow of Warrant Stock.If after any property becomes distributable pursuant to this Section 4 by reason of the taking of any record of the holders of Common Stock, but prior to the occurrence of the event for which such record is taken, and the Holder exercises this Warrant, any shares of Common Stock issuable upon exercise by reason of such adjustment shall be deemed the last shares of Common Stock for which this Warrant is exercised (notwithstanding any other provision to the contrary herein) and such shares or other property shall be held in escrow for the Holder by the Issuer to be issued to the Holder upon and to the extent that the event actually takes place, upon payment of the current Warrant Price.Notwithstanding any other provision to the contrary herein, if the event for which such record was taken fails to occur or is rescinded, then such escrowed shares shall be cancelled by the Issuer and escrowed property returned. 5.Notice of Adjustments.Whenever the Warrant Price or Warrant Share Number shall be adjusted pursuant to Section 4 hereof (for purposes of this Section 5, each an “adjustment”), the Issuer shall cause its Chief Financial Officer to prepare and execute a certificate setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board made any determination hereunder), and the Warrant Price and Warrant Share Number after giving effect to such adjustment, and shall cause copies of such certificate to be delivered to the Holder of this Warrant promptly after each adjustment.Any dispute between the Issuer and the Holder of this Warrant with respect to the matters set forth in such certificate may at the option of the Holder of this Warrant be submitted to a national or regional accounting firm reasonably acceptable to the Issuer and the Holder, provided that the Issuer shall have ten (10) days after receipt of notice from such Holder of its selection of such firm to object thereto, in which case such Holder shall select another such firm and the Issuer shall have no such right of objection.The firm selected by the Holder of this Warrant as provided in the preceding sentence shall be instructed to deliver a written opinion as to such matters to the Issuer and such Holder within thirty (30) days after submission to it of such dispute.Such opinion shall be final and binding on the parties hereto.The costs and expenses of the initial accounting firm shall be paid equally by the Issuer and the Holder and, in the case of an objection by the Issuer, the costs and expenses of the subsequent accounting firm shall be paid in full by the Issuer. 6.Fractional Shares.No fractional shares of Warrant Stock will be issued in connection with any exercise hereof, but in lieu of such fractional shares, the Issuer shall round the number of shares to be issued upon exercise up to the nearest whole number of shares. 7.Ownership Cap and Exercise Restriction.Notwithstanding anything to the contrary set forth in this Warrant, at no time may a Holder of this Warrant exercise this Warrant if the number of shares of Common Stock to be issued pursuant to such exercise would exceed, when aggregated with all other shares of Common Stock owned by such Holder at such time, the number of shares of Common Stock which would result in such Holder beneficially owning (as determined in accordance with Section 13(d) of the Exchange Act and the rulesthereunder) in excess of 9.999% of the then issued and outstanding shares of Common Stock; provided, however, that upon a holder of this Warrant providing the Issuer with sixty-one (61) days notice (pursuant to Section 13 hereof) (the “Waiver Notice”) that such Holder would like to waive this Section 7 with regard to any or all shares of Common Stock issuable upon exercise of this Warrant, this Section 7 will be of no force or effect with regard to all or a portion of the Warrant referenced in the Waiver Notice; provided, further, that this provision shall be of no further force or effect during the sixty-one (61) days immediately preceding the expiration of the term of this Warrant. -10- 8.Issuer’s Redemption Option.Commencing on the Original Issue date, if the closing Per Share Market Value of the Common Stock for any twenty (20) consecutive Trading Days exceeds $2.50 per share (as may be adjusted for any stock splits or combinations of the Common Stock), the Issuer may, at any time thereafter upon fifteen (15) Trading Days prior written notice (the “Issuer Redemption Notice”) to the Holder, redeem the unexercised portion of this Warrant in cash at a price equal to the number of shares of Warrant Stock with respect to the unexercised portion of this Warrant multiplied by $0.01 (the “Issuer Redemption Price”); provided, that, in connection with any redemption by the Issuer under this Section 8, (A) the Registration Statement is then in effect and has been effective, without lapse or suspension of any kind, for a period of sixty (60) consecutive calendar days, (B) trading in the Common Stock shall not have been suspended by the Securities and Exchange Commission or the American Stock Exchange (or other exchange or market on which the Common Stock is trading), (C) the Issuer is in material compliance with the terms and conditions of this Warrant and the other Transaction Documents (as defined in the Purchase Agreement) and (D) the Issuer is not in possession of any material non-public information; provided, further, that the Registration Statement is in effect from the date of delivery of the Issuer Redemption Notice until the date which is the later of (1) the date the Holder exercises the Warrant pursuant to the Issuer Redemption Notice and (2) the fifteenth (15th) day after the Holder receives the Issuer Redemption Notice (the “Early Termination Date”).The rights and privileges granted pursuant to this Warrant with respect to the shares of Warrant Stock subject to the Issuer Redemption Notice (the “Redeemed Warrant Shares”) shall expire on the Early Termination Date if this Warrant is not exercised with respect to such Redeemed Warrant Shares prior to such Early Termination Date.The Issuer’s Redemption Notice shall state the date of redemption which date shall be the tenth (10th) day (or if such day is a Saturday or Sunday or a day on which banking institutions in the City of New York are not open for business, the next succeeding day) after the Issuer has delivered the Issuer’s Redemption Notice (the “Issuer’s Redemption Date”), the Issuer’s Redemption Price and the number of shares to be redeemed by the Issuer.The Issuer shall not send a Issuer’s Redemption Notice unless it has good and clear funds for a minimum of the amount it intends to redeem in a bank account controlled by the Issuer.The Issuer shall deliver the Issuer’s Redemption Price to the Holder on the Issuer’s Redemption Date.Not later than five (5) days after receipt of the Issuer Redemption Price, Holder shall return to the Issuer for cancellation the original Warrant to be redeemed. If the Issuer fails to pay the Issuer’s Redemption Price by the Issuer’s Redemption Date, the redemption will be declared null and void. Notwithstanding anything in the foregoing to the contrary, if the Holder may not exercise this Warrant as a result of the restrictions contained in Section 7 hereof, the Call Notice shall be deemed null and void and shall not be deemed effective until the date that the Holder may exercise this Warrant in accordance with Section 7 hereof. 9.Definitions.For the purposes of this Warrant, the following terms have the following meanings: “Additional Shares of Common Stock” means all shares of Common Stock issued by the Issuer after the Original Issue Date, and all shares of Other Common, if any, issued by the Issuer after the Original Issue Date, except: (i) securities issued (other than for cash) in connection with a merger, acquisition, or consolidation, (ii) securities issued pursuant to the conversion or exercise of convertible or exercisable securities issued or outstanding on or prior to the date of the Purchase Agreement or issued pursuant to the Purchase Agreement (so long as the conversion or exercise price in such securities are not amended to lower such price and/or adversely affect the Holders), (iii) the Warrant Stock, (iv) securities issued in connection with bona fide strategic license agreements or other partnering arrangements so long as such issuances are not for the purpose of raising capital, (v) Common Stock issued or the issuance or grants of options to purchase Common Stock pursuant to the Issuer’s stock option plans and employee stock purchase plans outstanding as they exist on the date of the Purchase Agreement, and (vi) any warrants issued to the placement agent and its designees for the transactions contemplated by the Purchase Agreement. -11- “Articles of Incorporation” means the Articles of Incorporation of the Issuer as in effect on the Original Issue Date, and as hereafter from time to time amended, modified, supplemented or restated in accordance with the terms hereof and thereof and pursuant to applicable law. “AMEX” shall mean the American Stock Exchange. “Board” shall mean the Board of Directors of the Issuer. “Capital Stock” means and includes (i) any and all shares, interests, participations or other equivalents of or interests in (however designated) corporate stock, including, without limitation, shares of preferred or preference stock, (ii) all partnership interests (whether general or limited) in any Person which is a partnership, (iii) all membership interests or limited liability company interests in any limited liability company, and (iv) all equity or ownership interests in any Person of any other type. “Common Stock” means the Common Stock, $0.001 par value per share, of the Issuer and any other Capital Stock into which such stock may hereafter be changed. “Common Stock Equivalent” means any Convertible Security or warrant, option or other right to subscribe for or purchase any Additional Shares of Common Stock or any Convertible Security. “Convertible Securities” means evidences of Indebtedness, shares of Capital Stock or other Securities which are or may be at any time convertible into or exchangeable for Additional Shares of Common Stock.The term “Convertible Security” means one of the Convertible Securities. “Governmental Authority” means any governmental, regulatory or self-regulatory entity, department, body, official, authority, commission, board, agency or instrumentality, whether federal, state or local, and whether domestic or foreign. “Holders” mean the Persons who shall from time to time own any Warrant.The term “Holder” means one of the Holders. “Independent Appraiser” means a nationally recognized or major regional investment banking firm or firm of independent certified public accountants of recognized standing (which may be the firm that regularly examines the financial statements of the Issuer) that is regularly engaged in the business of appraising the Capital Stock or assets of corporations or other entities as going concerns, and which is not affiliated with either the Issuer or the Holder of any Warrant. “Issuer” means XELR8 Holdings, Inc., a Nevada corporation, and its successors. “Majority Holders” means at any time the Holders of Warrants exercisable for a majority of the shares of Warrant Stock issuable under the Warrants at the time outstanding. “Nasdaq” means the Nasdaq Global Market or the Nasdaq Capital Market. “Original Issue Date” means February 19, 2008. “OTC Bulletin Board” means the over-the-counter electronic bulletin board. -12- “Other Common” means any other Capital Stock of the Issuer of any class which shall be authorized at any time after the date of this Warrant (other than Common Stock) and which shall have the right to participate in the distribution of earnings and assets of the Issuer without limitation as to amount. “Outstanding Common Stock” means, at any given time, the aggregate amount of outstanding shares of Common Stock, assuming full exercise, conversion or exchange (as applicable) of all options, warrants and other Securities which are convertible into or exercisable or exchangeable for, and any right to subscribe for, shares of Common Stock that are outstanding at such time. “Person” means an individual, corporation, limited liability company, partnership, joint stock company, trust, unincorporated organization, joint venture, Governmental Authority or other entity of whatever nature. “Per Share Market Value” means on any particular date (a) the last closing bid price per share of the Common Stock on such date on AMEXor another registered national stock exchange on which the Common Stock is then listed, or if there is no such price on such date, then the closing bid price on such exchange or quotation system on the date nearest preceding such date, or (b) if the Common Stock is not listed then on AMEX or any registered national stock exchange, the last closing bid price for a share of Common Stock in the over-the-counter market, as reported by the American Stock Exchange or in the National Quotation Bureau Incorporated or similar organization or agency succeeding to its functions of reporting prices) at the close of business on such date, or (c) if the Common Stock is not then reported by the OTC Bulletin Board or the National Quotation Bureau Incorporated (or similar organization or agency succeeding to its functions of reporting prices), then the average of the “Pink Sheet” quotes for the five (5) Trading Days preceding such date of determination, or (d) if the Common Stock is not then publicly traded the fair market value of a share of Common Stock as determined by an Independent Appraiser selected in good faith by the Majority Holders; provided, however, that the Issuer, after receipt of the determination by such Independent Appraiser, shall have the right to select an additional Independent Appraiser, in which case, the fair market value shall be equal to the average of the determinations by each such Independent Appraiser; and provided, further that all determinations of the Per Share Market Value shall be appropriately adjusted for any stock dividends, stock splits or other similar transactions during such period.The determination of fair market value by an Independent Appraiser shall be based upon the fair market value of the Issuer determined on a going concern basis as between a willing buyer and a willing seller and taking into account all relevant factors determinative of value, and shall be final and binding on all parties.In determining the fair market value of any shares of Common Stock, no consideration shall be given to any restrictions on transfer of the Common Stock imposed by agreement or by federal or state securities laws, or to the existence or absence of, or any limitations on, voting rights. “Purchase Agreement” means the Common Stock and Warrant Purchase Agreement dated as of February 19, 2008, among the Issuer and the Purchasers. “Purchasers” means the purchasers of the Common Stock and the Warrants issued by the Issuer pursuant to the Purchase Agreement. “Securities” means any debt or equity securities of the Issuer, whether now or hereafter authorized, any instrument convertible into or exchangeable for Securities or a Security, and any option, warrant or other right to purchase or acquire any Security.“Security” means one of the Securities. “Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute then in effect. -13- “Subsidiary” means any corporation at least 50% of whose outstanding Voting Stock shall at the time be owned directly or indirectly by the Issuer or by one or more of its Subsidiaries, or by the Issuer and one or more of its Subsidiaries. “Term” has the meaning specified in Section 1 hereof. “Trading Day” means (a) a day on which the Common Stock is traded on the American Stock Exchange, or (b) if the Common Stock is not traded on American Stock Exchange, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices); provided, however, that in the event that the Common Stock is not listed or quoted as set forth in (a) or (b) hereof, then Trading Day shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close. “Voting Stock” means, as applied to the Capital Stock of any corporation, Capital Stock of any class or classes (however designated) having ordinary voting power for the election of a majority of the members of the Board (or other governing body) of such corporation, other than Capital Stock having such power only by reason of the happening of a contingency. “Warrants” means the Warrants issued and sold pursuant to the Purchase Agreement, including, without limitation, this Warrant, and any other warrants of like tenor issued in substitution or exchange for any thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e) hereof or of any of such other Warrants. “Warrant Price” initially means $1.50 as such price may be adjusted from time to time as shall result from the adjustments specified in this Warrant, including Section 4 hereto. “Warrant Share Number” means at any time the aggregate number of shares of Warrant Stock which may at such time be purchased upon exercise of this Warrant, after giving effect to all prior adjustments and increases to such number made or required to be made under the terms hereof. “Warrant Stock” means Common Stock issuable upon exercise of any Warrant or Warrants or otherwise issuable pursuant to any Warrant or Warrants. 10.Other Notices.In case at any time: (A) the Issuer shall make any distributions to the holders of Common Stock; or (B) the Issuer shall authorize the granting to all holders of its Common Stock of rights to subscribe for or purchase any shares of Capital Stock of any class or other rights; or (C) there shall be any reclassification of the Capital Stock of the Issuer; or (D) there shall be any capital reorganization by the Issuer; or -14- (E) there shall be any (i) consolidation or merger involving the Issuer or (ii) sale, transfer or other disposition of all or substantially all of the Issuer’s property, assets or business (except a merger or other reorganization in which the Issuer shall be the surviving corporation and its shares of Capital Stock shall continue to be outstanding and unchanged and except a consolidation, merger, sale, transfer or other disposition involving a wholly-owned Subsidiary); or (F) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Issuer or any partial liquidation of the Issuer or distribution to holders of Common Stock; then, in each of such cases, the Issuer shall give written notice to the Holder of the date on which (i) the books of the Issuer shall close or a record shall be taken for such dividend, distribution or subscription rights or (ii) such reorganization, reclassification, consolidation, merger, disposition, dissolution, liquidation or winding-up, as the case may be, shall take place.Such notice also shall specify the date as of which the holders of Common Stock of record shall participate in such dividend, distribution or subscription rights, or shall be entitled to exchange their certificates for Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, disposition, dissolution, liquidation or winding-up, as the case may be.Such notice shall be given at least twenty (20) days prior to the action in question and not less than ten (10) days prior to the record date or the date on which the Issuer’s transfer books are closed in respect thereto.This Warrant entitles the Holder to receive copies of all financial and other information distributed or required to be distributed to the holders of the Common Stock. 11.Amendment and Waiver.Any term, covenant, agreement or condition in this Warrant may be amended, or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively), by a written instrument or written instruments executed by the Issuer and the Majority Holders; provided, however, that no such amendment or waiver shall reduce the Warrant Share Number, increase the Warrant Price, shorten the period during which this Warrant may be exercised or modify any provision of this Section 11 without the consent of the Holder of this Warrant.No consideration shall be offered or paid to any person to amend or consent to a waiver or modification of any provision of this Warrant unless the same consideration is also offered to all holders of the Warrants. 12.Governing Law; Jurisdiction.This Warrant shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction.This Warrant shall not be interpreted or construed with any presumption against the party causing this Warrant to be drafted.The Issuer and the Holder agree that venue for any dispute arising under this Warrant will lie exclusively in the state or federal courts located in New York County, New York, and the parties irrevocably waive any right to raise forum non conveniens or any other argument that New York is not the proper venue.The Issuer and the Holder irrevocably consent to personal jurisdiction in the state and federal courts of the state of New York.The Issuer and the Holder consent to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof.Nothing in this Section 12 shall affect or limit any right to serve process in any other manner permitted by law.The Issuer and the Holder hereby agree that the prevailing party in any suit, action or proceeding arising out of or relating to this Warrant or the Purchase Agreement, shall be entitled to reimbursement for reasonable legal fees from the non-prevailing party.The parties hereby waive all rights to a trial by jury. -15- 13.Notices.Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery by telecopy or facsimile at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.The addresses for such communications shall be: If to the Issuer: XELR8 Holdings, Inc. 480 South Holly Street Denver, CO 80246 Attention: John D. Pougnet Chief Executive Officer Tel. No.: (303) 316-8577 Fax No.: (303) 316-4116 with copies (which copies shall not constitute notice) to: Law Office of Gary A. Agron 5arkway Suite 520 Englewood, CO 80111 Attention: Gary Agron Tel. No.: (303) 770-7254 Fax No.: (303) 770-7257 If to any Holder: Anastasios Belesis 200 Rector Place 3V New York, NY10280 with copies (which copies shall not constitute notice) to: Kramer Levin Naftalis & Frankel LLP 1177 Avenue of the Americas New York, New York 10036 Attention: Christopher S. Auguste Tel. No.: (212) 715-9100 Fax No.: (212) 715-8000 Any party hereto may from time to time change its address for notices by giving written notice of such changed address to the other party hereto. -16- 14.Warrant Agent.The Issuer may, by written notice to each Holder of this Warrant, appoint an agent having an office in New York, New York for the purpose of issuing shares of Warrant Stock on the exercise of this Warrant pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant to subsection (d) of Section 2 hereof or replacing this Warrant pursuant to subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent. 15.Remedies.The Issuer stipulates that the remedies at law of the Holder of this Warrant in the event of any default or threatened default by the Issuer in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate and that, to the fullest extent permitted by law, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise. 16.Successors and Assigns.This Warrant and the rights evidenced hereby shall inure to the benefit of and be binding upon the successors and assigns of the Issuer, the Holder hereof and (to the extent provided herein) the Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by any such Holder or Holder of Warrant Stock. 17.Modification and Severability.If, in any action before any court or agency legally empowered to enforce any provision contained herein, any provision hereof is found to be unenforceable, then such provision shall be deemed modified to the extent necessary to make it enforceable by such court or agency.If any such provision is not enforceable as set forth in the preceding sentence, the unenforceability of such provision shall not affect the other provisions of this Warrant, but this Warrant shall be construed as if such unenforceable provision had never been contained herein. 18.Headings.The headings of the Sections of this Warrant are for convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant. 19.Registration Rights.The Holder of this Warrant is entitled to the benefit of certain registration rights with respect to the shares of Warrant Stock issuable upon the exercise of this Warrant pursuant to that certain Registration Rights Agreement, of even date herewith, by and among the Issuer and Persons listed on Schedule I thereto (the “Registration Rights Agreement”) and the registration rights with respect to the shares of Warrant Stock issuable upon the exercise of this Warrant by any subsequent Holder may only be assigned in accordance with the terms and provisions of the Registrations Rights Agreement. -17- IN WITNESS WHEREOF, the Issuer has executed this Warrant as of the day and year first above written. XELR8 HOLDINGS, INC. By: /s/ John D. Pougnet Name: John D. Pougnet Title:Chief Executive Officer -18- EXERCISE FORM SERIES G WARRANT XELR8 HOLDINGS, INC. The undersigned , pursuant to the provisions of the within Warrant, hereby elects to purchase shares of Common Stock of XELR8 Holdings, Inc. covered by the within Warrant. Dated:Signature Address Number of shares of Common Stock beneficially owned or deemed beneficially owned by the Holder on the date of Exercise: The undersigned is an “accredited investor” as defined in Regulation D under the Securities Act of 1933, as amended. The undersigned intends that payment of the Warrant Price shall be made as (check one): Cash Exercise Cashless Exercise If the Holder has elected a Cash Exercise, the Holder shall pay the sum of $ by certified or official bank check (or via wire transfer) to the Issuer in accordance with the terms of the Warrant. If the Holder has elected a Cashless Exercise, a certificate shall be issued to the Holder for the number of shares equal to the whole number portion of the product of the calculation set forth below, which is .The Issuer shall pay a cash adjustment in respect of the fractional portion of the product of the calculation set forth below in an amount equal to the product of the fractional portion of such product and the Per Share Market Value on the date of exercise, which product is . X Y - (A)(Y) B Where: The number of shares of Common Stock to be issued to the Holder (“X”). The number of shares of Common Stock purchasable upon exercise of all of the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised (“Y”). The Warrant Price (“A”). The Per Share Market Value of one share of Common Stock (“B”). -19- ASSIGNMENT FOR VALUE RECEIVED, hereby sells, assigns and transfers unto the within Warrant and all rights evidenced thereby and does irrevocably constitute and appoint , attorney, to transfer the said Warrant on the books of the within named corporation. Dated:Signature Address PARTIAL ASSIGNMENT FOR VALUE RECEIVED, hereby sells, assigns and transfers unto the right to purchase shares of Warrant Stock evidenced by the within Warrant together with all rights therein, and does irrevocably constitute and appoint , attorney, to transfer that part of the said Warrant on the books of the within named corporation. Dated: Signature Address FOR USE BY THE ISSUER ONLY: This Warrant No. W- canceled (or transferred or exchanged) this day of , , shares of Common Stock issued therefor in the name of , Warrant No. W- issued for shares of Common Stock in the name of .
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EXHIBIT HELIX ENERGY SOLUTIONS GROUP,INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following unaudited pro forma condensed consolidated financial statements are presented to give effect to the disposition of substantially all of the Company’s investment in Cal Dive International, Inc.(“Cal Dive”).The Company, through a series of the following separate transactions, has reduced its ownership in Cal Dive from approximately 57% at December 31, 2008 to its current approximate 0.54% ownership interest. · The Company sold 13.6 million shares to Cal Dive for $86 million in January 2009.The Company’s ownership interest in Cal Dive was reduced to approximately 51% following this transaction; · In June 2009, a secondary public offering resulted in the Company’s disposition of 22.6 million shares of its Cal Dive common stock for approximately $183 million in net proceeds; · In June 2009, under the terms of a stock repurchase agreement the Company sold 1.6 million shares of its Cal Dive common stock to Cal Dive at $8.50 per share or $14 million; · In September 2009, 20.6 million shares of Cal Dive common stock were sold in a secondary public offering at $10.00 per share, plus an additional approximate 2.6 million shares will be sold pursuant to the exercise of the over-allotment option, which will closeon September 29, 2009, resulting in aggregate net proceeds of approximately $221 million. The net proceeds from the disposition of the Company's shares of Cal Dive common stock will be used for general corporate purposes. The estimated pre-tax gain on these sale transactions totals approximately $78 million, which is subject to change based on the results of Cal Dive for the month of September 2009 that are not yet available. The unaudited pro forma condensed statement of operations for the year ended December 31, 2008 was derived from our audited consolidated statement of operations for the year ended December 31, 2008.The unaudited pro forma condensed consolidated statement of operations should be read together with the Company’s 2008 audited consolidated statement of operations and the notes thereto included in our Current Report on Form 8-K filed June 16, The unaudited pro forma condensed consolidated balance sheet as of June 30, 2009 and the unaudited pro forma condensed consolidated statement of operations for the six months ended June 30, 2009 have been derived from our interim unaudited consolidated financial statements included in our Quarterly Report on Form 10-Q for the period ended June 30, 2009 and should be read in conjunction with those financial statements, including the notes thereto. The unaudited pro forma condensed consolidated financial statements are based on the following assumptions and adjustments: · The unaudited pro forma condensed consolidated balance sheet is presented as if the September 2009 dispositions of Cal Dive common stock, including the pending closing of the shares exercised under the over-allotment option,all occurred on June 30, 2009 and · The unaudited pro forma condensed consolidated statements of operations are presented as if the above dispositions of Cal Dive common stock, including the pending closing of the shares exercised under the over-allotment option, occurred on January 1, Pursuant to the Securities and Exchange Commission rules for pro forma financial statements, no pro forma adjustments were made with respect to any increase in assumed interest income associated with the investment of the net proceeds received from the sales of Cal Dive common stock. Separately, no pro forma adjustment was made to reflect reductions in the Company's indebtedness and related interest expense because there is no requirement under the Company's debt arrangements to use proceeds from its disposition of Cal Dive common stock to reduce such indebedness. The unaudited pro forma condensed financial statements are presented for illustration purposes only.The financial position and results of operations may have been different if the dispositions of Cal Dive stock had occurred as of the dates indicated above and do not purport to representthe Company’s financial position or results of operations for any future date or period. HELIX ENERGY SOLUTIONS GROUP, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (in thousands) As Reported 1 Pro Forma Adjustments Pro Forma ASSETS Current assets: Cash and cash equivalents $ 261,930 $ 221,512 2 $ 483,442 Accounts receivable, net 266,289 — 266,289 Other current assets 123,325 — 123,325 Asset available for sale — 4,315 2 4,315 Total current assets 651,544 225,827 877,371 Property and equipment, net 2,823,216 — 2,823,216 Other assets: Equity investments 393,405 (200,314 ) 2 193,091 Goodwill, net 77,515 — 77,515 Other assets, net 79,682 — 79,682 $ 4,025,362 $ 25,513 $ 4,050,875 Current liabilities: Accounts payable $ 165,342 $ — $ 165,342 Accrued liabilities 224,318 400 2 224,718 Income taxes payable 77,914 6,492 2 84,406 Current maturities of long-term debt 13,730 — 13,730 Total current liabilities 481,304 6,892 488,196 Long-term debt 1,348,713 — 1,348,713 Deferred income taxes 513,248 — 513,248 Decommissioning liabilities 181,096 — 181,096 Other long-term liabilities 8,981 — 8,981 Total liabilities 2,533,342 6,892 2,540,234 Convertible preferred stock 25,000 — 25,000 Shareholders’ equity: Common stock, no par value 895,305 2,912 3 898,217 Retained earnings 571,609 15,709 2,3 587,318 Accumulated other comprehensive income (loss) (20,575 ) (20,575 ) Total controlling interest shareholders’ equity 1,446,339 18,621 1,464,960 Noncontrolling interests 20,681 — 20,681 Total shareholders’ equity 1,467,020 18,621 1,485,641 $ 4,025,362 $ 25,513 $ 4,050,875 See accompanying notes to unaudited pro forma condensed consolidated financial statements. HELIX ENERGY SOLUTIONS GROUP, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (in thousands, except per share data) Year Ended December 31, 2008 As Reported4 Pro Forma Adjustments5 Pro Forma Net revenues $ 2,114,074 $ (777,116 ) $ 1,336,958 Cost of sales 1,741,883 (528,175 ) 1,213,708 Gross profit 372,191 (248,941 ) 123,250 Goodwill and other indefinite-lived intangible impairments 704,311 — 704,311 Gain on sale of assets, net 73,471 (204 ) 73,267 Selling and administrative expenses 177,172 (74,500 ) 102,672 Income (loss) from operations (435,821 ) (174,645 ) (610,466 ) Equity in earnings of investments 31,854 — 31,854 Net interest expense and other 89,499 (22,285 ) 67,214 Income (loss) before income taxes (493,466 ) (152,360 ) (645,826 ) Provision (benefit) for income taxes 86,779 (67,067 ) 19,712 Income (loss) from continuing operations before noncontrolling interests and preferred dividends (580,245 ) (85,293 ) (665,538 ) Net income (loss) attributable to noncontrolling interests 45,873 (45,975 ) (102 ) Preferred stock dividends 3,192 — 3,192 Net loss applicable to common shareholder from continuing operations $ (629,310 ) $ (39,318 ) $ $ (668,628 ) Lossper common share: from continuing operations: Basic $ (6.94 ) $ (7.38 ) Diluted $ (6.94 ) $ (7.38 ) Weighted average common shares outstanding: Basic 90,650 90,650 Diluted 90,650 90,650 See accompanying notes to unaudited pro forma condensed consolidated financial statements. HELIX ENERGY SOLUTIONS GROUP, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (in thousands, except per share data) Six Months Ended June 30, 2009 As Reported 6 Pro Forma Adjustments5 Pro Forma Net revenues $ 1,065,614 $ (391,908 ) $ 673,706 Cost of sales 768,648 (299,886 ) 468,762 Gross profit 296,966 (92,022 ) 204,944 Gain on oil and gas derivative commodity contracts 78,730 — 78,730 Gain on sale of assets, net 1,773 — 1,773 Selling and administrative expenses 80,725 (33,651 ) 47,074 Income (loss) from operations 296,744 (58,371 ) 238,373 Equity in earnings of investments 13,767 (896 ) 12,871 Gain on subsidiary equity transaction 59,442 (59,442 ) — Net interest expense and other 29,663 (6,642 ) 23,021 Income before income taxes 340,290 (112,067 ) 228,223 Provision (benefit) for income taxes 121,728 (43,828 ) 77,900 Income (loss) from continuing operations before noncontrolling interests and preferred dividends 218,562 (68,239 ) 150,323 Net income (loss) attributable to noncontrolling interests 18,173 (17,307 ) 866 Preferred stock dividends 563 — 563 Preferred stock beneficial conversion charge 53,439 — 53,439 Net incomeapplicable to common shareholders from continuing operations $ 146,387 $ (50,932 ) $ 95,455 Earnings per common share from continuing operations: Basic $ 1.50 $ 0.98 Diluted $ 1.37 $ 0.89 Weighted average common shares outstanding: Basic 96,077 96,077 Diluted 106,000 106,000 See accompanying notes to unaudited pro forma condensed consolidated financial statements. Helix Energy Solutions Group Inc Notes To Unaudited Pro Forma Condensed Consolidated Financial
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Exhibit 3.1 CERTIFICATE OF AMENDMENT OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF SIGNPATH PHARMA INC. Pursuant to Section 242 of the Delaware General Corporation Law. SignPath Pharma Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: 1)The name of the corporation (hereinafter called the “Corporation”) is SignPath Pharma Inc. 2)The certificate of incorporation of the Corporation is hereby amended by striking out Article 4(A) thereof in its entirety and by substituting in lieu of said Article the following new Article 4(A): “FOURTH (A) Authorized Capital Stock.The total number of shares of all classes of stock which the Corporation shall have the authority to issue is 55,000,000, each of the par value of $0.001 per share, of which (i) 50,000,000 shares shall be designated as common stock (the “Common Stock”) and (ii) 5,000,000 shares shall be designated as Preferred Stock, par value $.10 per share (hereinafter, the “Preferred Stock”).” 3)The amendment of the certificate of incorporation herein certified has been duly adopted and written consent has been given in accordance with the provisions of Sections 228 and 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the Corporation has caused this Certificate to be duly executed as of October 19, 2011. SIGNPATH PHARMA, INC. By:/s/ Lawrence Helson Name: Lawrence Helson, M.D. Title: CEO
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Exhibit 10.3
EXECUTION VERSION
PURCHASE AGREEMENT
by and among
WSILC, L.L.C., RTW ATM, LLC, C.O.D., LLC AND WG ATM, LLC AND THEIR MEMBERS
and
CARDTRONICS USA, INC.
dated as of July 21, 2014
Table of Contents
Page
Article I
THE TRANSACTION
1
Section 1.1
The Transaction
1
Section 1.2
Closing
2
Section 1.3
Deliveries by the Company Holders
2
Section 1.4
Deliveries by the Purchaser
4
Section 1.5
Escrow
4
Section 1.6
Hewitt Holdback
4
Article II
PURCHASE PRICE
6
Section 2.1
Purchase Price
6
Section 2.2
Payment
6
Section 2.3
Method of Payment
7
Section 2.4
Determination of Net Working Capital plus Recent CapX
7
Article III
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COMPANY HOLDERS
10
Section 3.1
Ownership of LLC Units
10
Section 3.2
Authorization; Validity of Agreement
10
Section 3.3
No Violations, Consents and Approvals
10
Section 3.4
Litigation
11
Section 3.5
Brokers
11
Article IV
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COMPANIES
11
Section 4.1
Organization
11
Section 4.1-A
11
Section 4.2
Capitalization
12
Section 4.3
No Violations; Consents and Approvals
12
Section 4.4
Financial Statements
13
Section 4.5
Absence of Certain Changes
13
Section 4.6
Litigation
14
Section 4.7
No Undisclosed Liabilities
14
Section 4.8
Compliance with Law
15
Section 4.9
Technology and Intellectual Property
15
-1-
Table of Contents
(continued)
Page
Section 4.10
Employee Benefit Plans; ERISA
16
Section 4.11
Material Contracts
19
Section 4.12
Tax Matters
22
Section 4.13
Environmental Matters
23
Section 4.14
Labor Matters
24
Section 4.15
Real Property Matters
25
Section 4.16
Title to Other Property; All ATM Assets
26
Section 4.17
Insurance
26
Section 4.18
Affiliate Relationships
26
Section 4.19
Tangible Personal Property
26
Section 4.20
Suppliers and Merchants
27
Section 4.21
Business Continuity
27
Section 4.22
Data Privacy and Security
28
Section 4.23
Brokers
28
Section 4.24
Bank Accounts
28
Section 4.25
EFT Accounts
28
Section 4.26
Certain Financial Data
28
Section 4.27
Vault Cash
29
Section 4.28
Theft
29
Section 4.29
Certain Security Policy
29
Section 4.30
No Other Representations or Warranties
29
Article V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
29
Section 5.1
Organization
29
Section 5.2
30
Section 5.3
Consents and Approvals; No Violations
30
Section 5.4
Financing
30
Section 5.5
Brokers
31
Section 5.6
31
Article VI
COVENANTS
31
Section 6.1
Interim Operations of the Companies
31
-2-
Table of Contents
(continued)
Page
Section 6.2
Due Diligence Inspection and Reviews; Further Access to Information
32
Section 6.3
Certain Filings
33
Section 6.4
Further Action and Reasonable Best Efforts
33
Section 6.5
Notification
34
Section 6.6
Tax Matters
34
Section 6.7
Employee Benefits
38
Section 6.8
Publicity
40
Section 6.9
Retention of and Access to Books and Records
40
Section 6.10
Indemnification of Managers and Officers
41
Section 6.11
Compliance with WARN Act and Similar Statutes
42
Section 6.12
Further Assurances
42
Section 6.13
No Shop
42
Section 6.14
Non-Competition; Non-Solicitation; Confidentiality
42
Section 6.15
EFT Accounts
45
Section 6.16
Mail
46
Section 6.17
Use of Names
46
Section 6.18
Non-Assigned Assets
46
Section 6.19
Pre-Closing Transfer of Certain Automobiles
47
Section 6.20
Cooperation Regarding Vault Cash Borrowings
47
Section 6.21
Efforts to Obtain Certain Consents
47
Article VII
CONDITIONS
48
Section 7.1
Conditions to Each Party’s Obligation
48
Section 7.2
Conditions to the Obligation of the Company Holders
48
Section 7.3
Conditions to Obligation of the Purchaser
49
Article VIII
TERMINATION
49
Section 8.1
Termination
49
Section 8.2
Effect of Termination
50
Section 8.3
Fees and Expenses
51
Article IX
SURVIVAL AND INDEMNIFICATION
51
Section 9.1
Survival
51
-3-
Table of Contents
(continued)
Page
Section 9.2
Indemnification by the Company Holders
51
Section 9.3
Indemnification by the Purchaser
52
Section 9.4
Limitations on Indemnification Amount
52
Section 9.5
Other Limitations
53
Section 9.6
Notice and Payment of Claims
54
Section 9.7
Tax Consequences
55
Section 9.8
Remedy
55
Section 9.9
Powers of Attorney
55
Section 9.10
Purchaser Reliance
57
Article X
MISCELLANEOUS
58
Section 10.1
Amendment; Waiver
58
Section 10.2
Notices
58
Section 10.3
Interpretation
59
Section 10.4
Headings; Schedules
60
Section 10.5
Counterparts
61
Section 10.6
Entire Agreement
61
Section 10.7
Severability
61
Section 10.8
Damages; Specific Performance
61
Section 10.9
Governing Law
61
Section 10.10
Dispute Resolution
61
Section 10.11
Conflicts and Privilege
62
Section 10.12
Construction
62
Section 10.13
Disclaimer of Warranties
63
Section 10.14
Assignment
63
Section 10.15
Definitions
63
-4-
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT, dated as of July 21, 2014 (this “Agreement”), is made
by and among WSILC, L.L.C., an Illinois limited liability company (“WSILC”), RTW
ATM, LLC, an Illinois limited liability company (“RTW”, along with WSILC, each
being referred to as a “Target Company” and collectively as the “Target
Companies”), C.O.D., LLC, a Missouri limited liability company (“COD”), WG ATM,
LLC, a Missouri limited liability company (“WG”, along with WSILC, RTW and COD
each being referred to as a “Company” and collectively as the “Companies”), each
person listed on Schedule A hereto (each, a “Company Holder” and collectively,
the “Company Holders”), Rock Island Capital Fund I, L.P., a Delaware limited
partnership, in its capacity as the representative of the Company Holders and
the Asset Sellers (the “Seller Representative”), and Cardtronics USA, Inc., a
Delaware corporation (the “Purchaser”). The Companies, the Company Holders, the
Seller Representative and the Purchaser are referred to herein as “Parties” and
each individually may be referred to as a “Party”.
WHEREAS, WSILC is the record owner of 2,000 units of RTW (the “Subsidiary
Interest”) and the Company Holders are the record owners of all the other issued
and outstanding membership interests and/or units of the Companies in the
amounts set forth on Schedule A (collectively with the Subsidiary Interest, the
“LLC Units”);
WHEREAS, the Company Holders named on Schedule A as Equity Sellers (the “Equity
Sellers”) desire to sell and Purchaser desires to purchase all of the issued and
outstanding membership interests and/or units of each Target Company owned by
the Equity Sellers (collectively, the “Equity Seller Units”);
WHEREAS, COD and WG (the “Asset Sellers”) desire to sell and transfer, and the
Purchaser desires to purchase and assume, the Purchased Assets and the Assumed
Liabilities;
WHEREAS, on the terms and subject to the conditions set forth herein, the Equity
Sellers desire to sell to the Purchaser, and the Purchaser desires to purchase
from the Equity Sellers, all of the Equity Seller Units; and
WHEREAS, on the terms and subject to the conditions set forth herein, the Asset
Sellers shall sell and transfer to the Purchaser, and the Purchaser shall
purchase and assume the Purchased Assets and the Assumed Liabilities.
representations, warranties, covenants, conditions, and agreements set forth
herein, the parties hereto agree as follows:
Article I
THE TRANSACTION
Section 1.1The Transaction. Upon the terms and subject to conditions of this
Agreement, at the Closing, each Equity Seller shall sell, transfer, assign,
convey and deliver to the Purchaser, and the Purchaser shall accept from each
Equity Seller, all of the issued and
outstanding Equity Seller Units held by such Equity Seller, free and clear of
any and all Liens. Upon the terms and subject to conditions of this Agreement,
at the Closing, (A) each Asset Seller shall sell, transfer, assign, convey and
deliver to the Purchaser all of the Purchased Assets, free and clear of any and
all Liens except for Liens securing Vault Cash Borrowings, and (B) the Purchaser
shall (i) accept and purchase all of the Purchased Assets from each Asset
Seller, free and clear of any and all Liens, and (ii) assume all of the Assumed
Liabilities. At the Closing, each Asset Seller shall retain responsibility and
liability for all of the Excluded Liabilities
Section 1.2Closing. The closing of the purchase, sale and transfer of the
Equity Seller Units and the Purchased Assets and the assumption of the Assumed
Liabilities and the other transactions contemplated hereby (the “Closing”) will
take place at 10:00 a.m., Chicago time, on the fifth business day after
satisfaction or waiver of all of the conditions set forth in Article VII hereof
(other than those conditions which by their nature are to be satisfied at the
Closing, but subject to the fulfillment or waiver of those conditions) (the
“Closing Date”), at the offices of McDermott Will & Emery LLP, 227 West Monroe
Street, Chicago, Illinois, 60606 (or by exchange of facsimile or PDF signatures)
unless another date or place is agreed to in writing by the parties hereto.
Section 1.3Deliveries by the Company Holders. At the Closing, the Company
Holders shall deliver, or cause to be delivered, to the Purchaser:
(a)Instruments of transfer executed by the Equity Sellers and sufficient to vest
in the Purchaser good title to the Equity Seller Units;
(b)A general bill of sale, assignment and assumption agreement, in substantially
the form of Exhibit A, executed by each Asset Seller, and effective as of 11:59
p.m. Central Time on the Closing Date;
(c)The resignations of the members of the Board of Managers of each Target
Company;
(d)The LLC Unit record books and ledgers and minute books of each Target
Company; provided, that any of the foregoing items shall be deemed to have been
delivered pursuant to this Section 1.3(d) if such item has been delivered to, or
is otherwise located at, the offices of a Target Company;
(e)Originals of all of the contracts, commitments, books, records, files and
other data of the Asset Sellers that (i) are included in the Purchased Assets or
(ii) relate to or affect the Purchased Assets as of the Closing Date; provided,
that any of the foregoing items shall be deemed to have been delivered pursuant
to this Section 1.3(e) if such item has been delivered to, or is otherwise
located at, the offices of a Target Company;
(f)Written evidence from The PrivateBank and Trust Company confirming that
(i) all of the existing authorized signatories on the EFT Accounts have been
removed and (ii) all of Purchaser’s designees listed on Schedule 1.3(f) have
been added as authorized signatories on the EFT Accounts;
- 2 -
(g)A certificate of the Secretary of each Company, dated the Closing Date,
attaching and certifying the applicable required authorizing resolutions of such
Company;
(h)Good standing certificates for each of the Companies from the jurisdiction of
its formation or organization, as applicable;
(i)Payoff and release letters from the holders of the Indebtedness for Borrowed
Money of the Companies that (i) reflect the amounts required in order to pay in
full such indebtedness and (ii) provide that, upon payment in full of the
amounts indicated, all Liens with respect to the assets of any of the Companies
shall be terminated and of no further force and effect, together with UCC-3
termination statements with respect to the financing statements filed against
the assets of any of the Companies by the holders of such Liens;
(j)An exact duplicate of the Data Room in digital form stored on DVD’s or on an
external hard drive;
(k)The Escrow Agreement in substantially the form of Exhibit B, executed by the
Seller Representative;
(l)A Termination and Release Agreement, in substantially the form of Exhibit C,
executed by each of (A) RIC GP I, LLC terminating all management fee agreements
and (B) COD and WG terminating the Amended and Restated Management Agreement
made and entered into November 1, 2011 by and among WSILC, COD and WG (the
“Management Agreement”);
(m)A duly executed non-foreign affidavit, dated as of the Closing Date, sworn
under penalty of perjury and in form and substance required by Treasury
Regulation § 1.1445-2(b), stating that each Company Holder and Asset Seller is
not a “foreign person” as defined in Section 1445 of the Code; provided that,
notwithstanding anything else to the contrary herein, if a Company Holder or
Asset Seller, as applicable, fails to deliver such certificate and the Purchaser
elects to proceed with Closing, the Purchaser shall be entitled to withhold or
cause to be withheld from payments otherwise payable to such Company Holder or
Asset Seller, as applicable, all amounts required to be withheld pursuant to
Section 1445 of the Code;
(n)A Release Agreement in the form of Exhibit D, executed by each Company
Holder, in which such Company Holder releases, on behalf of itself and all of
its Affiliates, any and all claims, rights, causes of actions, indebtedness or
other obligations (other than the obligations under this Agreement) that may be
owed by any Target Company to such Company Holder, other than as relate to
current employment and indemnification rights under the Target Company's limited
liability company operating agreement (and as to Mark Idel the conditional note
owing to IDI ATM, LLC);
(o)A Transition Services and Office Space Sharing Agreement in substantially the
form of Exhibit E, executed by WSILC and Welch Gaming, LLC;
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(p)An amendment to the Processing Agreement between WSILC and Welch Gaming, LLC
in substantially the form of Exhibit F;
(q)An Employment Agreement in the form of Exhibit G executed by Jeffery Hewitt
(“Hewitt”);
(r)An Employment Agreement in the form of Exhibit H executed by Bradley Cummins
(“Cummins”);
(s)A termination and trademark assignment of the Welch License Agreement, in the
form of Exhibit I executed by authorized representatives of WSILC and Welch
Systems, Inc.;
(t)A termination of the existing Gaming Payout Device Cash Agreement among First
Premier Bank, WSILC and Welch Gaming, LLC or amendment deleting WSILC as a
party, and an indemnification letter in the form of Exhibit J executed by
Welching Gaming, LLC in favor of WSILC; and
(u)All other documents required to be delivered by the Company Holders or Asset
Sellers on or prior to the Closing Date pursuant to this Agreement.
Section 1.4Deliveries by the Purchaser. At the Closing the Purchaser shall
deliver (a) to the Seller Representative, on behalf of the Equity Sellers and
the Asset Sellers, the Closing Payment Amount in accordance with Section 2.2,
(b) the Escrow Agreement in the form of Exhibit B executed by the Purchaser,
(c) to Hewitt an Employment Agreement in the form of Exhibit G executed by the
Purchaser, and (d) to Cummins an Employment Agreement in the form of Exhibit H
executed by the Purchaser, together with all other documents required to be
delivered by the Purchaser on or prior to the Closing Date pursuant to this
Agreement.
Section 1.5Escrow. At the Closing, the Purchaser shall deposit with the Escrow
Agent $16,000,000 (the “Indemnity Escrow Amount”), to be held by the Escrow
Agent in accordance with the terms of the Escrow Agreement and used to satisfy
any liabilities of the Equity Sellers and Asset Sellers arising under Section
2.2(c) or Section 9.2 The Equity Sellers’ and Asset Sellers’ relative interest
in any amounts distributable from the Indemnity Escrow Amount shall be their
Distributive Share. The parties agree that the fees and costs of the Escrow
Agent shall be borne one-half by the Purchaser and one-half by Seller
Representative (on behalf of the Equity Sellers and Asset Sellers).
Section 1.6Hewitt Holdback. As referenced in Section 2.2(a)(iii), at the
Closing, Purchaser shall withhold and retain from the Net Purchase Price an
amount (the “Retention Amount”) equal to thirteen and one-half percent (13.5%)
of Hewitt’s Distributive Share of the Net Purchase Price allocable solely to
WSILC (before giving effect to any WC/CapX Adjustment).
(a)For purposes of determining the portion of the Closing Payment Amount to be
disbursed by the Seller Representative pursuant to Section 9.10 to each Equity
Seller and Asset Seller, the following provisions shall apply:
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(i)The portion of the Closing Payment Amount to be disbursed by the Seller
Representative to each Equity Seller (other than Hewitt) and Asset Seller shall
be equal to their respective Distributive Share of an amount equal to the sum of
(x) the Closing Payment Amount plus (y) the Retention Amount; and
(ii)The portion of the Closing Payment Amount to be disbursed to Hewitt shall be
equal to the entire remaining Closing Payment Amount that is not disbursed to
the other Equity Sellers and Asset Sellers pursuant to Section 1.6(a)(i).
(b)The Retention Amount need not be segregated or held in a separate account by
the Purchaser and shall be paid, disbursed and applied by Purchaser as follows:
(i)Purchaser shall pay (A) one-third (1/3rd) of the Retention Amount to Hewitt
on the date that is five hundred forty-seven (547) days after the Closing Date
(“First Installment Due Date”) if Hewitt has remained continuously employed by
the Purchaser (or an Affiliate of the Purchaser) from the Closing Date through
the First Installment Due Date and (B) the remaining two-thirds (2/3rds) of the
Retention Amount to Hewitt on the third anniversary of the Closing Date (“Second
Installment Due Date”) if Hewitt has remained continuously employed by the
Purchaser (or an Affiliate of the Purchaser) from the Closing Date through and
until the Second Installment Due Date; provided, however, if (x) on or before
the due date of either of the foregoing installments of the Retention Amount the
Purchaser has, in good faith, provided written notice to Hewitt pursuant to
clauses (a) or (c) of the definition of “Cause” and (y) Hewitt’s period to cure
the matter disclosed in such written notice has not yet expired as of the due
date of such installment of the Retention Amount, then the Purchaser shall have
the right, by notice to Hewitt, to delay the due date of such installment of the
Retention Amount otherwise due on the First Installment Due Date or the Second
Installment Due Date, as applicable, until the next Business Day following the
expiration of such cure period.
(ii)If Hewitt’s employment with the Purchaser and all of its Affiliates should
be terminated by the Purchaser (and/or all of such Affiliates, as applicable)
without Cause, by Hewitt with Good Reason or by reason of Hewitt’s death or
permanent disability prior to the payment of the entirety of the Retention
Amount to Hewitt in accordance with Section 1.6(b)(i), then the remaining unpaid
portion of the Retention Amount shall be paid to Hewitt within five (5) business
days following such termination without Cause, termination by Hewitt with Good
Reason or Hewitt’s death or disability, as applicable.
(iii)If Hewitt’s employment with the Purchaser and all of its Affiliates should
with Cause or by Hewitt without Good Reason prior to the payment of the entirety
of the Retention Amount to Hewitt in accordance with Section 1.6(b)(i), then all
of the Retention Amount not otherwise disbursed to Hewitt pursuant to Section
1.6(b)(i) or Section 1.6(b)(ii) shall be paid to Hewitt on the fifth (5th)
anniversary of the Closing Date.
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Article II
PURCHASE PRICE
Section 2.1Purchase Price. The aggregate consideration for the Equity Seller
Units and the Purchased Assets (the “Purchase Price”) shall be an amount equal
to One Hundred Sixty Million Dollars (U.S. $160,000,000) (the “Gross Purchase
Price”) plus the assumption of the Assumed Liabilities. The net cash
consideration (“Net Purchase Price”) shall be equal to the Gross Purchase Price
(i) minus the amount of the outstanding Indebtedness for Borrowed Money of the
Target Companies as of the Closing Date, (ii) minus the amount of unpaid Seller
Transaction Expenses, (iii) minus the Past Employee Termination Amount,
(iv) minus one-half of the fees of any filings under Competition Laws (as
contemplated by Section 6.3, (v) minus the amount, if any, by which the sum of
Net Working Capital (excluding for this purpose Vault Cash and Vault Cash
Borrowing) plus Recent CapX, as reflected on the Final Closing Statement, is
less than $2,400,000 (a “Negative WC/CapX Adjustment”) (vi) minus the amount, if
any, by which Vault Cash Borrowings exceed Vault Cash as of the Closing Date
(“Vault Cash Deficiency”) and (vii) plus the amount, if any, by which the sum of
Borrowing) plus Recent CapX as reflected on the Final Closing Statement exceeds
$2,600,000 (a “Positive WC/CapX Adjustment”). The applicable Negative WC/CapX
Adjustment and/or the Positive WC/CapX Adjustment is referred to herein as the
“WC/CapX Adjustment.”
Section 2.2Payment.
(a)Cash Payment to Equity Sellers and Asset Sellers. At the Closing, Purchaser
shall deliver to the Seller Representative, on behalf of the Equity Sellers and
Asset Sellers, an amount (“Closing Payment Amount”) equal to (i) the Net
Purchase Price (before giving effect to any WC/CapX Adjustment, (ii) minus the
Indemnity Escrow Amount, (iii) minus the Retention Amount, (iv) minus the amount
of the outstanding Indebtedness for Borrowed Money of the Asset Sellers that is
paid pursuant to Section 2.2(b), and (v) subtracting any estimated Negative
WC/CapX Adjustment or adding any estimated Positive WC/CapX Adjustment, as
applicable, based upon the Estimated Closing Balance Sheet.
(b)Other Payments. At the Closing, Purchaser shall pay to the holders of the
Indebtedness for Borrowed Money of the Target Companies the amounts set forth in
their payoff letters delivered pursuant to Section 1.3(i) in accordance with the
terms thereof and shall also pay, on behalf of the Asset Sellers, the holders of
the Indebtedness for Borrowed Money of the Asset Sellers the amounts set forth
in their payoff letters delivered pursuant to Section 1.3(i) in accordance with
the terms thereof. Additionally, the Purchaser shall pay any unpaid Seller
Transaction Expenses to the required payees in accordance with the instructions
delivered by the Seller Representative to the Purchaser at least two (2)
Business Days prior to the Closing.
(c)Reconciliation of WC/CapX Adjustment. If the WC/CapX Adjustment based upon
the Final Closing Statement is different than the WC/CapX Adjustment that was
estimated based on the Estimated Closing Statement, then within five (5)
Business
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Days after the final determination of the Final Closing Statement pursuant to
Section 2.4, either (i) the Equity Sellers and the Asset Sellers shall pay to
Purchaser from the Indemnity Escrow Amount (A) the amount, if any, by which the
estimated Positive WC/CapX Adjustment exceeds the final Positive WC/CapX
Adjustment plus (B) the amount, if any, by which the final Negative WC/CapX
Adjustment exceeds the estimated Negative WC/CapX Adjustment or (ii) Purchaser
shall pay to the Seller Representative, on behalf of the Equity Sellers and
Asset Sellers, (A) the amount, if any, by which the final Positive WC/CapX
Adjustment exceeds the estimated Positive WC/CapX Adjustment plus (B) the
amount, if any, by which the estimated Negative WC/CapX Adjustment exceeds the
final Negative WC/CapX Adjustment.
(d)Vault Cash Deficiency. The Equity Sellers and the Asset Sellers shall pay to
Purchaser from the Indemnity Escrow Amount any Vault Cash Deficiency promptly
following the final determination of the amount thereof.
Section 2.3Method of Payment. All payments under Section 2.2 shall be made by
wire transfer of immediately available funds free of costs and charges to an
account that the recipient, at least forty-eight (48) hours prior to the time
for payment specified hereunder, has designated.
Section 2.4Determination of Net Working Capital plus Recent CapX.
(a)Estimated Closing Statement. At least fifteen (15) business days prior to
the Closing, the Seller Representative shall deliver to the Purchaser a schedule
setting forth the Seller Representative’s best estimate of the sum of Net
Working Capital plus Recent CapX, pro forma as of the Closing Date (the
“Estimated Closing Statement”), prepared in accordance with the definitions of
Adjusted Current Assets and Adjusted Current Liabilities and Recent CapX.
(b)Proposed Final Closing Statement. Within ninety (90) calendar days after the
Closing Date, the Purchaser shall prepare, or cause to be prepared, and deliver
to the Seller Representative an unaudited statement of the Adjusted Current
Assets and Adjusted Current Liabilities as of the Closing Date and Recent CapX
and any Vault Cash Deficiency (the “Proposed Final Closing Statement”), which
shall be prepared in accordance with a manner consistent with the preparation of
the April 30, 2014 current assets and liabilities statement attached as
Schedule 10.15 (WC Statement). If no Proposed Final Closing Statement is
delivered to the Seller Representative within such ninety (90) calendar day
period, then the Purchaser shall be deemed to have accepted the Estimated
Closing Statement and the Estimated Closing Statement shall constitute the Final
Closing Statement.
(c)Objection to Proposed Final Closing Statement. Within thirty (30) calendar
days after the Proposed Final Closing Statement is delivered to the Seller
Representative pursuant to Section 2.4(b), the Seller Representative shall
complete its review of the sum of Net Working Capital plus Recent CapX and any
Vault Cash Deficiency derived from the Proposed Final Closing Statement. If the
Seller Representative objects to the calculation of the sum of Net Working
Capital plus Recent
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CapX and Vault Cash Deficiency, as set forth in the Proposed Final Closing
Statement, then the Seller Representative shall inform the Purchaser on or prior
to the last day of such thirty (30) calendar day period by delivering a written
notice to the Purchaser (a “Closing Statement Objection”) setting forth a
specific description of the basis of the Closing Statement Objection and the
adjustments to the sum of Net Working Capital plus Recent CapX and Vault Cash
Deficiency that the Seller Representative believes should be made. If there is
any delay in access to necessary books, records and personnel required by
Section 2.4(f), such response period shall be extended by the period of
delay. If no Closing Statement Objection is delivered to the Purchaser within
such thirty (30) calendar day period (as it may have been extended), then the
Seller Representative shall be deemed to have accepted the Proposed Final
Closing Statement and the Proposed Final Closing Statement shall constitute the
Final Closing Statement.
(d)Response to Closing Statement Objection. If a Closing Statement Objection is
delivered to the Purchaser pursuant to Section 2.4(c)Section 2.4(b), then the
Purchaser shall have fifteen (15) calendar days to review and respond to the
Closing Statement Objection by delivering written notice to the Seller
Representative, specifying the scope of its disagreement with the information
contained in it. If no such written notice is delivered to the Seller
Representative within such fifteen (15) calendar day period, then the Purchaser
shall be deemed to have accepted the Closing Statement Objection.
(e)Dispute Resolution Following Closing Statement Objection.
(i)Negotiation. If the Purchaser delivers a written notice to the Seller
Representative in response to a Closing Statement Objection pursuant
to Section 2.4(d), then the Seller Representative and the Purchaser shall
promptly meet and attempt in good faith to resolve any dispute or disagreement
relating to the Proposed Final Closing Statement and the calculation of the sum
of Net Working Capital plus Recent Capx and Vault Cash Deficiency (the “Closing
Statement Dispute”).
(ii)Resolution by CPA Firm. If the Seller Representative and the Purchaser are
unable to resolve the Closing Statement Dispute within sixty (60) calendar days
after the delivery of a Closing Statement Objection to the Purchaser, then at
any time thereafter the Seller Representative or the Purchaser may elect to have
the Closing Statement Dispute resolved by PricewaterhouseCoopers LLP (provided
that neither Seller Representative nor Purchaser has engaged such firm for any
purpose in the last three years), or another nationally recognized firm of
independent public accountants as to which the Seller Representative and
Purchaser mutually agree (the “CPA Firm”), who shall, acting as experts and not
as arbitrators, determine on the basis of the criteria set forth in this
Section 2.4, and only with respect to the remaining accounting-related
differences so submitted to the CPA Firm (and not by independent review),
whether and to what extent, if any, the sum of Net Working Capital plus Recent
CapX and Vault Cash Deficiency as derived from the Proposed Final Closing
Statement requires adjustment. In connection with the engagement of the CPA
Firm, each Party shall execute reasonable engagement letters in the reasonable
discretion of the respective parties and supply such other documents and
information as the CPA Firm reasonably requires. Without
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limitation, each Party may submit such data and information to the CPA Firm as
such Party deems appropriate. The CPA Firm shall be instructed to use every
reasonable effort to perform its services within fifteen (15) calendar days
after submission of the Closing Statement Dispute to it and, in any case, as
soon as practicable after such submission. In resolving the Closing Statement
Dispute, the CPA Firm (A) shall utilize accounting principles that are
consistent with GAAP and the Companies’ historical calculation of current assets
and current liabilities and (B) shall not assign a value to any item greater
than the greatest value for such item claimed by any Party, or less than the
smallest value for such item claimed by any Party, as presented to the CPA Firm
pursuant hereto. The Proposed Final Closing Statement, as it may be adjusted by
the CPA’ Firm’s resolution of the Closing Statement Dispute shall constitute the
Final Closing Statement.
(iii)Payment of Fees of CPA Firm. If the sum of Net Working Capital plus Recent
CapX as reflected on the Final Closing Statement is closer in amount to the Net
Working Capital as reflected in the Closing Statement Objection (or, if
different, the last Net Working Capital proposed in writing by the Seller
Representative as a part of the negotiations conducted pursuant to Section
2.4(e)(i)) than to the sum of Net Working Capital plus Recent CapX as reflected
on the Proposed Final Closing Statement (or, if different, the last Net Working
Capital proposed in writing by the Purchaser as a part of the negotiations
conducted pursuant to Section 2.4(e)(i), then the Purchaser shall pay all fees
and expenses of the CPA Firm in connection with the services provided pursuant
to Section 2.4(e)(ii). If the sum of Net Working Capital plus Recent CapX as
reflected on the Final Closing Statement is closer in amount to the sum of Net
Working Capital plus Recent CapX as reflected on the Proposed Final Closing
Statement (or, if different, the last Net Working Capital proposed in writing by
the Purchaser as a part of the negotiations conducted pursuant to Section
in the Closing Statement Objection (or, if different, the last sum of Net
Working Capital plus Recent CapX proposed in writing by the Seller
2.4(e)(i)), then the Seller Representative, on behalf of the Company Holders
shall pay all fees and expenses of the CPA Firm in connection with the services
provided pursuant to Section 2.4(e)(ii), which shall be paid from the Indemnity
Escrow Amount.
(f)Cooperation. Each Party agrees that, from and after the Closing Date, it
will not take any actions with respect to the accounting books, records,
policies and procedures of Purchaser or any Company that would obstruct or
prevent the preparation, review or evaluation of the Proposed Final Closing
Statement. Each Party shall cooperate, and shall cause its Affiliates and
designees to cooperate, with the other in the preparation, review and evaluation
of the Proposed Final Closing Statement, including the provision on a timely
basis of all information reasonably necessary or useful in connection with the
preparation, review and evaluation of the Proposed Final Closing Statement and
access to necessary personnel and reasonable amounts of their time. The Seller
Representative and its accountants shall have reasonable access to all
information used by the Purchaser in preparing the Proposed Final Closing
Statement, including the work papers of its accountants.
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Article III
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO
THE COMPANY HOLDERS
Each Company Holder, severally and not jointly, represents and warrants to
Purchaser as to such Company Holder as follows:
Section 3.1Ownership of LLC Units. Such Company Holder owns, beneficially and
of record, the class and number of LLC Units of the respective Company listed
opposite such Company Holder’s name on Schedule 3.1, free and clear of all
Liens, options, rights, calls, commitments, proxies or other contract
rights. Such Company Holder has sole voting power and sole power of disposition
and sole power to agree to all of the matters set forth in this Agreement, in
each case with respect to all of the LLC Units so indicated opposite such
Company Holder’s name on Schedule 3.1, with no limitations, qualifications or
restrictions on such rights and powers, and such Company Holder has not granted
such rights and powers to any other Person.
Section 3.2Authorization; Validity of Agreement. Each Company Holder has the
requisite power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the other documents and instruments to be executed and
delivered hereunder, and the consummation of the transactions contemplated
hereby and thereby have been duly authorized on behalf of such Company Holder,
if such Company Holder is not a natural Person, and no other proceedings on the
part of the Company Holder are necessary to authorize the execution and delivery
of this Agreement and the other documents and instruments to be executed and
delivered hereunder or the consummation of the transactions contemplated hereby
and thereby. This Agreement constitutes, and when executed and delivered, the
other documents and instruments to be executed and delivered hereunder by the
Company Holder will constitute, valid and binding agreements of such Company
Holder, except to the extent such enforcement may be subject to or limited by
(i) bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors’ rights generally and (ii) the effect of general principles
law or in equity).
Section 3.3No Violations, Consents and Approvals. Except as set forth on
Schedule 3.3, neither the execution and delivery by the Company Holder of this
Agreement or the other documents and instruments to be executed and delivered by
the Company Holder hereunder, nor the consummation by the Company Holder of the
transactions contemplated hereby and thereby will (i) violate any provision of
the organizational documents of the Company Holder (if the Company Holder is not
a natural Person), (ii) result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration) under, any of the
terms, conditions or provisions of any loan agreement, note, bond, mortgage,
guarantee, lease, license, agreement or other instrument or obligation to which
the Company Holder is a party, (iii) require any authorization, consent or
approval by, filing with or notice to any foreign, federal, state, local,
municipal, county or other governmental, administrative or regulatory authority,
body, agency, court, tribunal, commission or similar entity (including any
branch, department or
- 10 -
official thereof) (a “Governmental Entity”), except for (A) the requirements of
any federal, state and foreign Law or Order that is designed or intended to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade or lessening of competition, including the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“Competition
Law”) applicable to the transactions contemplated hereby, (B) such
authorizations, consents, approvals, filings or notices, the failure of which to
obtain or make would not, individually or in the aggregate, have a Material
Adverse Effect or a material adverse effect on the Company Holder’s ability to
perform its obligations hereunder and (C) such authorizations, consents,
approvals, filings or notice requirements that become applicable solely as a
result of the specific regulatory status of the Purchaser or any of its
Affiliates, or (iv) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to the Company Holder; except in the case of clauses
(ii) through (iv) above for such violations, breaches or defaults which are not
reasonably likely to have a Material Adverse Effect.
Section 3.4Litigation. Except as set forth on Schedule 3.4, as of the date of
this Agreement, there is no Action pending or, to the actual knowledge of the
applicable Company Holder, threatened, against any Company Holder or any of its
respective assets, properties or businesses that would reasonably be expected to
prevent the Closing.
Section 3.5Brokers. Except as set forth in Schedule 3.5, no broker, finder or
based upon arrangements made by or on behalf of a Company Holder.
Article IV
Each Company, severally and not jointly, represents and warrants to Purchaser as
to such Company as follows:
Section 4.1Organization. Such Company is a limited liability company duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its organization or incorporation. Such Company has all
requisite limited liability company power and authority to own, lease and
operate its properties and to carry on its business as it is now being
conducted, and is qualified or licensed to do business and is in good standing
in each jurisdiction in which the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to be so
organized, existing and in good standing or to have such power and authority, or
to be so qualified or licensed is not reasonably likely to have a Material
Adverse Effect. Schedule 4.1 delivered to the Purchaser as of the date of this
Agreement sets forth each jurisdiction in which such Company is qualified to do
business.
Section 4.1-AAuthorization; Validity of Agreement. Such Company has the
hereby and thereby have been duly authorized on behalf of such
- 11 -
Company, and no other proceedings on the part of such Company are necessary to
authorize the execution and delivery of this Agreement and the other documents
and instruments to be executed and delivered hereunder or the consummation of
the transactions contemplated hereby and thereby. This Agreement constitutes,
and when executed and delivered, the other documents and instruments to be
executed and delivered hereunder by such Company will constitute, valid and
binding agreements of such Company, except to the extent such enforcement may be
subject to or limited by (i) bankruptcy, insolvency or other similar laws, now
or hereafter in effect, affecting creditors’ rights generally and (ii) the
effect of general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
Section 4.2Capitalization.
(a)All the outstanding LLC Units are duly authorized, validly issued, fully paid
and non-assessable and are owned, directly by the Company Holders (or, in the
case of certain of the Subsidiary Interest, WSILC) in the amounts and classes,
if applicable, set forth on Schedule A. Such Company is not a party to any
(i) options, warrants, calls, pre-emptive rights, subscriptions or other rights,
convertible securities, agreements or commitments of any character obligating
such Company to issue, transfer or sell any LLC Units in such Company or
securities convertible into or exchangeable for such LLC Units or equity
interests, (ii) contractual obligations to repurchase, redeem or otherwise
acquire any LLC Units or other equity interests of such Company, (iii) voting
trusts or similar agreements with respect to the voting of the LLC Units of such
Company, or (iv) liens, claims, charges, security interests, mortgages, pledges
or other restrictions or encumbrances, except for any restrictions on transfer
generally arising under any applicable federal or state securities laws
(collectively, “Liens”) on such LLC Units.
(b)Except for the ownership of the Subsidiary Interest by WSILC, no such Company
has any Subsidiaries.
(c)No holder of any Company LLC Units or other Person has any statutory
appraisal or dissenters’ rights in respect of the transactions contemplated by
this Agreement.
Section 4.3No Violations; Consents and Approvals. Except as set forth on
Schedule 4.3, neither the execution and delivery by such Company of this
Agreement or the other documents and instruments to be executed and delivered
hereunder, nor the consummation by such Company of the transactions contemplated
hereby and thereby will (i) violate any provision of its articles of
organization or its LLC Agreement, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any loan or credit
agreement, note, bond, mortgage, guarantee, lease, license, agreement or other
instrument or obligation to which such Company is a party or by which it or any
of its assets may be bound, (iii) require any authorization, consent or approval
by, filing with or notice to any Governmental Entity, except for (A) the
requirements of any Competition Law, applicable to the transactions contemplated
hereby, (B) such authorizations, consents, approvals, filings or notices, the
failure of which to obtain or make would not, individually or in the aggregate,
have a Material Adverse Effect or a material adverse effect on such Company’s
- 12 -
ability to perform its obligations hereunder and (C) such authorizations,
consents, approvals, filings or notice requirements that become applicable
solely as a result of the specific regulatory status of the Purchaser or any of
rule or regulation applicable to such Company any of its properties or assets;
except in the case of clauses (ii) through (iv) above for such violations,
breaches or defaults which are not reasonably likely to have a Material Adverse
Effect.
Section 4.4Financial Statements.
(a)Such Company’s audited (in the case of the Target Companies, consolidated
with each other and with Welch Management Holdings, LLC) (i) balance sheets as
of December 31, 2012 and December 31, 2013, and statements of operations and
cash flows for the 12 month periods ended December 31, 2012 and December 31,
2013 (collectively, the “Year-End Financial Statements”) and (ii) unaudited
balance sheet as of May 31, 2014 (the “Recent Balance Sheet”), and statement of
operations for the period from January 1, 2014 through May 31, 2014 (the
“Interim Financial Statement,” and, together with the Year-End Financial
Statements, the “Company Financial Statements”) have been prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis (“GAAP”) (except as otherwise noted therein) and fairly present
in all material respects the consolidated financial position and the
consolidated results of operations and cash flows of such Company as at the
dates thereof or for the periods presented therein (subject to normal year-end
adjustments and the absence of related notes). The Company Financial Statements
are consistent with the books and records of such Company and its Subsidiaries.
(b)All accounts receivable reflected on the Recent Balance Sheet, and all
accounts receivable of such Company generated since the date of the Recent
Balance Sheet (the “Receivables”), constitute bona fide receivables resulting
from the sale of inventory, services or other obligations in favor of such
Company.
(c)The accounts payable of such Company reflected on the Recent Balance Sheet
arose from bona fide transactions in the Ordinary Course of Business, and all
such accounts payable have either been paid, are not yet due and payable in the
Ordinary Course of Business, or are being contested by such Company in good
faith.
(d)Purchaser has been provided access to true, correct and complete copies of
all Processor Reports. Such Company has no Knowledge that the data set forth in
the Processor Reports is inaccurate or incomplete in any material respect.
Section 4.5Absence of Certain Changes. Except as (i) disclosed on Schedule 4.5
or (ii) required by applicable law, since the date of the Interim Financial
Statement until the date of this Agreement:
(a)there has not been any change in the business, results of operations or
financial condition of such Company that has had or is reasonably likely to have
- 13 -
(b)such Company has conducted its business in all material respects in the
Ordinary Course of Business;
(c)such Company has not amended its articles of organization or LLC Agreement;
(d)such Company has not granted any increase in salary or bonus payable to any
officer or employee, except in the Ordinary Course of Business or as required by
existing Contracts;
(e)such Company has not made any commitment outside of the Ordinary Course of
Business to be paid after the Closing other than as set forth on
Schedule 4.5(e);
(f)such Company has not made or revised any material Tax election or settled or
compromised any Tax liability; and
(g)such Company has not (i) issued, sold, transferred, pledged, disposed of or
encumbered any LLC Units or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire, any LLC
Units or other equity interests of such Company or (ii) redeemed, purchased or
otherwise acquired directly or indirectly any of its LLC Units or other equity
interests.
Section 4.6Litigation. Except as set forth on Schedule 4.6 and except for
claims under Environmental Laws (which are the subject of Section 4.13 hereof
exclusively), as of the date of this Agreement, there is no suit, claim, action,
arbitration, proceeding or investigation (each, an “Action”) pending or, to the
Knowledge of such Company, threatened, against such Company or any of its
respective assets, properties or businesses. There is no charge, involving such
Company or its employees that has been filed with (or, to the Knowledge of such
Company, threatened to be filed with), or no administrative proceeding or, to
the Knowledge of such Company, investigation is being conducted by the Equal
Employment Opportunity Commission or any other governmental entity (or any
equivalent agency in any state or municipality), the Occupational Safety and
Health Administration, or the Department of Labor.
Section 4.7No Undisclosed Liabilities. Except as set forth on Schedule 4.7,
such Company has no liability, commitment or obligation of any kind or any
nature, except for (i) such liabilities, commitments or obligations reflected on
or reserved against in the Interim Financial Statement, or incurred since the
date of the Interim Financial Statement in the Ordinary Course of Business,
(ii) liabilities disclosed in footnotes to the Year-End Financial Statements,
(iii) any contractual commitments that (A) are of a nature not required to be
disclosed in a balance sheet prepared in accordance with GAAP, (B) arise
pursuant to the terms of a Contract disclosed on Schedule 4.11(a) or not
required to be disclosed on Schedule 4.11(a) pursuant to Section 4.11(a) and
(C) do not arise from or relate to a breach or default by such Company under any
Contract, and (iv) liabilities, commitments or obligations incurred in the
Ordinary Course of Business since the date of the Interim Financial Statement.
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Section 4.8Compliance with Law.
(a)Except for Environmental Laws (which are the subject of Section 4.13 hereof
exclusively), compliance of Plans with Laws (which are the subject of Section
4.10 hereof exclusively) and compliance with the New ADA Rules (which are the
subject of Section 4.19 hereof exclusively) hereof, the operations of such
Company are not being conducted in violation of any law, statute, regulation,
award, decision, settlement, judgment, decree, order or injunction of any
Governmental Entity (each, an “Order”), except where such violations are not
reasonably likely to have a material impact on such Company.
(b)Such Company holds all licenses, permits, variances and approvals of
Governmental Entities (collectively, “Permits”) necessary for the lawful conduct
of their respective businesses as currently conducted except for Permits under
Environmental Laws (which are the subject of Section 4.13 hereof exclusively)
and except where the failure to hold such Permits is not reasonably likely to
have a Material Adverse Effect. All of such material permits held by such
Company are set forth on Schedule 4.8(b).
Section 4.9Technology and Intellectual Property.
(a)Schedule 4.9(a) sets forth an accurate and complete list of all issued
Patents and pending Patent applications, registered Marks, pending applications
for registration of Marks, unregistered Marks, registered Copyrights, and
Internet domain names owned or filed by such Company. Schedule 4.9(a) lists
(i) the record owner of each such item of Intellectual Property, (ii) the
jurisdictions in which each such item of Intellectual Property has been issued
or registered or in which any such application for issuance or registration has
been filed and (iii) the registration or application date, as applicable.
(b)Such Company is the owner of all right, title and interest in and to, or has
valid and continuing rights to use, sell, license and otherwise commercially
exploit, as the case may be, the Company Intellectual Property, the Company
Technology and the Intellectual Property licensed to such Company under the
Intellectual Property Licenses as the same is used, sold, licensed and otherwise
commercially exploited by such Company in its business as presently conducted,
free and clear of Liens (except for those specified in the Intellectual Property
Licenses listed in Schedule 4.11(a)(xxiii)).
(c)To the Knowledge of such Company, the Company Intellectual Property, the
Company Technology, the development, manufacturing, licensing, marketing, offer
for sale, sale or use of any products and services in connection with the
business of such Company as presently conducted, and the present business
practices, methods and operations of such Company do not infringe, dilute,
constitute or result from an unauthorized use or misappropriation of, or violate
any Intellectual Property, or Technology of any Person. The Company
Intellectual Property, the Company Technology and the Intellectual Property
the Intellectual Property and Technology necessary to
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enable such Company to conduct its business in the manner in which such business
is currently being conducted.
(d)To the Knowledge of such Company, no Person is infringing, diluting,
violating, misusing or misappropriating any Company Intellectual Property or
Company Technology, and no claims of infringement, dilution, violation, misuse
or misappropriation of any Company Intellectual Property or Company Technology
have been made against any Person by such Company.
(e)Such Company is in compliance in all material respects with any posted
privacy policies and all Laws and industry standards relating to personally
identifiable information.
(f)Such Company is not the subject of any pending or, to the Knowledge of such
Company, threatened Action that involve a claim of infringement, unauthorized
use, misappropriation, dilution or violation by any Person against such Company
or challenging the ownership, use, validity or enforceability of any Company
Intellectual Property, Company Technology or Intellectual Property licensed to
such Company under any of the Intellectual Property Licenses. Such Company has
not received written notice of any such threatened Action.
Section 4.10Employee Benefit Plans; ERISA.
(a)Schedule 4.10(a) contains a true and complete list of each bonus, deferred
compensation, incentive compensation, stock purchase, stock option, severance or
termination pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, employment, deferred bonus, retention or
divestiture award, profit sharing, pension, or retirement plan, program,
agreement or arrangement or other “employee benefit plan” (within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”)), and each other material employee benefit plan, program, agreement or
arrangement, sponsored, maintained or contributed to by such Company or by any
trade or business, whether or not incorporated (an “ERISA Affiliate”), that
together with such Company would be deemed a “single employer” within the
meaning of Section 4001 of ERISA, for the benefit of any employee or former
employee of such Company (collectively, the “Plans”).
(b)With respect to each Plan, such Company has heretofore made available to the
Purchaser true and complete copies of each of the following documents:
(i)the Plan;
(ii)the most recent annual report and actuarial report, if required under ERISA;
(iii)the most recent Summary Plan Description required under ERISA with respect
thereto;
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(iv)if the Plan is funded through a trust or any third-party funding vehicle,
the trust or other funding agreement and the latest financial statements
thereof;
(v)the most recent determination letter or opinion letter received from the
Internal Revenue Service with respect to each Plan intended to qualify under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code”);
(vi)all plans, contracts, policies or agreements describing each bonus, deferred
compensation or incentive compensation to which any of the employees of the
Target Companies are entitled;
(vii)any contract agreement, policy, or plan under which any employee of the
Target Companies is entitled to any deferred bonus, retention or divestiture
award;
(viii)each stock purchase, stock option or other similar agreement under which
any employee of the Target Companies is entitled to stock, stock options or
other benefits; and
(ix)any contract, agreement, policy or plan under which any of the employees of
the Target Companies are entitled to hospitalization or other medical, life or
other insurance benefits;
(x)any prior waiver of any preexisting condition, waiting period limitation, or
other condition, obligation or requirement of any employee benefit plan
(including those specifically referred to in the third sentence of Section
6.7(b).
(c)All required reports and descriptions (including Form 5500 annual reports,
summary annual reports, and summary plan descriptions) have been timely filed
and/or distributed in accordance with the applicable requirements of ERISA and
the Code with respect to each such Plan.
(d)Except as provided on Schedule 4.10(d), each Plan has been operated and
administered in all material respects in accordance with its terms and
applicable law, including but not limited to ERISA and the Code. Such Company
has not engaged in a transaction or has taken or failed to take any action in
connection with which such Company or any ERISA Affiliate could be subject to
any material liability for either a civil penalty assessed pursuant to
Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975, 4976
or 4980B of the Code.
(e)There are no pending, or to the Knowledge of such Company, threatened, claims
by or on behalf of any Plan, by any employee or beneficiary covered under any
such Plan, or otherwise involving any such Plan (other than routine claims for
benefits).
(f)Each Plan which is an “employee pension benefit plan” within the meaning of
Section 3(2) of ERISA and which is intended to be “qualified” within the meaning
of Section 401(a) of the Code has been determined by the Internal Revenue
Service to be so qualified, and each trust maintained thereunder has been
determined by the Internal Revenue Service to be exempt from taxation under
Section 501(a) of the
- 17 -
Code. To the knowledge of such Company, no event has occurred since the date of
such determination that would materially affect such qualification.
(g)Such Company makes the following representations and warranties:
(i)No liability under Title IV of ERISA has been incurred by such Company or any
ERISA Affiliate that has not been satisfied in full, and no condition currently
exists that presents a risk to the Purchaser or any of its ERISA Affiliates of
incurring a liability under such title.
(ii)Each Plan that is a “nonqualified deferred compensation” arrangement under
Section 409A of the Code meets all of the requirements of, and has been operated
in compliance with, Section 409A of the Code, and no service provider is
entitled to a tax gross up or similar payment from such Company for any Tax or
interest that may be due under Section 409A of the Code.
(iii)In connection with the Closing and related transactions, no payments of
money or other property, acceleration of benefits, or provisions of other rights
have been or will be made hereunder, under any agreement contemplated herein, or
under any Plan or any other agreement that, in the aggregate, would be
reasonably likely to result in sanctions under Sections 280G and 4999 of the
Code, whether or not some subsequent action or event would be required to cause
such payment, acceleration or provision to be triggered.
(iv)Except as set forth on Schedule 4.10(g)(iv), with respect to each Plan that
provides welfare benefits of the type described in Section 3(1) of ERISA, (A) no
such plan provides medical, death or other such benefits with respect to current
or former employees or partners of such Company (or their spouses or
beneficiaries) beyond their termination of employment, other than coverage
mandated by Sections 601-608 of ERISA and Section 4980B of the Code or
applicable state law, (B) each such plan, to the extent applicable, has been
administered in compliance, including applicable notice requirements, with
Sections 601-609 of ERISA and 4980B of the Code and, if applicable, comparable
state law, and no Taxes payable on account of Section 4980B of the Code have
been or, to the Knowledge of such Company, are expected to be incurred, (C) each
such plan that is subject to the Health Insurance Portability and Accountability
Act of 1996, as amended (“HIPAA”), has been administered in compliance with
HIPAA, including applicable notice, privacy and security requirements applicable
to the plan sponsor of such a plan, and (D) each such plan that is subject to
the Patient Protection and Affordable Care Act of 2010, as amended (the
“Affordable Care Act”) has been maintained and administered in compliance with
the Affordable Care Act, including applicable notice and coverage requirements
and no Taxes or liability have been or, to the Knowledge of the Company, are
expected to be incurred as a result of any violation of the Affordable Care Act
to such Plan. Each group health plan” (as such term is defined in
Section 5000(b)(1) of the Code or Section 607(1) of ERISA) sponsored or
maintained by the Company has been administered and operated in material
compliance with the applicable requirements of Part 6 of Section B of Title I of
ERISA and Section 4980B of the Code.
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(v)No person who is or was engaged by such Company as an independent contractor
or in any other non-employee capacity could reasonably be characterized as an
employee of such Company under applicable laws, statutes, rules, regulations or
administrative proceedings covering federal, state and local income taxation,
workers’ compensation, or unemployment insurance.
Section 4.11Material Contracts.
(a)Schedule 4.11(a) lists each of the following contracts and agreements to
which such Company is a party as of the date of this Agreement (such contracts
and agreements described below being “Material Contracts”):
(i)Contracts with the Company Holders or any Affiliate thereof;
(ii)Contracts for the sale of any of the assets of such Company other than in
the Ordinary Course of Business or for the grant to any Person of any
preferential rights to purchase any of its assets;
(iii)Contracts for joint ventures, strategic alliances, partnerships, licensing
arrangements, or sharing of profits or proprietary information;
(iv)Contracts containing covenants of such Company not to compete in any line of
business or with any Person in any geographical area or not to solicit or hire
any person with respect to employment or covenants of any other Person not to
compete with such Company in any line of business or in any geographical area or
not to solicit or hire any individual with respect to employment;
(v)Contracts relating to the acquisition by such Company of any operating
business or material assets or the capital stock of any other Person;
(vi)Contracts relating to the incurrence, assumption or guarantee of any
Indebtedness or imposing a Lien on any of the assets of such Company, including
indentures, guarantees, loan or credit agreements, sale and leaseback
agreements, purchase money obligations incurred in connection with the
acquisition of property, mortgages, pledge agreements, security agreements, or
conditional sale or title retention agreements;
(vii)any Contract pursuant to which Vault Cash is supplied to such Company for
use in the Company ATMs (“Vault Cash Agreements”), such cash borrowed under such
agreements being referred to herein as “Vault Cash Borrowings”;
(viii)any Contract pursuant to which armored car services are provided to such
Company;
(ix)any Contract pursuant to which maintenance or repair services are supplied
to such Company with respect to the Company ATMs;
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(x)any Contract pursuant to which such Company is provided any
telecommunications services in connection with the operation of the Company
ATMs;
(xi)the twenty-five (25) largest Company Merchant Agreements, as measured by the
amount of gross revenues received by all of the Companies during the most
recently completed fiscal year and the current fiscal year-to-date of the
Companies;
(xii)any Contract (commonly referred to as “processor contracts”) pursuant to
which ATM transactional processing services are provided to such Company with
respect to such Company’s ATMs;
(xiii)any Contract (commonly referred to as “branding contracts”) pursuant to
which such Company permits a financial institution to place its name and
trademarks on any of the Company ATMs and pursuant to which that institution’s
cardholders are permitted to use those Company ATMs on a surcharge free basis;
(xiv)any Contract (commonly referred to as “advance functionality contracts”)
pursuant to which such Company is enabled to provide services such as bill
payment, check cashing or other services at some of the Company ATMs;
(xv)any Contract (commonly referred to as a “surcharge free agreement”) pursuant
to which such Company has agreed to permit the cardholders of certain designated
financial institutions to make cash withdrawals from certain Company ATMs
without the assessment of a surcharge fee;
(xvi)any Contract (commonly referred to as a “sponsorship agreement”) pursuant
to which a financial institution sponsors such Company’s participation in the
financial electronic payment networks such as MasterCard, Visa, Cirrus,
Interlink, Maestro, Plus, Pulse, NYCE and STAR;
(xvii)Contracts under which such Company has made advances or loans to any other
Person;
(xviii)Contracts, polices or plans which obligate the Company to pay or provide
any severance or other payments or benefits upon termination of employment,
change of control, sale of assets or equity, or retention, to, or for, any
employee of the Target Companies;
(xix)Contracts for the employment of any individual on a full-time, part-time or
consulting basis;
(xx)Contracts with independent contractors or consultants that are not
cancelable without penalty or further payment and without more than 30 days’
notice;
(xxi)outstanding Contracts of guaranty, surety or indemnification by such
Company, other than indemnification provisions in leases, Company Merchant
Agreements, branding agreements and other Contracts entered into in the Ordinary
Course of Business or in business acquisition agreements described in clause
(v) above;
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(xxii)each Contract under which a Company has granted a third party a power of
attorney;
(xxiii)all Intellectual Property Licenses or any other Contracts relating to any
Intellectual Property or Technology (excluding licenses pertaining to Shrinkwrap
Software);
(xxiv)any Distribution Agreement with a Dealer and the list of Distribution
Agreements on Schedule 4.11(a) includes an accurate count of the number of ATMs
that are being serviced by the Companies pursuant to each such Distribution
Agreement;
(xxv)any Contract in which (I) services are provided to such Company for
compensation that is based on the amount of revenues or sales generated as a
result of such services, (II) such Company will be required to pay a
change-of-control or similar type of fee or payment by reason of the completion
of the transactions contemplated hereby or (III) such Company will have the
option to terminate such Contract upon payment of a specified fee or other
payment upon completion of the transactions contemplated hereby; and
(xxvi)any Contract not listed in respect of the categories set forth above other
than Company Merchant Agreements with an annual payment in excess of $100,000.
(b)Except as set forth on Schedule 4.11(b), each Material Contract is in full
force and effect and such Company is not in material breach of, or material
default under, any such Material Contract, nor, to the Knowledge of the
Companies, is any other party to any Material Contract in material breach of or
default thereunder. Except as disclosed on Schedule 4.11(b), no party to any
Material Contract has exercised in writing any termination rights with respect
thereto, and no party has given written notice of any material dispute with
respect to any Material Contract.
(c)Such Company has delivered to Buyer a correct and complete copy of each
written Material Contract. Schedule 4.11(c) contains an accurate and complete
description of all material terms of all oral Material Contracts.
(d)There is no event which, upon giving of notice or lapse of time or both,
would constitute a material breach or material default under any such Material
Contract or would permit the termination, modification or acceleration of such
Material Contract.
(e)With regard to the Company Merchant Agreements of the Companies:
(i)Schedule 4.11(e) includes a copy of the current standard forms used by the
Companies (the “Contract Forms”) utilized in negotiating Company Merchant
Agreements since January 1, 2012, other than national contracts. Except as
shown on Schedule 4.11(e)(i), none of the Company Merchant Agreements (A) is a
Contract between a Company, on the one hand, and any Company Holder, Affiliate
of a Company Holder or any present or former director, officer or employee of a
Company or
- 21 -
Company Holder or Affiliate of a Company Holder, on the other hand, (B) creates
any type of partnership, joint venture or profit sharing agreement or
(C) imposes any non-compete, exclusivity or similar restrictions on any Company
or any Affiliate thereof. Originals or copies of all of the Company Merchant
Agreements are located in the business premises and offices covered by the
Leases and have been made available for inspection by Purchaser.
(ii)Except as would not be or result in, alone or together, a Material Adverse
Effect and except as otherwise shown on Schedule 4.11(e)(ii), (A) each of the
Company Merchant Agreements is valid, binding and enforceable against the
parties thereto in accordance with its terms, and is in full force and effect,
(B) the Companies have not violated any provision of, or failed to perform any
obligation required under the provisions of, any Company Merchant Agreement,
(C) to the Knowledge of the Companies, no other party is in breach, or has
received written notice of breach, of any Company Merchant Agreement and (D) no
event has occurred that with the lapse of time or the giving of notice or both
would constitute a breach or default by any Company, or, to the Knowledge of the
Companies, any other party under any Company Merchant Agreement.
Section 4.12Tax Matters.
(a)Each Company is and always has been classified as a partnership within the
meaning of Treasury Regulation Section 301.7701-2(a) (and any corresponding
provisions of state and/or local law) and has not made an election to be treated
as an association within the meaning of Treasury Regulation Section 301.7701-3
(and any corresponding provisions of state and/or local law).
(b)All Returns required to be filed or extended with any taxing authority by, or
with respect to, such Company have been filed or extended in accordance with all
applicable laws, and such Company has timely paid all Taxes (whether or not
shown on any Returns).
(c)No claim has ever been made by an authority in a jurisdiction where such
Company does not file Returns that such Company is or may be subject to taxation
by that jurisdiction. There are no liens on any of the assets of such Company
that arose in connection with any failure (or alleged failure) to pay any Taxes.
(d)All deficiencies asserted or assessments made as a result of any examination
of the Returns have been paid in full or are being challenged in good faith
through appropriate proceedings.
(e)Such Company has withheld and paid all Taxes required to have been withheld
and paid in connection with any amounts paid or owing to any employee,
independent contractor, creditor and other third party, and all Forms W-2 and
1099 required with respect thereto have been properly completed and timely
filed.
(f)No statute of limitations has been waived with respect to the Taxes of such
Company.
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(g)Notwithstanding anything to the contrary contained in this Agreement, nothing
in this Section 4.12 shall cause such Company to be liable for any Taxes for
which such Company is not expressly liable pursuant to Section 6.6 hereof.
(h)For purposes of this Agreement, (i) “Taxes” shall mean all taxes (whether or
not shown on any Returns), levies or other like assessments, charges or fees
(including estimated taxes, charges and fees) applicable to and payable by such
Company, including, without limitation, income, gross receipts, transfer,
excise, property, sales, use, value-added, license, payroll, withholding, social
security and franchise or other governmental taxes or charges, imposed by the
United States or any foreign country, including any state, county or local
government or subdivision or agency thereof, and such term shall include any
interest, penalties or additions to tax attributable to such taxes whether
disputed or not and including any obligation to indemnify or otherwise assign or
succeed to the Tax liability of any other Person; and (ii) “Return” shall mean
any report, return, statement or other written information (including any
schedule or attachment thereto and including any amendment thereof) required to
be supplied to a taxing authority in connection with Taxes.
(i)No Company is a party to any Tax allocation or sharing agreement.
Section 4.13Environmental Matters.
(a)Except as set forth on Schedule 4.13(a), such Company is in compliance with
all material applicable Environmental Laws, which compliance includes the
possession of all permits and governmental authorizations required under
applicable Environmental Laws and compliance with the terms and conditions
thereof, except where such non-compliance is not reasonably likely to have a
Material Adverse Effect.
(b)Except as set forth on Schedule 4.13(b), there are no Environmental Claims
pending or, to the Knowledge of such Company, threatened, against such Company
that are reasonably likely to be material to such Company.
(c)Except as set forth on Schedule 4.13(c), such Company has no Knowledge of any
releases, spills or discharges of Hazardous Substances on or underneath any of
the Real Property that are reasonably likely to be material to such Company.
(d)Schedule 4.13(d) describes all pending arrangements with Governmental
Entities regarding any investigatory, remedial or corrective obligation,
relating to such Company or its facilities, the subject of which is unresolved.
(e)The Purchaser acknowledges that (i) the representations and warranties
contained in this Section 4.13 are the only representations and warranties being
made by such Company with respect to compliance with, or liability or claims
under, Environmental Laws or with respect to permits issued or required under
Environmental Laws, (ii) no other representation by such Company contained in
this Agreement shall apply to any such matters and (iii) no other representation
or warranty, express or implied, is being made with respect thereto.
- 23 -
(f)As used in this Agreement:
(i)the term “Environmental Claim” means any claim, action, investigation or
notice to such Company by any Person alleging potential liability (including,
without limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resource damages, personal injuries, or
penalties) arising out of, based on, or resulting from (a) the presence, or
release into the environment, of any Hazardous Substance at any location,
whether or not owned or operated by such Company or (b) circumstances forming
the basis of any violation, or alleged violation, of any applicable
Environmental Law;
(ii)the term “Environmental Laws” means all federal, state, and local laws and
regulations, as in effect and as interpreted as of the date of this Agreement,
relating to pollution or protection of the environment, and human health and
safety including without limitation, laws and regulations relating to emissions,
discharges, releases or threatened releases of Hazardous Substances, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, presence, transport or handling of Hazardous Substances; and
(iii)the term “Hazardous Substance” means all substances defined as such in the
National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. §
300.5, or defined as such by any other Environmental Law, or regulated as such
under, any Environmental Law, including, but not limited to, petroleum, lead,
asbestos, or polychlorinated biphenyls.
Section 4.14Labor Matters.
(a)Schedule 4.14(a) sets forth a complete and correct list of all salaried
employees of such Company having total annual compensation in excess of
$100,000, showing for each: (i) name, (ii) current job title, and (iii) actual
base salary, bonus, commission or other remuneration paid during 2013, (iv) base
salary, bonus, commission or other remuneration due or to become due to such
employee during 2014, (v) all severance, termination, retention, change of
control and/or other payment or benefit to which such employee is entitled, and
(vi) for all Continuing Target Employees (including those whose compensation is
less than $100,000), a schedule reflecting all accrued vacations and/or other
benefits or accruals which Purchaser will be required to credit or allow for
Continuing Target Employees pursuant to the provisions of
Section 6.7(b). Except for the Discontinued Employees, there are no employees
on the payroll of any Target Company being paid for services provided to Welch
Gaming, LLC or to any other Person that is not a Target Company.
(b)Except as listed in Schedule 4.14(b),
(i)there are no collective bargaining or other union agreements covering
employees of such Company;
(ii)there are no strikes, disputes, lockouts or work stoppages pending or, to
the knowledge of such Company, threatened against such Company that have had
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or are reasonably likely to have a Material Adverse Effect. There has been no
petition, election or other effort by, or for, any of the employees of the
Company to create a collective bargaining unit or enter into a collective
bargaining agreement;
(iii)there are no indemnification provisions and/or benefits to which any
Continuing Target Employee is entitled, as described in Section 6.10, except as
provided in the limited liability company agreements of the Target Companies and
common law rights, if any; and
(iv)there are no contracts, agreements or other documents containing non-compete
and/or non-solicitation obligations with regard to any current employee of such
Company or any former employee who is still subject to such obligations.
Section 4.15Real Property Matters.
(a)Schedule 4.15 lists all of the real property owned, used or occupied by such
Company (the “Real Property”).
(b)Schedule 4.15(b) contains a complete and correct list of all interests of
such Company in Real Property pursuant to leases, licenses or other occupancy or
use agreements (collectively, the “Leases”). Such Company has good and valid
title to the leasehold estate or other interest created under the Leases, free
and clear of all Liens other than Permitted Liens. Such Company has previously
made available to the Purchaser true, correct and complete copies of all Leases,
together with all amendments and modifications thereof and supplements thereto.
Other than the leasehold estates created under the Leases, such Company does not
own any real property. Except as set forth on Schedule 4.15(b), (i) each Lease
is in full force and effect, (ii) such Company is not in material breach of, or
material default under, any of the Leases, (iii) to the Knowledge of the
Companies, no other party to any Lease is in material breach of or default
thereunder and (iv) no party to any Lease has exercised in writing any
termination rights with respect thereto, and no party has given written notice
of any material dispute with respect to any Lease.
(c)To the Knowledge of such Company, there is no (i) violation of any applicable
building, zoning, land use or other similar Law (including, without limitation,
the Americans with Disabilities Act, if applicable) in respect of the Real
Property; (ii) violation of any other Law which, individually or in combination
with any others, would materially and adversely affect the ability of such
Company to use the affected parcel of Real Property in the manner and scope in
which it is now being used or operated; (iii) operation on or use of the Real
Property which constitutes non-conforming use under any applicable building,
zoning, land use or other Law; and (iv) other than published notice not actually
received, any pending or contemplated rezoning or special designation proceeding
affecting the Real Property.
(d)For purposes of this Agreement, “Permitted Liens” means (i) mechanics’,
carriers’, workers’, repairers’, materialmen’s, warehousemen’s and other similar
Liens arising or incurred in the ordinary course of business for sums not yet
due and payable or
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interim liens for Taxes, assessments or other charges for Governmental Entities
that are being contested in good faith by such Company or are not yet due and
payable, (ii) liens as reflected in the title records relating to real property
owned or leased by such Company, (iii) any other covenants, conditions,
restrictions, reservations, rights, Liens, easements and other matters affecting
title, that do not individually or in the aggregate with other such Liens,
materially impair the value or marketability of the property subject to such
Lien or materially interfere with use of such property in the conduct of the
business of such Company as it is currently being conducted thereon, and
(iv) those Liens set forth on Schedule 4.15(d).
Section 4.16Title to Other Property; All ATM Assets. Such Company has good and
valid title to, or holds a valid and existing lease or license to use, all of
the material non-real properties, contracts, rights and other assets (of every
kind, character and description, whether real, personal or mixed, including the
Company ATM’s), used in its business as it is currently conducted, in each case,
free and clear of all Liens other than Permitted Liens. Except for
Company-Serviced ATMs, all of the material assets that are used in, useful to or
otherwise associated with or related to the business of owning, operating,
maintaining or exploiting ATMs, as currently being conducted by the Companies,
are owned by and, except for installed ATMs, in the possession of the
Companies.
Section 4.17Insurance. Set forth in Schedule 4.17 is a complete and accurate
list of all policies of fire, liability, product liability, workers
compensation, health and other forms of insurance presently in effect with
respect to the business and properties of such Company. Schedule 4.17 includes,
without limitation, the carrier, a general description of coverage, the limits
of coverage, retention or deductible amounts, amount of annual premiums, and
date of expiration. All such polices currently in effect are valid, outstanding
and enforceable policies, and no such policy provides for or is subject to any
currently enforceable retroactive rate or premium adjustment, loss sharing
arrangement or other actual or contingent liability arising wholly or partially
out of events arising prior to the date hereof. No notice of cancellation or
termination has been received by such Company with respect to any such
policy. Such Company has duly and timely made all claims it has been entitled
to make under each policy of insurance during the last two (2) years.
Section 4.18Affiliate Relationships. Except as set forth in Schedule 4.18, no
Company Holder or Affiliate of a Company Holder (A) does business with such
Company, (B) owns any property, asset or right that is used by such Company in
the conduct of its business or (C) has any direct or indirect interest in
(i) any entity that does business with such Company or (ii) any property, asset
or right that is used by such Company in the conduct of its business.
Section 4.19Tangible Personal Property.
(a)Except for Company-Owned ATMs with GAAP zero net book value not currently
installed, all of such Company’s tangible personal property (including, without
limitation, all of its Company-Owned ATMs) used in the business of such Company
which, individually or in the aggregate, are material to the operation of the
business of the Companies is in a state of reasonable maintenance and repair
(ordinary wear and tear excepted) and are suitable for the purposes used by such
Company.
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(b)The following matters related to the Company ATMs are true and correct:
(i)Schedule 4.19(b)(i) sets forth an accurate and complete list of all of the
Company-Owned ATMs, excluding those ATMs with a GAAP zero net book value that
are out of service
(ii)Schedule 4.19(b)(ii) sets forth an accurate and complete list of all of the
Company-Serviced ATMs.
(c)Schedule 4.19(b)(i) and Schedule 4.19(b)(ii) each includes the following
information for each of the Company ATMs listed thereon: (A) the manufacturer,
model number and age of such Company ATM, (B) the current location of such
Company ATM, (C) the “sponsoring” financial institution for such Company ATM,
(D) the operating system running on such Company ATM and (E) the Company that
owns such Company ATM (if it is a Company-Owned ATM). None of the Company-Owned
ATMs are leased to the Company pursuant to any type of personal property lease
but are all owned outright by the Company. The Company ATMs installed and in
use are in compliance with the New ADA Rules.
(d)Schedule 4.19(d) sets forth an accurate and complete list of all desktop,
laptop and tablet computers, computer servers, printers, mobile phones
(including smart phones), audio-visual equipment, computer networking equipment
and other material items of office equipment used in the operation of the
business of such Company. Except as otherwise indicated on Schedule 4.19(d),
all items listed on Schedule 4.19(d) and any other items of equipment and
furniture used in, or necessary for, the operation of the business of such
Company, as currently conducted, are owned by and in the possession of such
Company.
Section 4.20Suppliers and Merchants. Schedule 4.20 sets forth a correct and
complete list of the 10 largest suppliers (by dollar volume) of products or
services to the Companies collectively, and the 25 largest Company Merchants (by
dollar volume) collectively each during calendar year 2013 and the four (4)
months ended April 30, 2014. Schedule 4.20 also sets forth, for each such
supplier and Company Merchant, the aggregate payments from and to such Person by
the Companies during such periods. Except as disclosed on Schedule 4.20, since
the date of the Interim Financial Statement, none of the suppliers or Company
Merchants listed on Schedule 4.20 has cancelled or otherwise terminated its
relationship with the Companies or materially reduced or changed the pricing or
other terms of its business with the Companies and no such supplier or merchant
has notified the Company in writing that it intends to cancel, terminate or
materially reduce or change the pricing or other terms of its business with the
Companies
Section 4.21Business Continuity. Except as set forth on Schedule 4.21, none of
the software, computer hardware (whether general or special purpose),
telecommunications capabilities (including all voice, data and video networks)
and other similar or related items of automated, computerized, and/or software
systems and any other networks or systems and related services that are used by
or relied on by such Company in the conduct of its business (collectively, the
“Systems”) have experienced bugs, failures, breakdowns, or continued
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substandard performance in the past twelve (12) months that has caused or
reasonably could be expected to cause any substantial disruption or interruption
in or to the use of any such Systems by such Company.
Section 4.22Data Privacy and Security. Except as set forth on Schedule 4.22,
such Company is in compliance in all material respects, with:
(a)its applicable internal policies and procedures concerning data privacy and
security;
(b)applicable industry self-regulatory standards concerning data security and/or
breach notification, including the Payment Card Industry Data Security Standards
(“PCI-DSS”) but solely to the extent such Company processes, stores or transmits
payment card information as defined in PCI-DSS;
(c)applicable U.S. laws and regulations relating to data privacy, security
and/or breach notification; and
(d)provisions in its written agreements with third parties that relate to data
privacy, security and/or breach notification.
Such Company has not since January 1, 2011 received, and is not aware of, any
actual or suspected written administrative, civil or criminal complaint
regarding its collection, storage, disclosure or transfer of Personally
Identifiable Information.
Section 4.23Brokers. Except as set forth in Schedule 4.23, no broker, finder or
based upon arrangements made by or on behalf of such Company.
Section 4.24Bank Accounts. Schedule 4.24 lists each bank account of such
Company, along with the name of the applicable bank, the account number, and the
authorized signatories on such account.
Section 4.25EFT Accounts. All of the fees and revenues that are attributable to
any use of the Company ATMs, including, without limitation, all interchange
revenues and surcharge fees, are exclusively deposited into (i) one of the EFT
Accounts or (ii) a bank account owned and controlled by a Target Company.
Section 4.26Certain Financial Data. Other than the projected financial
information for all periods beginning with May 1, 2014 and thereafter within the
STEAMBOAT Buyer Model FINAL (April 2014) (located at Data Room Index Number
1.2.4) as to which no representations and warranties are made, the data and
other information set forth in the spreadsheets posted in the Data Room under
the following Index Numbers are complete and accurate in all material respects
as of the dates and for the time periods indicated therein:
Data Room Index Number
Description of Item
10.5.2.1
Steamboat_Data Tape (2011-2013)
- 28 -
10.5.2.6
Steamboat_Data Tape (Jan-April 14)
1.2.4
STEAMBOAT Buyer Model FINAL (April 2014)
2.4.1.1
WSILC_Bank Sponsor – ATM Data Report_4Q_2013
10.5.8.2
WSILC-COD-WG TID Listing 060414
10.5.8.3
Kahuna TID Listing060414-FINALwDivAdded
10.5.10
Current Employee Matrix (names incl)
Section 4.27Vault Cash. Such Company does not own any of its Vault Cash. All
Vault Cash is supplied by an unrelated third party pursuant to the terms of a
Vault Cash Agreement. Attached hereto as Schedule 4.27 is a schedule reflecting
the aggregate daily balances of Vault Cash for each day during the most recent
three months for all Company ATM’s.
Section 4.28Theft. Except as set forth on Schedule 4.28, since January 1, 2011,
such Company has not experienced any theft of any Company ATM and/or the theft
of any Vault Cash from any Company ATM. To the extent such Company has had any
such thefts, Schedule 4.28 identifies the date of such theft, the store at which
such theft occurred, a brief description of the nature of the loss, and the
dollar amount of such loss.
Section 4.29Certain Security Policy. Navy Federal Credit Union (“CU”) has never
requested a copy of WSILC's security policy pursuant to the provisions of
Section 6.3.2 of that certain Modified ATM Marketing Agreement dated October 12,
2011 by and between WSILC and CU (as amended by Addendums #1-3).
Section 4.30No Other Representations or Warranties. Except for the
representations and warranties contained in Article III and this Article IV,
neither the Company Holders, the Companies nor any other Person makes any other
express or implied representation or warranty on behalf of the Companies or any
of their Affiliates. Except for the representations and warranties contained in
Article III and this Article IV, none of the Company Holders, the Companies and
the Companies’ Affiliates makes any express or implied representation or
warranty with respect to any information provided to the Purchaser or its
Affiliates or representatives or any projections, forecasts or forward-looking
information otherwise provided to the Purchaser.
Article V
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
The Purchaser represents and warrants to the Company Holders as follows:
Section 5.1Organization. The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Purchaser has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted and
is qualified or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which the nature of the business
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conducted by it makes such qualification or licensing necessary, except where
the failure to be so organized, existing or in good standing would not
(x) impair the ability of the Purchaser to perform its obligations hereunder or
(y) delay the consummation of the transactions contemplated by this Agreement.
Section 5.2Authorization; Validity of Agreement. The Purchaser has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery by the Purchaser of this Agreement and the other documents and
instruments to be executed and delivered by the Purchaser and the consummation
of the transactions contemplated hereby and thereby have been duly authorized by
the Board of Directors of the Purchaser, and no other corporate proceedings on
the part of the Purchaser are necessary to authorize the execution and delivery
delivered by the Purchaser and the consummation of the transactions contemplated
hereby and thereby. This Agreement constitutes, and when executed and
delivered, the other documents and instruments to be executed and delivered by
the Purchaser pursuant hereto will constitute, valid and binding agreements of,
Section 5.3Consents and Approvals; No Violations. Except as set forth on
Schedule 5.3, neither the execution and delivery by the Purchaser or the other
documents and instruments to be executed and delivered by the Purchaser, nor the
consummation by the Purchaser of the transactions contemplated hereby will
(i) violate any provision of the certificate of incorporation or bylaws of the
Purchaser, (ii) result in a violation or breach of, or constitute (with or
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any material note, bond, mortgage, indenture,
guarantee, other evidence of indebtedness, license, lease, contract, agreement
or other instrument or obligation to which the Purchaser is a party or by which
any of them or any of their assets may be bound, (iii) require any
authorization, consent or approval by, filing with or notice to any Governmental
Entity, except for (A) the requirements of any Competition Law applicable to the
transactions contemplated hereby and (B) such authorizations, consents,
approvals, filings or notices, the failure of which to obtain or make would not,
Purchaser’s ability to perform its obligations hereunder or any of the other
transactions contemplated hereby, or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Purchaser or any of its
properties or assets, except in the case of clauses (ii) through (iv) for
violations, breaches or defaults which would not (x) impair the ability of the
Purchaser to perform its obligations hereunder or (y) delay the consummation of
the transactions contemplated by this Agreement.
Section 5.4Financing. The Purchaser has sufficient liquid funds available
(through existing credit arrangements or otherwise) to pay the Gross Purchase
Price and to satisfy and perform its obligations hereunder.
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Section 5.5Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Purchaser.
Section 5.6No Other Representations or Warranties. Except for the
representations and warranties contained in this Article V, neither the
Purchaser nor any other Person makes any other express or implied representation
or warranty on behalf of the Purchaser or any of its Affiliates.
Article VI
COVENANTS
Section 6.1Interim Operations of the Companies. Each Company shall ensure that,
except as (i) expressly contemplated by this Agreement, (ii) disclosed on
Schedule 6.1, (iii) required by applicable law, or (iv) agreed to in writing by
the Purchaser, after the date of this Agreement and prior to the Closing:
(a)the business of such Company shall be conducted in all material respects in
the ordinary course of business (the “Ordinary Course of Business”) and such
Company shall not execute or enter into, whether or not in the Ordinary Course
of Business, any Contract that would be material to the business of the
Companies taken as a whole;
(b)such Company shall not acquire or enter into any lease for Real Property or
agree to any material modifications of any Lease;
(c)such Company shall not sell any of its assets, including any of the Purchased
Assets, outside of the Ordinary Course of Business;
(d)such Company shall not merge or consolidate with, or purchase or otherwise
acquire any equity interests or all or substantially all of the assets of, any
other Person;
(e)such Company shall not guarantee the Indebtedness for Borrowed Money of any
other Person;
(f)such Company shall not issue any membership interests and/or units unless
(i) the recipient of such membership interests and/or units should agree to be
bound by the terms and provisions of this Agreement and (ii) all Company
Holders, including the recipient of such membership interests and/or units,
should agree, in writing, as to how such issuance of membership interests and/or
units will impact their respective Distributive Share and Indemnity Share;
(g)such Company shall not redeem any membership interests and/or units unless
all other Company Holders should agree, in writing, as to how such redemption
will impact their respective Distributive Share and Indemnity Share;
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(h)such Company shall not adopt a plan of complete or partial liquidation or
dissolution;
(i)such Company shall not permit any of its assets to become subjected to any
Lien, other than (i) Liens created, with prior notice to the Purchaser, to
secure Indebtedness for Borrowed Money and (ii) Permitted Liens;
(j)such Company shall not increase the compensation or severance benefits
payable by it to any of its employees, except to the extent done in the Ordinary
Course of Business and consistent with past practices;
(k)such Company shall not adopt or amend any employee benefit plan, except as
required under ERISA, the Code, or any other applicable law, or as necessary to
maintain the qualified status of such plan under the Code;
(l)such Company shall not enter into any material settlement or release with
respect to any Action affecting such Company or any settlement or release which
requires such Company to make an admission of wrongdoing or abstain from
engaging in any activity material to the business of such Company, or commence
any litigation or other legal proceeding;
(m)make or incur any capital expenditure that is not paid for (i) with cash or
(ii) by incurring a liability characterized as a current liability pursuant to
GAAP; and
(n)such Company shall not enter into an agreement, contract, commitment or
arrangement which would cause such Company to be in breach of the foregoing.
Notwithstanding the foregoing, nothing in this Agreement shall prohibit a
Company from (i) paying or making regular, extraordinary or special cash
distributions pursuant to the LLC Agreement with respect to the LLC Units or
distributing the loan receivable from Welch Gaming, LLC, (ii) making, accepting,
paying, repaying or settling intercompany receivables, payables, loans or
advances to, from or with one another or with the Company Holders or any of
their respective Affiliates, (iii) paying, repaying or settling any Indebtedness
for Borrowed Money or other indebtedness owed to third parties or (iv) engaging
in any transaction incident to the cash management procedures of such Company
and its Affiliates, in the case of clause (iv), to the extent consistent with
such Company’s past practice.
Section 6.2Due Diligence Inspection and Reviews; Further Access to Information.
(a)The Purchaser acknowledges that it has, prior to its execution of this
Agreement, conducted due diligence inspections and reviews of the Companies and
will bear all of its own costs, expenses and charges incurred in connection with
its due diligence inspections and reviews.
(b)From the date of this Agreement until the Closing, each Company shall:
(i) afford to the Purchaser and its authorized representatives reasonable access
during normal business hours upon reasonable prior notice to all of the books
and records of such Company, and (ii) furnish to the Purchaser such other
information concerning the
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business, properties and personnel of such Company as the Purchaser may
reasonably request, provided that nothing herein shall require any Company to
furnish to Purchaser or provide Purchaser with access to information that legal
counsel for any Company reasonably determines to give rise to antitrust or
competition Law issues. The Purchaser and its authorized representatives will
conduct all such inspections in a manner which will minimize any disruptions of
the business and operations of such Company. Until the Closing has occurred,
the Purchaser will hold any such information in accordance with the provisions
of (A) the letter agreement between the Companies and Cardtronics, Inc. (as the
parent of the Purchaser), dated as of January 22, 2014, (B) the Supplemental
Confidentiality and “Clean Room” Agreement between the Companies and the
Purchaser, dated as of March 21, 2014, and (C) the Amended and Restated
Supplemental Confidentiality and “Clean Room” Agreement between the Companies
and the Purchaser, dated as of May 20, 2014 (collectively, the “Confidentiality
Agreements”), and will cause such information to be so held by its respective
representatives. Upon a termination of this Agreement pursuant to Section 8.1
hereof, (y) the Purchaser and its representatives shall return (and hold
confidential) all information provided pursuant to this Section 6.2 and all
other confidential information (as defined in the Confidentiality Agreements)
pursuant to the procedures set forth in the Confidentiality Agreements, and
(z) the Confidential Agreements shall terminate and be of no further force or
effect.
Section 6.3Certain Filings. Each Company, the Company Holders and Purchaser
shall make or cause to be made, as promptly as practicable (which filing shall
be made in any event within ten (10) Business Days after the date of this
Agreement), all filings with Governmental Entities that are necessary to obtain
all authorizations, consents, orders and approvals for the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, including all filings required under applicable Competition Laws. The
Parties agree that the fees of any such filings shall be paid by the Purchaser
to the Governmental Entity but that one-half of the fees shall be deducted from
the Gross Purchase Price for purposes of determining the amount of the Net
Purchase Price. The Seller Representative, on behalf of the Company Holders,
and the Purchaser shall use commercially reasonable efforts to (i) respond to
any requests for additional information made by any Governmental Entities with
respect to all filings required under applicable Competition Laws, (ii) obtain
any required approvals of any Governmental Entities under applicable Competition
Laws and (iii) overcome any objections which may be raised by any Governmental
Entity in connection with Competition Laws; provided, however, the “commercially
reasonable efforts” of any Party shall not be deemed to include (A) divesting or
otherwise holding separate (including by establishing a trust or otherwise), or
taking any other action (or otherwise agreeing to do any of the foregoing) with
respect to any of the businesses, assets or properties of any Party or the
Affiliates of any Party, or (B) entering into any settlement, undertaking,
consent decree, stipulation or agreement with any Governmental Entity that would
require any Party or the Affiliates of any Party to take any action listed in
the preceding clause (A). The Seller Representative, on behalf of the Company
Holders, and Purchaser shall, to the extent reasonably practical, each consult
with the other prior to any meetings, by telephone or in person, with the staff
of any Governmental Entity regarding the transactions contemplated hereby.
Section 6.4Further Action and Reasonable Best Efforts. Upon the terms and
subject to the conditions herein provided, each of the Parties hereto shall use
its reasonable best efforts
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to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including using reasonable best efforts to satisfy the conditions precedent to
the obligations of any of the Parties hereto, to obtain all necessary
authorizations, consents and approvals, and to effect all necessary
registrations and filings; provided, however, that such action shall not include
any requirement on the part of Purchaser, the Company Holders, the Companies or
their respective Affiliates to expend money (other than routine out-of-pocket
expenses), commence, defend, or participate in any litigation or offer or grant
any accommodation (financial or otherwise) to any Person (and Purchaser’s
obligations under this Section 6.4 are further subject to the conditions set
forth in Section 6.3). Each of the Parties hereto will furnish to the other
Parties such necessary information and reasonable assistance as such other
Parties may reasonably request in connection with the foregoing and will provide
the other Parties with copies of all filings made by such Party with any
Governmental Entity or any other information supplied by such Party to any
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby (other than filings required under applicable Competition
Laws).
Section 6.5Notification. Prior to the Closing, each Company shall promptly
notify the Purchaser (in writing after such Company has notice thereof), and the
Purchaser shall promptly notify the Seller Representative (in writing after the
Purchaser has notice thereof), and keep such other Party advised, as to any
litigation or administrative proceeding pending and known to such Party or, to
its Knowledge, threatened against such Party that challenges the transactions
contemplated hereby or that affects or relates to the Equity Seller Units or the
Purchased Assets in any manner.
Section 6.6Tax Matters.
(a)Transfer Taxes. All transfer, documentary, sales, use, stamp, registration
and other such Taxes and fees (including any penalties and interest) incurred in
connection with transactions contemplated by this Agreement (including any real
property transfer Tax and any similar Tax) shall be borne and paid by the
Companies and the Seller Representative shall file, or cause to be filed, all
necessary Returns and other documentation with respect to all such Taxes and
fees, and, if required by applicable Law, the Company Holders and the Companies
will, and will cause their Affiliates to, join in the execution of any such
Returns and other documentation.
(b)Tax Returns; Payment of Taxes.
(i)The Seller Representative shall be responsible for preparation and filing of
any Returns required to be filed by or on behalf of the Target Companies (or
with respect to the assets or business of the Target Companies) for tax periods
ending on or before the Closing (“Pre-Closing Returns”). The Purchaser shall
cooperate reasonably with the Seller Representative, to the extent reasonably
necessary, in the preparation of such Pre-Closing Returns, including by making
each Target Company’s books and records available for inspection by the Seller
Representative, the Seller Representative’s accountants, auditors and attorneys
upon reasonable advance notice. The Equity Sellers, in accordance with their
respective Indemnity Share, shall be responsible for the payment
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of all income Taxes payable by or on behalf of the Target Companies with respect
to the Pre-Closing Returns. Taxes other than income Taxes for each Target
Company for tax periods beginning prior to the Closing and which are unpaid as
of the Closing are to be borne by the Equity Sellers (based on the express
provisions of Section 6.6(b)(ii)) except to the extent taken into account in
calculating Net Working Capital.
(ii)The Purchaser shall be responsible for preparation and filing of all other
Returns required to be filed after the Closing by or on behalf of the Target
Companies (or with respect to the assets or business of the Target Companies)
for tax periods ending after the Closing, and, subject to the provisions below
relating to Straddle Returns, the Purchaser shall be responsible for the payment
of all Taxes payable by or on behalf of the Target Companies with respect to
such Returns. Any such Returns that are for tax periods beginning before and
ending after the Closing (“Straddle Returns”) shall be submitted to the Seller
Representative for its review at least 30 days prior to the filing date of such
Return (in the case of income Tax Returns) and at least 15 days prior to the
filing date of such Return (in the case of Returns other than income Tax
Returns) and shall not be filed without the prior approval of the Seller
Representative which approval shall not be unreasonably withheld. If the Seller
Representative and the Purchaser cannot agree on the amount of Taxes owed by any
Target Company or the treatment of an item shown on such Tax Return within
fifteen (15) days, the Purchaser and the Seller Representative shall refer the
matter to the CPA Firm. The Purchaser and the Seller Representative shall each
bear 50% of the fees and expenses of the CPA Firm. The determination of the CPA
Firm as to the amount owing by any Target Company with respect to such Tax
Returns shall be binding on both the Purchaser and the Equity Sellers for
purposes of filing such Tax Returns. Except to the extent taken into account in
calculating Net Working Capital, the Seller Representative, on behalf of and for
the account of the Equity Sellers (in accordance with their respective Indemnity
Share), shall reimburse the Purchaser for that portion of any income Taxes
payable by such Target Company with respect to Straddle Returns that relate to
the period ending on the Closing Date. For purposes of this Section 6.6(b), the
portion of the Taxes payable by each Target Company with respect to a Straddle
Return that relates to the period ending on the Closing Date shall be
determined, in the case of Taxes based on income or receipts, based on an
interim closing of the books of such Target Company, and in the case of all
other Taxes, by prorating such Taxes based on a ratio of (A) the number of days
in the tax period through and including the Closing Date to (B) the total number
of days in the tax period; provided, however, that the Equity Sellers shall not
be responsible for any Tax incurred after the Closing Date as a result of any
action by any Target Company or the Purchaser other than in the ordinary course
of the business of such Target Company.
(c)Allocation of Purchase Price. Each of the Parties further agrees and
acknowledges that the Purchase Price shall be allocated among (i) the assets of
the Target Companies (the portion of the Purchase Price allocated to each of the
assets of the Target Companies shall be increased by the respective liabilities
of the Target Companies as of the Closing) and (ii) the Purchased Assets (the
portion of the Purchase Price allocated to the Purchased Assets shall be
increased by the Assumed Liabilities as of the Closing), all in accordance with
the methodology set forth on Schedule 6.6(c) (the “Asset Allocation”). The
portion of the Purchase Price allocated to the assets of the Target
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Companies and to the Purchased Assets shall be reflected on a separate Form 8594
filed for each Target Company and each Asset Seller. Unless otherwise required
by applicable Tax Law, for income Tax purposes, the Equity Sellers, the Asset
Sellers and the Purchaser will not, and will cause their respective Affiliates
not to, take a position in any forum that is inconsistent with this Section
6.6(c) or the Asset Allocation, including taking an inconsistent position on any
Tax Return, before any Governmental Entity charged with the collection of any
Tax, or in any Legal Proceeding relating to any Tax. The Company Holders and
the Purchaser will file all federal, state, local and foreign income Tax Returns
in accordance with Schedule 6.6(c).
(d)Expected Tax Treatment. The Purchaser and Equity Sellers agree to treat the
purchase and sale of the Equity Seller Units in accordance with Situation 2 of
Revenue Ruling 99-6, 1999-1 C.B. 432, with the result that (i) the Equity
Sellers shall be treated as selling the Equity Seller Units in a transaction in
which gain or loss is reportable in accordance with Section 741 of the Code, and
(ii) the Purchaser shall be treated as purchasing all of the assets of each
Company for U.S. federal income tax purposes.
(e)Pre-Closing Returns. After the Closing Date, the Seller Representative shall
have the exclusive right to represent the interests of the Target Companies in
any and all Tax audits, assessments or administrative or court proceedings
relating to Pre-Closing Returns; provided, however, that the Purchaser shall
have the right to participate in any such audit, assessment or proceeding and to
employ counsel of its choice for purposes of such participation. In the event
that the Seller Representative proposes to compromise or settle any Tax claim,
or consent or agree to any Tax liability, relating to a Target Company, the
Purchaser shall have the right to review such proposed compromise, settlement,
consent or agreement. Without the prior written consent of the Purchaser, which
shall not be unreasonably withheld or delayed, the Seller Representative shall
not agree or consent to compromise or settle any issue or claim arising in any
such audit, assessment or proceeding, or otherwise agree to or consent to any
Tax liability, to the extent that any such compromise, settlement, consent or
agreement that would result in a cost to the Purchaser that is not indemnified
(f)Straddle Returns. After the Closing Date, the Purchaser shall have the
exclusive right to represent the interests of the Target Companies in any and
all Tax audits, assessments or administrative or court proceedings relating to
Tax Returns for Straddle Periods; provided, however, that the Seller
Representative shall have the right to participate in any such audit, assessment
or proceeding and to employ counsel of its choice for purposes of such
participation to the extent that any such audit, assessment or proceeding would
result in an indemnity payment to the Purchaser pursuant to this Agreement. In
the event that the Purchaser proposes to compromise or settle any Tax claim, or
consent or agree to any Tax liability, relating to a Target Company that would
result in an indemnity payment to the Purchaser pursuant to this Agreement, the
Seller Representative shall have the right to review such proposed compromise,
settlement, consent or agreement. Without the prior written consent of the
Seller Representative, which shall not be unreasonably withheld or delayed, the
Purchaser shall not agree or consent to compromise or settle any issue or claim
arising in any such audit, assessment
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or proceeding, or otherwise agree to or consent to any Tax liability, to the
extent that any such compromise, settlement, consent or agreement that would
(g)Amended Return.
(i)Upon written request of the Seller Representative, the Purchaser shall file,
or cause to be filed, any amended Tax Return (other than an amended income Tax
Return) for a Target Company or a claim for Tax (other than income Tax) refund
on behalf of such Target Company for any period ending on or prior to the
Closing Date; provided that taking such position will not subject either the
Purchaser or such Target Company to additional Taxes or reduce any Tax asset or
Tax attribute of the Purchaser or such Target Company. The Purchaser shall
permit the Seller Representative to review and comment on such amended Tax
Return prior to filing and the Purchaser shall incorporate the Seller
Representative’s reasonable comments. The cost of preparing such amended Tax
Return shall be borne by the Seller Representative. The Purchaser shall
reimburse the Equity Sellers for any Tax refund received with respect to such
amended Tax Return, net of any costs incurred by the Purchaser under
this Section 6.6(g)(i).
(ii)Any amended Tax Return of a Target Company or claim for Tax refund on behalf
of a Target Company for any period ending after the Closing Date shall be filed,
or caused to be filed, only by the Purchaser. The Purchaser shall not make or
cause to be made, any such filing, without the prior written consent of the
Seller Representative (which consent shall not be unreasonably withheld,
conditioned or delayed), to the extent such filing, if accepted, reasonably
might increase the Tax liability of any Company Holder.
(h)The Purchaser shall not file an election under Treasury regulation 301.7701-3
or any comparable provisions of applicable Law of state or local jurisdiction to
cause a Target Company to be treated as anything other than partnership for
Federal income Tax purposes (or for purposes of such state or local
jurisdiction), where such election has an effective date prior to the day after
the Closing Date.
(i)The Purchaser shall cause the Target Companies to promptly to remit to the
Seller Representative for the benefit of the Equity Sellers any refunds of Taxes
received attributable to tax periods ending on or before the Closing except to
the extent that such refunds were taken into account in the Net Working Capital.
(j)After the Closing Date, the Purchaser and the Equity Sellers shall provide
each other with such cooperation and information including reasonable access to
any applicable employees relating to the Target Companies as any other Party may
reasonably request in (i) filing any Tax Return, amended Tax Return or other Tax
filing or claim for refund of Taxes, (ii) determining any Tax liability or right
to refund of Taxes, (iii) conducting or defending any audit or other proceeding
in respect of Taxes, or (iv) effectuating the terms of this
Agreement. Notwithstanding the foregoing, no Party shall be unreasonably
required to prepare any document, or determine any information, not then in its
possession in response to a request under this Section 6.6(j).
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(k)Adjustment for Tax Benefits. Any amounts subject to indemnification by the
Equity Sellers hereunder shall be computed net of any Tax benefits realized by
the Purchaser in connection therewith.
Section 6.7Employee Benefits.
(a)The Parties agree to the following provisions related to the employees of the
Companies:
(i)Those employees of any Target Company that are listed on
Schedule 6.7(a)(i) hereto (“Discontinued Employees”), must be, on or before the
Closing Date, (i) transferred to and employed by Welch Gaming, LLC or
(ii) terminated by the Target Companies as employees of the Target
Companies. All costs, expenses, salary, severance payments, bonus amounts or
other payments due or payable to any Discontinued Employee, and all other
expenses or costs incurred, in connection with the transfer or discharge of the
Discontinued Employees shall be Seller Transaction Expenses for all purposes of
this Agreement.
(ii)The Purchaser hereby undertakes that all individuals who are employed by a
Target Company as of the Closing Date other than Discontinued Employees (each, a
“Continuing Target Employee”) shall each remain an employee of the employing
Target Company immediately following the Closing Date.
(iii)Prior to the Closing Date, the Target Companies shall terminate the 401(k)
Plan effective no later than the day immediately preceding the Closing
Date. The Purchaser shall indemnify the current trustee, Cummins, for costs and
liabilities incurred that may be incurred in connection with continuing to act
as trustee between the Closing Date and final distribution or transfer of all
plan assets, provided that such indemnification shall not cover liability for
the matters disclosed in Section 4.10(d) for which the Company Holders are
indemnifying Purchaser.
(iv)Except as provided in (i) and (iii) above, the Purchaser hereby assumes,
agrees to honor without modification or contest, and agrees to cause each Target
Company to honor without modification or contest, and to make required payments
when due under, all contracts, agreements, arrangements, policies, plans and
commitments of the Target Companies, including any compensation arrangements,
employment agreements and employee or director benefit plans, programs and
policies, in existence as of the date hereof which are (x) applicable with
respect to any Continuing Target Employee or any officer or executive of such
Target Company, or with respect to any former employee, officer, or executive of
such Target Company and (y) disclosed on the appropriate Schedule to this
Agreement as contemplated by the representations and warranties set forth in
Article IV.
(v)The Purchaser further acknowledges and agrees that it shall be responsible to
make all required payments when due for all amounts accrued as of the Closing
Date under the Target Companies’ profit sharing and bonus plans to the extent
reflected in the calculation of Net Working Capital.
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(vi)Not in limitation of the foregoing, the Purchaser shall not alter or reduce
the status of any Continuing Target Employee in such a manner as would have the
effect of denying any such Continuing Target Employee credit for any and all
purposes for the Continuing Target Employee’s period of service with any Company
prior to the Closing. Neither this Section 6.7 nor any other provision of this
Agreement shall limit the ability or right of Purchaser or a Target Company to
terminate the employment of any of their respective employees after the Closing
Date (subject to any rights of any such employee pursuant to any contract,
agreement, arrangement, policy, plan or commitment).
(vii)Purchaser shall have no obligation to employ or to provide benefits to any
Person after the Closing Date other than the Continuing Target Employees. The
Parties specifically acknowledge and agree that (i) the provisions of this
Section are not intended to confer any rights or remedies for the benefit of any
employee of the Target Companies and (ii) no Continuing Target Employee shall be
retained as an employee beyond thirty (30) days after the Closing Date if the
Purchaser should determine, in its sole discretion, that any such Continuing
Target Employee does not satisfy the Purchaser’s minimum hiring eligibility
requirements as to passing a standard background check and drug test.
(b)For purposes of all employee benefit plans, programs and arrangements
maintained by or contributed to by the Purchaser (including, after Closing, each
Target Company), the Purchaser shall cause each such plan, program or
arrangement to treat the prior service with any Company and its Affiliates of
each Continuing Target Employee (to the same extent such service is recognized
under analogous plans, programs or arrangements of any Company or its Affiliates
prior to the Closing) as service rendered to the Purchaser, as the case may be,
for purposes of eligibility to participate in and vesting thereunder (but not
benefit accrual); provided, however, that such crediting of service shall not
operate to duplicate any benefit or the funding of such benefit. Continuing
Target Employees shall also be given credit for any deductible or co-payment
amounts paid in respect of the plan year in which the Closing occurs, to the
extent that, following the Closing, they participate in any other plan for which
deductibles or co-payments are required. The Purchaser shall also cause each
Purchaser Plan (as hereinafter defined below) to waive any preexisting condition
which was waived under the terms of any Plan immediately prior to the Closing or
waiting period limitation which would otherwise be applicable to a Continuing
Target Employee on or after the Closing. The Purchaser shall recognize any
accrued but unused vacation of the Continuing Target Employees as of the Closing
Date, and the Purchaser shall cause each Target Company to provide such paid
vacation. For purposes of this Agreement, a “Purchaser Plan” shall mean any
employee benefit plan, as defined in Section 3(3) of ERISA, or whatever
nonqualified employee benefit or deferred compensation plan, stock option, bonus
or incentive plan or other employee benefit or fringe benefit program, that may
be in effect generally for employees of the Purchaser from time to time.
(c)Except as provided in this Section 6.7, nothing in this Agreement shall limit
or restrict in any way the rights of the Purchaser or any Company to modify,
amend,
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terminate or establish employee benefit plans or arrangements, in whole or in
part, at any time after the Closing Date.
(d)The Purchaser shall comply with, and shall be responsible for all liabilities
or obligations under, the WARN Act, with respect to all Continuing Target
Employees from the actions of the Purchaser or any Company following the
Closing.
(e)The Target Companies shall, prior to or within a reasonable period after the
Closing, but in no event later than final distribution of the assets of the
401(k) Plan, commence a compliance statement through the Internal Revenue
Service’s Voluntary Compliance Program (as set forth in Rev. Proc. 2013-12) to
correct the 401(k) Plan’s compliance exceptions identified in Schedule 4.10(d).
The Target Companies shall use commercially reasonable efforts to cause the
plan’s third party administrator to pay all out-of-pocket costs of the Voluntary
Compliance Program application. To the extent that the costs and expenses of
preparing and submitting such application (including the application fee) are
not paid by the plan’s third party administrator or another third party, the
Company Holders shall pay for, from the Indemnity Escrow Fund, the cost for the
preparation of the Voluntary Compliance Program application with the cooperation
of the Target Companies, and the Seller Representative may designate counsel
reasonably satisfactory to the Purchaser.
Section 6.8Publicity. None of the Company Holders, the Companies, the Purchaser
or any of their respective Affiliates shall issue or cause the publication of
any press release or other announcement with respect to this Agreement or the
transactions contemplated hereby without the prior consultation of the other
party, except as may be required by law or by any listing agreement with a
national securities exchange, in which cases the other party shall be advised
and the parties shall use their reasonable best efforts to cause a mutually
agreeable release or announcement to be issued.
Section 6.9Retention of and Access to Books and Records.
(a)Following the Closing, the Purchaser shall retain all material books and
records of the Companies relating to the operations of the Companies prior to
the Closing Date for the period of times for each type of such books and records
as are required pursuant to the Purchaser’s company-wide file retention policies
or for such longer periods as may be required to satisfy applicable laws,
regulations or agreements. The books and records to be retained pursuant to
this Section 6.9(a) shall include, without limitation, books and records (such
books and records of each Company, collectively, the “Records”) (i) relating to
Taxes, including, without limitation, accounting and tax records and information
pertaining to events occurring prior to the Closing Date, (ii) required to be
retained pursuant to obligations imposed by any statute, rule, regulation or
pendency of any litigation or other legal proceeding (“Legal Proceeding”),
(iii) relevant and necessary to defend any claim of liability under Section
6.6(a) hereof or (iv) relevant and necessary in connection with the defense or
conduct of any Action with respect to the pre-Closing conduct, actions or
omissions of such Company.
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(b)From and after the Closing Date and upon reasonable advance notice from the
Seller Representative setting forth a reasonable purpose for requesting access,
the Purchaser shall afford, and shall cause each Target Company to afford, the
Seller Representative with the opportunity to examine and to make copies of all
of the Records. All such information and access by the Seller Representative
and its employees and representatives shall comply with the Purchaser’s security
procedures and shall be conducted in a manner which does not unreasonably
interfere with the operations of the Purchaser or its Affiliates.
(c)If originals or copies of any Records, articles, objects or things, are
required to respond to legal process in connection with the conduct or defense
by the Seller Representative of any Action, such party, subject to applicable
laws, regulations or agreements (including the attorney-client privilege), shall
be permitted to remove the Records, articles, objects or things temporarily from
the other party’s premises; provided, that such party shall return such original
documents to such other party as promptly as practicable after such time when
such original documents are no longer required in connection with such Legal
Proceeding.
(d)If, in connection with any Action, the Seller Representative shall require
the assistance of any employees of a Target Company, the Purchaser shall cause
such Target Company to provide such employees to the Seller Representative as
are reasonably required. The Seller Representative shall pay such Target
Company’s out-of-pocket reasonable costs incurred in connection with such use of
each employee.
(e)If the Purchaser should hereafter plan to prepare audited financial
statements for any one or more of the Target Companies with respect to any
period of time that begins on or before the Closing Date, then the Seller
Representative will, upon request of the Purchaser, (i) provide introductions to
the responsible partners at the accounting firms that provided auditing or other
accounting services to such Target Companies during such period of time and
(ii) provide written authorization to such accounting firms to disclose, provide
or deliver to the Purchaser (or its designee), at the cost and expense of the
Purchaser, copies of any and all files or other information in the possession of
such accounting firms as may be useful or necessary in connection with the
preparation of such audited financial statements.
Section 6.10Indemnification of Managers and Officers. For a period of at least
six (6) years after the Closing, the Purchaser shall not, and shall cause each
of the Target Companies (and any of its successors) not to, for such period,
amend, or cause to be amended, any provision in the articles of organization,
limited liability company operating agreement or any other organizational
document of such Target Company if the effect of any such amendment would impair
or inhibit any right to indemnification for acts and omissions occurring on or
prior to the Closing Date now existing in favor of the current or former
managers and/or officers of such Target Company. Notwithstanding the foregoing,
if the Purchaser or any Target Company, or any of their respective successors or
assigns, consolidates with or merges into any other Person or transfers all or
substantially all of its properties or assets to any Person, then, and in each
case, the Purchaser shall use commercially reasonable efforts to cause such
successors and assigns of the Purchaser or the applicable Target Company, as the
case may be, to honor the provisions
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with respect to indemnification and limitations on liability set forth in each
Target Company’s articles of organization, limited liability company operating
agreement or any other organizational document.
Section 6.11Compliance with WARN Act and Similar Statutes. Purchaser shall not,
and shall cause each Target Company not to, at any time within ninety days after
the Closing Date, effectuate (i) a “plant closing” (as defined in the Worker
Adjustment and Retraining Notification Act of 1988, and the rules and
regulations promulgated thereunder (the “WARN Act”)) affecting any site of
employment or one or more facilities or operating units within any site of
employment or facility of such Target Company or (ii) a “mass layoff” (as
defined in the WARN Act) affecting any site of employment or facility of such
Target Company; or, in the case of clauses (i) and (ii), any similar action
under applicable state, local or foreign statute, common law, rule or regulation
requiring notice to employees in the event of a plant closing or
layoff. Purchaser shall be responsible for notices or payments due to any
Continuing Target Employees, and all notices, payments, fines or assessments due
to any Governmental Entity pursuant to any applicable federal, state, local or
foreign statute, common law, rule or regulation with respect to the employment,
discharge or layoff of any Continuing Target Employees by Purchaser or such
Target Company on or after the Closing, including but not limited to the WARN
Act or any comparable state or local law and any rules or regulations as have
been issued in connection with the foregoing.
Section 6.12Further Assurances. At any time and from time to time after the
Closing Date, the Parties hereto shall (i) furnish upon reasonable request to
each other such further assurances, external audit consents, information,
documents, instruments of transfer or assignment, files and books and records,
(ii) promptly execute, acknowledge, and deliver any such further assurances
external audit consents, documents, instruments of transfer or assignment, files
and books and records, and (iii) do all such further acts and things, as such
other party may reasonably request for the purpose of carrying out the intent of
this Agreement and the documents referred to herein.
Section 6.13No Shop. The Company Holders and the Companies shall not, and shall
not permit any of their Affiliates to, directly or indirectly, encourage,
solicit or initiate inquiries or proposals from, or provide any confidential
information to, or participate in any discussions or negotiations with, or enter
into any agreement with, any Person (other than the Purchaser and its Affiliates
and their respective directors, officers, employees, representatives and agents)
in connection with any exchange, merger, sale of material assets, sale of
securities, acquisition of beneficial ownership of, or the right to vote
securities, liquidation, dissolution or similar transaction involving, the
Companies from the date hereof to the Closing or earlier termination of this
Agreement.
Section 6.14Non-Competition; Non-Solicitation; Confidentiality.
(a)For a period of four (4) years after the Closing Date, the Company Holders
shall not, and shall cause their Affiliates not to, directly or indirectly, own,
manage, engage in, operate, control, work for, consult with, render services
for, do business with, maintain any interest in or participate in the ownership,
management, operation or control
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of, any business, whether in corporate, proprietorship or partnership form or
otherwise, engaged in any of the following activities (a “Restricted Business”):
(i)owning, operating, processing or otherwise exploiting ATMs (other than
Permitted Gaming Cash Dispensers) located at retail or other business locations
(x) anywhere in the United States or (y) anywhere outside the United States in
which the Companies currently do business;
(ii)developing, licensing or otherwise selling software or technology related to
the use, location or function of ATMs, or for financial institutions that
provides or powers (w) a map locator function, (x) loan lead generation,
(y) interest rate management or (z) social media games; or
(iii)licensing, utilizing or permitting any other Person to license or utilize
the marks set forth on Schedule 6.14(a)(iii) in connection with the
advertisement, marketing, distribution, offering for sale and sale of the
placement and operation of ATMs and related services;
provided, however, that the restrictions contained in this Section 6.14(a) shall
not in any way restrict (A) the acquisition by the Company Holders or any such
Affiliates, directly or indirectly, of less than five percent (5%) of the
outstanding capital stock of any publicly traded company engaged in a Restricted
Business; (B) the Company Holders or any such Affiliates in connection with
their continued ownership and operation of Welch Management Holdings, LLC and
Welch Gaming, LLC, provided that the business and operations of Welch Management
Holdings, LLC and Welch Gaming, LLC do not include the ownership of, or the
provision of services related to, ATMs other than Permitted Gaming Cash
Dispensers; (C) Welch Systems Inc., David Welch and the other owners of Welch
Systems Inc. in connection with their continued ownership and operation of the
business of Welch Systems Inc. engaging in the sale, installation, maintenance
and repair of banking equipment, including ATMs; (D) HR Financial Services Inc.
(“HR Financial”) and its owners in connection with their continued ownership and
operation of (x) those ATMs currently owned by HR Financial and (y) up to seven
additional ATMs solely for installation and use in a Country Market retail store
and branded by Marine Bank (provided that HR Financial may not add more ATMs
pursuant to this clause (y) at any time after any sale or transaction that
results in a change of control of Country Market or Marine Bank) and only so
long as the Purchaser, one of the Companies or one of its or their Affiliates
has the exclusive right (without the obligation) to continue processing and
management for all of those ATMs owned by HR Financial at the rates in effect as
of the Closing Date; or (E) Mark Idel (“Idel”) in connection with his continued
ownership and operation of ATMs set forth on Schedule 1.2(g) to that certain
Asset Purchase Agreement by and among IDI ATM, LLC, its Member and WSILC,
effective January 1, 2014 and only subject to the condition set forth in
Section 7.4(a) of that agreement, to wit, that they are operated in their
current locations (as of January 1, 2014) and branded with the current (as of
January 1, 2014) financial institution branding. As used in this Section
6.14(a), “Permitted Gaming Cash Dispenser” shall mean any cash dispensing device
that is used in conjunction with a video gambling terminal, video lottery
terminal or other terminal for gambling and that
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provides solely a service for dispensing cash (or a ticket, card or other
electronic code that may be converted into cash or used to purchase goods or
services) as either the winnings from playing on such video gambling terminal,
video lottery terminal or other terminal for gambling or from redemption of a
purchased gaming ticket (“Gaming Redemption Functionality”); provided, however,
that such Permitted Gaming Cash Dispenser may include a service for withdrawing
cash from a user’s financial institution account ("Account Cash Functionality")
only if the Account Cash Functionality is either (I) operational on the Closing
Date in a Gaming Cash Dispenser installed on or prior to the Closing Date or
(II) made operational in a Gaming Dispenser installed after the Closing Date at
a location where one of the Companies or Purchaser does not then have an ATM
installed at the same location, and if installed after the Closing Date only if
the Account Cash Functionality is both (w) required by the terms of the contract
governing the provision and operation of the Gaming Redemption Functionality
and (x) exclusively operated and made available at the same location as, and in
connection with the operation of, the Gaming Redemption Functionality. A
Permitted Gaming Cash Dispenser with Account Cash Functionality may not be
installed from and after the Closing Date through the end of the four (4) year
anniversary of the Closing Date at any location where one of the Companies or
Purchaser also then has an ATM installed, and any Permitted Gaming Cash
Dispenser installed during that period at a location where one of the Companies
or Purchaser does not then have an ATM installed at the same location may only
include Account Cash Functionality if prior notice is provided to the Purchaser
and during that period exclusively utilizes WSILC or its Affiliates for the
processing of transactions.
(b)For a period of three (3) years after the Closing Date, the Company Holders
shall not, and shall cause their Affiliates not to, directly or indirectly:
(i) cause, solicit, induce or encourage any employees of the Purchaser or any of
its subsidiaries (including the Target Companies) to leave such employment;
provided, however, this restriction shall not prohibit general solicitations for
employment not specifically targeted at such employees; or (ii) cause, induce or
encourage any material actual customer or supplier of the Purchaser or any of
its subsidiaries or any other Person who has a material business relationship
with the Purchaser or any of its subsidiaries, to terminate or modify any such
relationship.
(c)For a period of three (3) years after the Closing Date, the Company Holders
shall not and shall cause their Affiliates 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 Purchaser, any
Confidential Information (as defined below). The Company Holders shall not have
any obligation to keep confidential (or cause its officers, directors or
Affiliates to keep confidential) any Confidential Information if and to the
extent disclosure thereof is specifically required by applicable Law, subpoena
or other judicial process; provided, however, that in the event disclosure is
required by applicable Law, subpoena or other judicial process, the Company
Holders 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 at Purchaser’s sole cost. For purposes of
this Section 6.14(c), “Confidential Information” means any proprietary
information with respect to any Company that has economic
- 44 -
value, including methods of operation, customer lists, products, prices, fees,
costs, Technology, inventions, trade secrets, know-how, Software, marketing
methods, plans, personnel, suppliers, competitors, markets, any compilation of
information, data, records, resources or documents that the Companies have
assembled and treat as confidential, 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, (ii) becomes
generally available to the public after the date of this Agreement other than as
a result of a disclosure not otherwise permissible hereunder, or (iii) becomes
available on a nonconfidential basis from a third party not bound by a
confidentiality agreement or any legal, fiduciary or other obligation
restricting disclosure.
(d)The covenants and undertakings contained in this Section 6.14 relate to
matters which are of a special, unique and extraordinary character and a
violation of the terms of this Section 6.14 will cause irreparable injury to
Purchaser, the amount of which will be difficult to estimate or determine and
which cannot be adequately compensated. Accordingly, the remedy at law for any
breach of this Section 6.14 will be inadequate. Therefore, Purchaser may be
entitled to a temporary and permanent injunction, restraining order or other
equitable relief from any court of competent jurisdiction in the event of a
breach of this Section 6.14 without the necessity of proving actual damage. The
rights and remedies provided by this Section 6.14 are cumulative and in addition
to any other rights and remedies which Purchaser may have hereunder or at law or
in equity.
(e)The parties hereto agree that, if any court of competent jurisdiction
determines that a specified time period, a specified geographical area, or a
specified business limitation of this Section 6.14 is unreasonable, arbitrary or
against public policy, then a lesser period of time, geographical area, or
business limitation which is determined by such court to be reasonable, not
arbitrary and not against public policy may be enforced against the applicable
party.
(f)Solely for purposes of this Section 6.14, the term “Affiliates” shall mean,
when applied to Rock Island Capital Fund I, L.P. and Rock Island Capital Q Fund
I, L.P. (the “Rock Island Entities”), only those Affiliates of the Rock Island
Entities that are controlled by one or both of the Rock Island Entities and not
those Affiliates of the Rock Island Entities that control or are under common
control with one or both of the Rock Island Entities.
Section 6.15EFT Accounts.
(a)The Asset Sellers expressly acknowledge that, upon completion of the Closing,
Purchaser or WSILC shall acquire the sole and exclusive beneficial ownership of
(i) the EFT Accounts, (ii) all Cash on Hand in the EFT Accounts as of the
Closing Date and (iii) all cash amounts deposited into the EFT Accounts on or
after the Closing Date. At the Closing, the Asset Sellers shall provide, in a
separate document, the login id, the password and such other access codes as may
be necessary to give Purchaser or WSILC online access to the EFT Accounts.
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(b)The Asset Sellers shall use best efforts to transfer title to the EFT
Accounts to WSILC by Closing. Notwithstanding the fact that the EFT Accounts
may remain titled in the name of the Asset Sellers after the Closing Date,
Purchaser is expressly authorized and empowered, from and after the Closing
Date, to direct the authorized signatories on the EFT Accounts to (i) transfer,
withdraw or otherwise use any of such cash on deposit from time to time in the
EFT Accounts as Purchaser may choose, (ii) issue checks, drafts or other payment
instruments that draw upon or utilize the cash balances in the EFT Accounts and
(iii) close the EFT Accounts and provide directions as to how any remaining cash
balances in the EFT Accounts shall be disbursed.
(c)From and after the Closing Date, without the express prior written consent of
the Purchaser, the Asset Sellers shall not exercise any right or power as the
legally titled owner of the EFT Accounts, including, without limitation, any of
the following rights or powers: (i) changing the authorized signatories on the
EFT Accounts, (ii) requesting or directing the disposition of any funds on
deposit in the EFT Accounts, (iii) changing the password, login id or other
access code for online access to the EFT Accounts or (iv) issuing any checks,
drafts or other payment documents that would draw upon or utilize the cash
balances in the EFT Accounts.
Section 6.16Mail. Each of the Asset Sellers authorizes and empowers the
Purchaser on and after the Closing Date to receive and open all mail received by
the Purchaser relating to the ATM business or the Purchased Assets and to deal
with the contents of such communications in any proper manner. The Asset
Sellers shall promptly deliver to the Purchaser any mail or other communication
received by them after the Closing Date pertaining to the ATM business or the
Purchased Assets. The Purchaser shall promptly deliver to the Asset Sellers any
mail or other communication received by it after the Closing Date pertaining to
the Excluded Assets or the Excluded Liabilities.
Section 6.17Use of Names. After the Closing Date, each of the Company Holders
and Asset Sellers agrees that (A) neither it, nor any of its Affiliates, shall
use the names, trademarks, slogans, trade names, logos or labels included in the
Purchased Assets and (B) any license or other right previously granted by any of
the Target Companies, any of the Company Holders or any Affiliate of a Company
Holder purporting to grant any right or interest in or to the names, trademarks,
slogans, trade names, logos or labels owned or used by the Target Companies
shall be terminated as of the Closing Date without any further action required
by any party thereto. Each of the Asset Sellers, Company Holders and their
Affiliates shall take such action as necessary to (i) change its name within
thirty (30) days after the Closing Date to a name that does not make use of, or
that is confusingly similar to, any of the names, trademarks, slogans, trade
names, logos or labels included in the Purchased Assets and (ii) maintain its
corporate existence in good standing for at least one year after the Closing
Date. Notwithstanding the foregoing, Welch Systems, Inc. shall have the right
to continue to use the name “Welch” in its name in a manner consistent with past
practices and in connection with the business of (x) providing repair and
technical services for bank equipment and ATMs and (y) engaging in the sale,
installation, maintenance and repair of banking equipment, including ATMs.
Section 6.18Non-Assigned Assets. If the legal interest in any of the Purchased
Assets, or any claim, right or benefit arising under or resulting from the
Purchased Assets, cannot be
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sold, assigned, transferred or conveyed on the Closing Date because any waiting
or notice period has not expired or any required consents or approvals have not
been obtained or waived, then the legal interest in such Purchased Assets will
not be sold, assigned, transferred or conveyed until such waiting or notice
period shall have expired or until the necessary approval, consent or waiver is
obtained, and each Asset Seller will, at its expense, use commercially
reasonable efforts to obtain such consents, approvals or waivers as soon as
practicable. Nothing in this Agreement may be construed as an attempt to assign
to the Purchaser any legal interest in any of the Purchased Assets that, as a
matter of law or by the terms of any contract to which an Asset Seller is
subject, is not assignable without the consent of any other party, unless such
consent is given. Pending such assignments, conveyances and transfers, each
Asset Seller will hold any such non-assigned Purchased Assets for the benefit of
the Purchaser and will cooperate with the Purchaser in any lawful and reasonable
arrangements designed to provide the benefits of ownership thereof to the
Purchaser.
Section 6.19Pre-Closing Transfer of Certain Automobiles. The automobiles listed
on Schedule 6.19 hereto (the “Excluded Autos”) are currently owned by a Target
Company. Prior to the Closing Date, the Target Companies and the Equity Sellers
will take such actions and execute such documents as may be necessary to
transfer, assign, convey and deliver the Excluded Autos to a Person other than
the Target Companies, with no adjustment to the Purchase Price. Without
limiting the foregoing, each Target Company shall, prior to the Closing, take
such actions as are necessary to result in the certificate of title for each
Excluded Auto to be transferred and re-issued in the name of the transferee of
each such Excluded Auto.
Section 6.20Cooperation Regarding Vault Cash Borrowings. From the date of this
Agreement and continuing through and until the Closing, the Companies shall, at
the request of the Purchaser, (i) provide the Purchaser with introductions to
the appropriate account officers of the financial institutions that have
provided the Vault Cash Borrowings and (ii) cooperate reasonably with the
Purchaser’s efforts to make arrangements, in advance of the Closing, for the
release at the Closing of the Liens that secure the Vault Cash
Borrowings. Purchaser will offer to provide substitute cash collateral or
letters or credit to the lender under the United Community Vault Line in order
to obtain a release of the Liens securing the United Community Vault Line. If
such lender declines to release such Liens, then Purchaser will repay all
amounts borrowed on the United Community Vault Line and thereby acquire
ownership at the Closing of all of the cash borrowed thereunder. If the amounts
borrowed under the United Community Vault Line are not repaid by the Purchaser
at Closing, the Purchaser will use reasonable effort to cause the Asset Sellers
and its owners to be released from liability on the United Community Vault Line,
notwithstanding that Purchaser indemnifies the Asset Sellers and their owners
under Section 9.3 with respect to the United Community Vault Line (except to the
extent of a Vault Cash Deficiency) as an Assumed Liability.
Section 6.21Efforts to Obtain Certain Consents. From the date of this Agreement
and continuing through and until the Closing, the Companies shall use
commercially reasonable efforts to obtain a written consent to the transactions
contemplated by this Agreement in a form reasonably approved by the Purchaser
from the counterparties to each agreement, note, bond, mortgage, guarantee,
lease, license, agreement or other instrument or obligation listed on
Schedule 4.3 except to the extent (i) any such consent has been obtained prior
to the date hereof or (ii) such agreement, note, bond, mortgage, guarantee,
lease, license, agreement or other
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instrument or obligation will be terminated at or before Closing in accordance
with or pursuant to the provisions of this Agreement.
Article VII
CONDITIONS
Section 7.1Conditions to Each Party’s Obligation. The respective obligation of
each party to effect the transactions contemplated by this Agreement shall be
subject to the satisfaction or, to the extent permitted by applicable law,
waiver at or prior to the Closing of each of the following conditions:
(a)No statute, rule, order, decree or regulation shall have been enacted or
promulgated by any Governmental Entity of competent jurisdiction which prohibits
the transactions contemplated by this Agreement or makes such transactions
illegal;
(b)There shall be no order or injunction of a Governmental Entity of competent
jurisdiction in effect precluding, restraining, enjoining or prohibiting
consummation of the transactions contemplated by this Agreement and there shall
be no suit, action, proceeding or investigation by a Governmental Entity seeking
to restrain, enjoin or prohibit the transactions contemplated by this Agreement;
(c)All relevant waiting periods under any Competition Law applicable to the
transactions contemplated hereby shall have expired or terminated, and all
actions required by, or filings required to be made with, any Governmental
Entity under any such Competition Law that are necessary to permit the
consummation of the transactions contemplated hereby shall have been taken or
made; and
(d)All authorizations, consents and approvals (including those necessary for the
continuation of all material agreements, permits and registrations) required to
be obtained prior to consummation of the transactions contemplated by this
Agreement shall have been obtained, except for such authorizations, consents and
approvals the failure of which to be obtained is not reasonably likely to have a
Material Adverse Effect.
Section 7.2Conditions to the Obligation of the Company Holders. The obligation
of the Company Holders to effect the transactions contemplated by this Agreement
is further subject to the satisfaction or, to the extent permitted by applicable
law, waiver at or prior to the Closing of the following conditions:
(a)The representations and warranties of the Purchaser contained in Article V
that are qualified as to materially shall be true and correct, and those not so
qualified shall be true and correct in all material respects, in each case, 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 materially 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);
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(b)The Purchaser shall have performed in all material respects each of its
respective agreements and covenants contained in or contemplated by this
Agreement that are required to be performed by it at or prior to the Closing
pursuant to the terms hereof; and
(c)The Company Holders shall have received a certificate signed by an executive
officer of the Purchaser, dated the Closing Date, to the effect that the
conditions set forth in Section 7.2(a) and Section 7.2(b) hereof have been
satisfied.
Section 7.3Conditions to Obligation of the Purchaser. The obligation of the
Purchaser to effect the transactions contemplated hereby is further subject to
the satisfaction or, to the extent permitted by applicable law, waiver at or
prior to the Closing of the following conditions:
(a)The representations and warranties of the Companies and the Company Holders
contained in Article III and Article IV that are qualified as to materiality
shall be true and correct, and those not so qualified shall be true and correct
in all material respects, in each case, 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 speak as of 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)Each Company and Company Holder shall have performed or complied in all
material respects its respective agreements and covenants contained in or
contemplated by this Agreement that are required to be performed or complied
with by it at or prior to the Closing pursuant to the terms hereof;
(c)The Purchaser shall have received a certificate signed by each Company, dated
the Closing Date, to the effect that the conditions set forth in Section 7.3(a)
and Section 7.3(b) hereof with respect to such Company have been satisfied;
(d)The Purchaser shall have received a certificate signed by the Seller
Representative, dated the Closing Date, to the effect that the conditions set
forth in Section 7.3(a) and Section 7.3(b) hereof with respect to the Company
Holders have been satisfied; and
(e)Since the date of this Agreement there shall not have been any Material
Adverse Effect.
Article VIII
TERMINATION
Section 8.1Termination. Notwithstanding anything herein to the contrary, this
Agreement may be terminated and the transactions contemplated hereby may be
abandoned at any time before the Closing occurs:
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(a)by the mutual written consent of the Companies, the Purchaser and the Seller
Representative, on behalf of the Company Holders;
(b)by any of the Companies, the Seller Representative, on behalf of the Company
Holders, or the Purchaser, if any Governmental Entity shall have issued a
statute, order, decree or regulation or taken any other action (which statute,
order, decree, regulation or other action the parties hereto shall use their
reasonable best efforts to lift), in each case permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement or making the transactions contemplated hereby illegal and such
statute, order, decree, regulation or other action shall have become final and
non-appealable;
(c)by the Seller Representative, on behalf of the Company Holders, if the
Purchaser breaches or fails to perform any of its covenants or agreements set
forth in this Agreement, or if any representation or warranty of Purchaser
contained in Article V is or becomes untrue, in either case such that the
conditions set forth in Section 7.2(a) and Section 7.2(b) would not be
satisfied and such breach is incapable of being cured or, if capable of being
cured, shall not have been cured within thirty (30) days after receipt by the
Purchaser of written notice specifying particularly such breach, failure or
untrue representation;
(d)by the Purchaser, if any Company or Company Holder breaches or fails to
perform any of its respective covenants or agreements set forth in this
Agreement, or if any representation or warranty of any Company or Company Holder
contained in Article III or Article IV hereof, respectively, is or becomes
untrue, in either case such that the conditions set forth in Section 7.3(a) and
Section 7.3(b) would not be satisfied and such breach is incapable of being
cured or, if capable of being cured, shall not have been cured within thirty
(30) days after receipt by the Seller Representative of written notice
specifying particularly such breach, failure or untrue representation; or
(e)by the Companies, the Seller Representative, on behalf of the Company
Holders, or the Purchaser, if the Closing shall not have occurred on or prior to
October 31, 2014; provided, that such date may be extended by the Purchaser upon
notice to the Seller Representative on or before October 31, 2014, for a period
not to exceed sixty (60) calendar days to the extent necessary to obtain any
required approvals of Governmental Entities; provided, further, that the failure
of any condition (other than those conditions which by their nature are to be
satisfied at the Closing) set forth in Section 6.15 hereof to be satisfied on or
prior to such date did not result from the failure by the party seeking to
terminate this Agreement to fulfill any obligation under this Agreement, that
such party is required to fulfill prior to the Closing.
Section 8.2Effect of Termination.
(a)In the event of the termination of this Agreement as provided in Section 8.1
hereof, written notice thereof shall forthwith be given to the other party
specifying the provision hereof pursuant to which such termination is made, and
this Agreement shall forthwith become null and void, and there shall be no
liability on the part of the
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Purchaser, any Company or any Company Holder, except for liabilities with
respect to any prior breach of covenants or a willful and intentional breach of
representations and warranties; provided, that the agreements contained in
Article X hereof shall survive the termination of this Agreement; and provided
further that the Confidentiality Agreement shall remain in full force and
effect.
(b)In the event of the termination of this Agreement as provided in Section 8.1
hereof, the Purchaser shall redeliver, and will cause its agents to redeliver to
the Companies, all documents, work papers and other materials of the Companies
relating to the transactions contemplated hereby, whether obtained before or
after the execution hereof. Notwithstanding the foregoing, the Purchaser may,
at its option, destroy any such documents, work papers and other materials of
the Companies in lieu of redelivery to the Companies provided that the Purchaser
provides to the Companies a written statement signed by an authorized officer of
the Purchaser certifying that such documents, work papers and other materials of
the Companies have been destroyed.
Section 8.3Fees and Expenses. All costs and expenses incurred in connection
with this Agreement and the consummation of the transactions contemplated hereby
shall be paid by the party incurring such expenses, except that the Seller
Transaction Expenses shall be paid by the Companies.
Article IX
SURVIVAL AND INDEMNIFICATION
Section 9.1Survival. All of the representations and warranties of the parties
contained in this Agreement, the Disclosure Schedule and any other certificate
or document delivered pursuant to this Agreement shall survive the Closing until
twenty-four (24) months after the Closing Date; provided, however, that the
representations and warranties set forth in (a) Section 3.1 (Ownership of LLC
Units), Section 3.2 (Authorization; Validity of Agreement), Section
3.5 (Brokers), Section 4.1 (Organization), Section 4.1-A (Authorization;
Validity of Agreement), Section 4.2 (Capitalization), Section 4.16 (Title to
Other Properties; All Other ATM Assets), Section 4.23 (Brokers), and Section
4.25 (EFT Accounts) (collectively, the “Fundamental Representations”) shall
survive the Closing indefinitely, and (b) Section 4.10 (Employee Benefit Plans;
ERISA), Section 4.12 (Tax Matters), and Section 4.13 (Environmental Matters)
(collectively the “Statutory Representations”) shall survive until the 90th
calendar day following expiration of the applicable statute of limitations (in
each case, the expiration date applicable to any such representations and
warranties is referred to herein as the “Expiration Date”). All of the
covenants, agreements, undertakings and obligations of the Parties contained in
this Agreement shall survive until fully performed or fulfilled, unless
non-compliance with such covenants, agreements, undertakings or obligations is
waived in writing by the party entitled to such performance.
Section 9.2Indemnification by the Company Holders. From and after the Closing,
subject to Section 9.4 and Section 9.5 hereof, the Company Holders shall
severally in proportion to their Indemnity Share, indemnify and hold harmless
the Purchaser and its members, managers, directors, officers, employees and
agents (collectively, the “Purchaser Indemnified Parties”)
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from and against any and all liabilities, commitments or obligations of any kind
or nature whatsoever, Actions, losses, deficiencies, expenses (including costs
of investigations and defense and reasonable attorneys’ and accountants’ fees)
or damages of any kind or nature whatsoever, whether or not involving a
third-party claim (collectively, “Damages”) directly or indirectly arising out
of or resulting from any one or more of the following: (i) any breach of any
representation or warranty made by any Company Holder or any Company in Article
III or Article IV of this Agreement, (ii) subject to the final sentence of this
Section 9.2, any breach or violation of, or failure to perform, any covenant,
agreement, undertaking or obligation of the Company Holders or the Asset Sellers
set forth in this Agreement, (iii) any breach or violation of, or failure to
perform, any pre-closing covenant, agreement, undertaking or obligation of the
Target Companies set forth in this Agreement, (iv) the employment relationship
of any Target Company with any Discontinued Employee, (v) failure of the Seller
Representative to timely, properly or correctly distribute the Purchase Price to
the Company Holders, (vi) the Excluded Liabilities, (vii) the Excluded Assets,
(viii) the Excluded Autos or any indebtedness related to the Excluded Autos,
(ix) the matters set forth on Schedule 9.2(a)(ix), as and to the extent set
forth thereon, (x) the matters set forth on Schedule 9.2(a)(x), as and to the
extent set forth thereon, (xi) the exceptions to compliance identified in
Schedule 4.10(d), and (xii) any liability of WSILC to First Premier Bank under
the Gaming Payout Device Cash Agreement among WSILC, Welch Gaming, LLC and First
Premier Bank, not released by First Premier Bank. For purposes of Section 9.2,
except for the second sentence of Section 4.16 (Title to Other Properties; All
Other ATM Assets), the representations and warranties made by the Companies and
the Company Holders in this Agreement shall not be deemed qualified by any
references to materiality or to Material Adverse Effect. Notwithstanding the
foregoing, liability for any violation of Section 6.14 by a Company Holder shall
be solely that of the breaching Company Holder.
Section 9.3Indemnification by the Purchaser. From and after the Closing,
subject to Section 9.4 and Section 9.5 hereof, the Purchaser shall indemnify and
hold harmless the Seller Representative and its members, managers, directors,
officers, employees and agents, and the other Company Holders and Asset Sellers
(collectively, the “Seller Indemnified Parties”) from and against any and all
Damages incurred directly or indirectly arising out of or resulting from any one
or more of the following: (i) any breach of any representation or warranty made
by the Purchaser in Article V of this Agreement; (ii) any breach or violation
of, or failure to perform, any covenant, agreement, undertaking or obligation of
the Purchaser set forth in this Agreement; (iii) any breach or violation of, or
failure to perform, any post-closing covenant, agreement, undertaking or
obligation of the Purchaser or a Target Company set forth in this Agreement and
(iv) the Assumed Liabilities.
Section 9.4Limitations on Indemnification Amount.
(a)Except for breaches of the Fundamental Representations, Section 4.12 (Tax
Matters) or Section 4.13 (Environmental Matters) and fraud by the Company
Holders, none of the Company Holders or the Purchaser, as the case may be, shall
be liable for Damages arising in connection with its indemnification obligations
under Section 9.2(i) or Section 9.3(i) hereof until the amount of Damages
incurred by the Seller Indemnified Parties or the Purchaser Indemnified Parties,
as the case may be, exceeds $750,000 in the aggregate and then only to the
extent of such excess (i.e. a true deductible, not a “tipping basket”).
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(b)Except for breaches of Fundamental Representations, Statutory
Representations, the representations and warranties made in Section 4.22 (Data
Privacy and Security) and fraud of the Company Holders, the Company Holders
shall in aggregate have no indemnification obligations to the Purchaser for any
liability under this Agreement (including without limitation Section 2.2
and Section 9.2) in excess of $24,000,000 (the “Indemnification Cap”). In
addition to the foregoing limits, the Company Holders’ aggregate indemnification
obligations to the Purchaser for any liability with respect to the matters in
Schedule 9.2 alone shall not exceed the limits set forth therein, and no Company
Holder shall be obligated to indemnify the Purchaser in an amount which exceeds
such Company Holder’s Indemnity Share of the Indemnification Cap, except for
breaches of Fundamental Representations or Statutory Representations or fraud of
the Company Holders. With respect to the Fundamental Representations and the
Statutory Representations, the Company Holders shall have no indemnification
obligations to the Purchaser in aggregate for any liability arising hereunder in
excess of the Purchase Price, less all other payments made for indemnification
obligations from the Indemnity Escrow or on account of Section 4.22. With
respect to the representations and warranties set forth in Section 4.22 (Data
Privacy and Security), the Company Holders shall have no indemnification
excess of $48,000,000.
Section 9.5Other Limitations.
(a)The amount of any Damages suffered by a Seller Indemnified Party or a
Purchaser Indemnified Party, as the case may be, shall be reduced by any
third-party insurance or other indemnification benefits which such party or any
of its representatives receives in respect of or as a result of such
Damages. If any Damages for which indemnification is provided hereunder are
subsequently reduced by any third-party insurance or other indemnification
benefit, recovery, the amount of the reduction shall be remitted to the Seller
Indemnified Party or Purchaser Indemnified Party, as the case may be.
(b)Notwithstanding any other provision of this Agreement, in the case of any
Damages or any alleged Damages arising hereunder as to which any Target Company
is entitled to indemnification pursuant to any asset purchase agreement pursuant
to which any Target Company acquired assets, the Purchaser shall proceed (or
shall cause such Target Company to proceed) directly against the indemnitors
thereunder and shall use its best efforts to enforce the rights of any Target
Company under those agreements before making any claim against the Company
Holders hereunder; provided, that the Seller Representative shall cooperate
reasonably with the Purchaser in making any such claim thereunder.
(c)No Action for indemnification, reimbursement or any other remedy pursuant to
this Article may be brought with respect to breaches of representations and
warranties contained herein after the applicable Expiration Date; provided,
however, that, if, prior to the applicable Expiration Date, an Indemnified Party
shall have notified the Indemnifying Party in writing of a specific claim for
indemnification under this Article and such notice identifies the nature of such
claim with reasonable specificity, such
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Indemnified Party shall be entitled to be indemnified with respect to such claim
in accordance with this Article notwithstanding the occurrence of such
Expiration Date.
(d)Notwithstanding any other provision of this Agreement, in no event shall any
Indemnified Party be entitled to indemnification for Damages pursuant to this
Article IX to the extent any Damages were attributable to such Indemnified
Party’s own gross negligence or willful misconduct.
Section 9.6Notice and Payment of Claims.
(a)Notice. An Indemnified Party shall notify the Indemnifying Party (with
reasonable specificity) promptly after it becomes aware of facts supporting an
Action for indemnification under this Article, and shall provide to the
Indemnifying Party as soon as practicable thereafter all information and
documentation necessary to support and verify any Damages associated with such
Action. The failure to so notify or provide information to the Indemnifying
Party shall not relieve the Indemnifying Party of any liability that it may have
to any Indemnified Party, except to the extent that the Indemnifying Party
demonstrates that it has been actually prejudiced by the Indemnified Party’s
failure to give such notice, in which case the Indemnifying Party shall be
relieved from its obligations hereunder.
(b)Payment. In the event an Action for indemnification under this Article shall
have been Finally Determined, the amount of the related Damages shall be paid by
the Company Holders, or the Purchaser, as the case may be, to the Seller
Indemnified Party or the Purchaser Indemnified Party, as the case may be, in
immediately available funds in U.S. dollars within five (5) business days after
such Final Determination. For purposes of this Agreement, the terms “Finally
Determined,” “Final Determination” and other similar phrases shall mean with
respect to any Action, and the liability for and amount of Damages therefor,
when the parties to such Action have so determined by mutual agreement or, if
disputed, when a final, non-appealable decision has been rendered in accordance
with Article IX hereof.
(c)Third-Party Claims. In the event that the Indemnifying Party may be required
to indemnify an Indemnified Party pursuant to this Article against any Action
made or brought by a third-party (a “Third-Party Claim”), indemnification shall
be provided in accordance with the following procedures:
(i)Upon receipt by an Indemnified Party of notice of the commencement of a
Third-Party Claim against it, such Indemnified Party shall, if an Action is to
be made against the Indemnifying Party under this Article, give notice to the
Indemnifying Party of the commencement of such Third-Party Claim as soon as
practicable, but in no event later than five (5) days after the Indemnified
Party shall have been served with process, but the failure to so notify the
Indemnifying Party shall not relieve the Indemnifying Party of any liability
that it may have to any Indemnified Party, except to the extent that the
Indemnifying Party demonstrates that its defense of such Third-Party Claim has
been actually prejudiced by the Indemnified Party’s failure to give
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such notice, in which case the Indemnifying Party shall be relieved from its
obligations hereunder.
(ii)If a Third-Party Claim is brought against an Indemnified Party and it gives
proper notice to the Indemnifying Party of the commencement of such Third-Party
Claim, the Indemnifying Party will be entitled (unless the Action involves Taxes
in which case defense will be handled as set forth in Section 6.6 hereof or
unless the Indemnifying Party is also a party to such Third-Party Claim except
if the Indemnifying Party determines in good faith that joint representation
would be appropriate) to assume the control of defense of such Third-Party Claim
with counsel reasonably satisfactory to the Indemnified Party and, after notice
from the Indemnifying Party to the Indemnified Party of its election to assume
the defense of such Third-Party Claim, the Indemnifying Party shall not, as long
as it conducts such defense, be liable to the Indemnified Party under this
Article IX for any fees of other counsel or any other expenses with respect to
the defense of such Third-Party Claim, in each case subsequently incurred by the
Indemnified Party in connection with the defense of such Third-Party Claim.
(iii)If the Indemnifying Party assumes the defense of a Third-Party Claim, no
compromise, discharge or settlement of or admission of liability in connection
with such Third-Party Claim may be effected by the Indemnifying Party without
the Indemnified Party’s consent (which consent shall not be unreasonably
withheld or delayed) unless (A) the sole relief provided is monetary damages
that are paid in full by the Indemnifying Party (if such claim by the
Indemnified Party for indemnification is successful) or (B) such settlement does
not include terms other than monetary Damages which in the good faith judgment
of the Indemnifying Party could significantly adversely affect such Target
Company’s business operations after the Closing.
Section 9.7Tax Consequences. Any indemnity payment made under this Article
shall be deemed to be an adjustment in the Purchase Price.
Section 9.8Remedy. Except for seeking equitable relief or claims based on
fraud, from and after the Closing the sole remedy of either party in connection
with a breach of the representations and warranties in this Agreement or a
breach or violation of, or failure to perform, any covenant, agreement or
obligation in this Agreement, shall be as set forth in this Article IX. The
eligible funds in the Indemnity Escrow account shall be the primary source of
recovery with respect to any indemnity claim made hereunder by Purchaser, and no
demand shall be made on Company Holders except to the extent in excess of funds
available in the Indemnity Escrow.
Section 9.9Powers of Attorney.
(a)Each Company Holder and Asset Seller irrevocably constitutes and appoints
Rock Island Capital Fund I, L.P. as such Company Holder’s true and lawful agent,
proxy and attorney-in-fact and agent (the “Seller Representative”) and
authorizes the Seller Representative acting for such Company Holder and in such
Company Holder’s name, place and stead, in any and all capacities to do and
perform every act and thing required or permitted to be done by such Company
Holder or the Seller
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Representative hereunder or otherwise in connection with the agreements and
transactions contemplated by this Agreement, as fully to all intents and
purposes as such Person might or could do in person, including, without
limitation:
(i)determine the presence (or absence) and direct payment of proceeds of claims
for indemnification against the Purchaser pursuant to Article IX;
(ii)deliver all notices required to be delivered by such Company Holder under
this Agreement, including, without limitation, any notice of a claim for which
indemnification is sought under Article IX;
(iii)receive all notices required to be delivered to such Company Holder under
(iv)take any and all action on behalf of such Company Holder from time to time
as the Seller Representative may deem necessary or desirable to defend, pursue,
resolve and/or settle disputes or claims under this Agreement, including,
without limitation, disputes regarding the Proposed Final Closing Statement or
the calculation of the sum of the Net Working Capital plus Recent CapX and Cash
Vault Deficiency under Section 2.4(e) and claims for indemnification under
Article IX;
(v)consent on behalf of the Company Holders with respect to matters under this
Agreement or the transactions contemplated hereby; and
(vi)engage and employ, at the expense of the Company Holders, agents and
representatives (including accountants, legal counsel and other professionals)
and to incur such other expenses as it deems necessary or prudent in connection
with the administration of the foregoing.
(b)Each Company Holder grants unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing necessary or
desirable to be done in connection with the transactions contemplated by this
Agreement, as fully to all intents and purposes as the undersigned might or
could do in person, hereby ratifying and confirming all that the Seller
Representative may lawfully do or cause to be done by virtue hereof. Each
Company Holder agrees that such agency, proxy and power of attorney are coupled
with an interest, and are therefore irrevocable without the consent of the
Seller Representative and Purchaser and shall survive the death, incapacity, or
bankruptcy of such Company Holder. Each Company Holder acknowledges and agrees
that upon execution of this Agreement, any delivery by the Seller Representative
of any waiver, amendment, agreement, opinion, certificate or other documents
executed by the Seller Representative or any decisions made by the Seller
Representative pursuant to this Section 9.9, such Company Holder shall be bound
by such documents or decision as fully as if such Company Holder had executed
and delivered such documents or made such decisions. Company Holders shall
reimburse, in accordance with their respective Indemnity Share, all costs
incurred by the Seller Representative in acting as Seller
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Representative and for all payments made on behalf of the Company Holders under
this Agreement.
(c)Liability. The Seller Representative shall not have by reason of this
Agreement a fiduciary relationship in respect of any Company Holder, except in
respect of amounts received on behalf of such Company Holder. The Seller
Representative shall not be liable to any Company Holder for any action taken or
omitted by it or any agent employed by it hereunder or under any other document
or instrument contemplated hereby, or in connection therewith, except that the
Seller Representative shall not be relieved of any liability imposed by law for
gross negligence or willful misconduct. The Seller Representative shall not be
liable to any of the Company Holders for any apportionment or distribution of
payments made by it in good faith, and if any such apportionment or distribution
is subsequently determined to have been made in error the sole recourse of any
Company Holder to whom payment was due, but not made, shall be to recover from
other Company Holders any payment in excess of the amount to which they are
determined to have been entitled. The Seller Representative shall not be
required to make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Agreement.
(d)Replacement of the Seller Representative. Each Company Holder acknowledges
and agrees that, upon the dissolution, liquidation, termination, bankruptcy or
other incapacity of the initial Seller Representative appointed pursuant
to Section 9.9(a), Rock Island Capital, LLC shall be succeed to the
responsibility and authority of the initial Seller Representative.
(e)Actions of the Seller Representative. Each Company Holder agrees that
Purchaser shall be entitled to rely on any action taken by the Seller
Representative, on behalf of the Company Holders, pursuant to Section 9.9(a)
above (each, an “Authorized Action”), and that each Authorized Action shall be
binding on each Company Holder as fully as if such Company Holder had taken such
Authorized Action. Purchaser agrees that the Seller Representative shall have
no liability to Purchaser for any Authorized Action, except to the extent that
such Authorized Action is found by a final order of a court of competent
jurisdiction to have constituted fraud or willful misconduct. Company Holders
agree, jointly and severally, to pay, and to indemnify and hold harmless,
Purchaser from and against any losses which they may suffer, sustain, or become
subject to, as the result of any claim by any Person that an Authorized Action
is not binding on, or enforceable against, the Company Holders. In addition,
the Company Holders hereby release and discharge Purchaser, each Company and
each of their respective Affiliates from and against any liability arising out
of or in connection with the Seller Representative’s failure to distribute any
amounts received by the Seller Representative on the Company Holders’ behalf to
the Company Holders.
Section 9.10Purchaser Reliance. By execution hereof, Seller Representative
agrees to accept payment of the Purchase Price and any other cash consideration
hereunder, from time to time, on behalf of the Company Holders and to promptly
disburse to the Equity Sellers and the Asset Sellers their respective
Distributive Share thereof, net of (i) any applicable fees and expenses,
including applicable fees of expenses of the Seller Representative arising out
of or in
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connection with the acceptance or administration of the Seller Representative’s
duties hereunder (and such reserves for contingencies as Seller Representative
may deem necessary or appropriate) and (ii) adjustments to take account of the
portion of the Net Working Capital attributable to the Target Companies (to be
charged or credited to the Equity Sellers) and the Asset Sellers (to be charged
or credited to the Company Holders in the Asset Sellers) as reasonably
determined by the Seller Representative. The Purchaser shall be entitled to
rely on the full power and authority of Seller Representative to act hereunder
and under any Exhibit or Schedule hereto on behalf of the Company Holders, and
shall not be liable in any way whatsoever for any action the Purchaser takes or
omits to take in reliance upon such power and authority. The Company Holders
shall look solely to the Seller Representative for payment of their Distributive
Share of the cash consideration paid to Seller Representative by the Purchaser,
less payments made or costs incurred by the Seller Representative on their
behalf, and they shall have no recourse against Purchaser or any of its
Affiliates or agents for payment thereof; provided, however, that this sentence
shall in no way limit the Company Holders’ or the Seller Representative’s power
to enforce any of the Company Holders’ rights hereunder.
Article X
MISCELLANEOUS
Section 10.1Amendment; Waiver.
(a)This Agreement may be amended, modified or supplemented by the parties
hereto, by action taken or authorized by their respective Manager or boards of
directors, as applicable, at any time. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties hereto.
(b)At any time prior to the Closing, the parties may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties of the other
parties contained herein or in any document, certificate or writing delivered
pursuant hereto or (iii) waive compliance with any of the agreements, covenants
or conditions of the other parties hereto contained herein. Any agreement on
the part of any party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party.
Section 10.2Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given upon (a) transmitter’s confirmation of a
receipt of a facsimile transmission, (b) confirmed delivery by a standard
overnight carrier or when delivered by hand or (c) the expiration of five (5)
business days after the day when mailed in the United States by certified or
registered mail, postage prepaid, addressed at the following addresses (or at
such other address for a party as shall be specified by like notice):
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(i)if to the Company Holders or the Selling Stockholder Representative (or any
Company prior to Closing), to:
Rock Island Capital Fund I, L.P.
1415 W. 22nd Street
Suite 1250
Oak Brook, Illinois 60523
Telephone: (630) 413-9147
Facsimile: (630) 574-0213
Attention: Michael E. Nugent
Neal J. White, P.C.
McDermott Will & Emery LLP
227 West Monroe Street
Suite 4700
Chicago, Illinois 60606
Telephone: (312) 984-7579
Facsimile: (312) 984-7700
(ii)if to the Purchaser (or any Company after the Closing), to:
Cardtronics USA, Inc.
3250 Briarpark Drive
Suite 400
Houston, Texas 77042
Telephone: (832) 308-4000
Facsimile: (832) 308-4001
Attention: General Counsel
Michael F. Rogers
Gardere Wynne Sewell LLP
1000 Louisiana Street
Suite 3400
Houston, Texas 77002
Telephone: (713) 276-5769
Facsimile: (713) 276-6769
Section 10.3Interpretation.
(a)Neither the specification of any dollar amount in any representation or
warranty contained in this Agreement nor the inclusion of any specific item in
any Schedule hereto is intended to vary the definition of “Material Adverse
Effect” or to imply that such amount, higher or lower amounts, or the term so
included or other items, are or are not material, and neither party shall use
the fact of the setting forth of any such
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amount or the inclusion of any such item in any dispute or controversy between
the parties as to whether any obligation, item or matter not described herein or
included in any Schedule is or is not material for the purposes of this
Agreement. Unless this Agreement specifically provides otherwise, neither the
specification of any item or matter in any representation or warranty contained
in this Agreement nor the inclusion of any specific item in any Schedule hereto
is intended to imply that such item or matter, or other items or matters, are or
are not in the Ordinary Course of Business, and no party shall use the fact of
the setting forth or the inclusion of any such item or matter in any dispute or
controversy between the parties as to whether any obligation, item or matter not
described herein or included in any Schedule is or is not in the Ordinary Course
of Business for purposes of this Agreement.
(b)For purposes of this Agreement, words in the singular shall be held to
include the plural and vice versa, and words of one gender shall be held to
include the other gender as the context requires. Whenever the words “include,”
“includes” or “including” are used in this Agreement they shall be deemed to be
followed by the words “without limitation.” The terms “hereof,” “herein” and
“hereto” shall be interpreted to refer to this Agreement in its entirety and to
all of the Schedules and not to any particular provision, unless otherwise
stated. The use of the phrase “reasonable best efforts” in provisions relating
to the obligations of the parties to seek required consents and approvals of any
Person shall in no event contemplate payment of any amount to such Person that
is more than minimal or the incurrence of any liability or the agreement to the
modification of any existing obligation or arrangement in a manner that would be
adverse in any material respect to any party hereto in order to obtain any such
consent or approval. The phrase “made available” when used in this Agreement
shall mean that the information referred to has been made available if requested
by the party to whom such information is to be made available. The term
“Affiliate” when used in this Agreement shall have the meaning ascribed to it in
Rule 12b-2 under the Exchange Act. The phrase “beneficial ownership” and words
of similar import when used in this Agreement shall have the meaning ascribed to
it in Rule 13d-3 under the Exchange Act.
Section 10.4Headings; Schedules.
(a)The headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement. When a reference is made in this Agreement to Sections, such
reference shall be to a Section of this Agreement unless otherwise indicated.
(b)To the extent any matter disclosed pursuant to any Schedule of the Disclosure
Schedule reasonably appears on its face to be applicable to another Schedule of
the Disclosure Schedule such disclosure shall be deemed to be disclosed in such
other Schedule but such disclosure shall not be deemed to be an admission or
representation as to the materiality of the item so disclosed.
(c)The Company Holders and the Companies shall have the right, by written notice
to Purchaser, from time to time prior to the Closing to supplement, amend or
update the Disclosure Schedule (a “Schedule Update”) to reflect facts, events or
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circumstances that occur after the date hereof that would have otherwise been
appropriate to include in any section of the Disclosure Schedule. Any
Schedule Update shall not be effective for purposes of applying the provisions
of Section 7.3(a); however, if the Closing occurs after Purchaser’s receipt of
any Schedule Update in accordance with and as permitted by the immediately
preceding sentence, then such Schedule Update will be effective to cure and
correct for all purposes any breach of any representation or warranty that would
have existed if the Company Holders and the Companies had not made such
Schedule Update.
Section 10.5Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
be considered one and the same agreement.
Section 10.6Entire Agreement. This Agreement, together with the Confidentiality
Agreement, constitutes the entire agreement, and supersedes all prior agreements
and understandings (written and oral), among the parties with respect to the
subject matter hereof.
Section 10.7Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void, unenforceable or against its regulatory policy, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
Section 10.8Damages; Specific Performance. Notwithstanding anything to the
contrary set forth herein, in no event shall any party hereto be entitled to any
punitive, incidental, indirect, special or consequential damages or loss of
profits resulting from or arising out of this Agreement or the transactions
contemplated hereby. Further, the parties acknowledge and agree that any breach
of the terms of this Agreement would give rise to irreparable harm for which
money damages would not be an adequate remedy and accordingly the parties agree
that each shall be entitled to enforce the terms of this Agreement by a decree
of specific performance without the necessity of proving the inadequacy of money
damages as a remedy.
Section 10.9Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO
THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
Section 10.10Dispute Resolution.
(a)All actions and proceedings arising out of or relating to this Agreement
shall be heard and determined in the federal courts located in Harris County,
Texas, and the Parties hereby irrevocably submit to the jurisdiction of such
courts in any such action or proceeding and irrevocably waive the defense of an
inconvenient forum. Each Party irrevocably consents to the service of any and
all process in any such action or proceeding by the mailing of copies of such
process to such Party at its address specified in Section 10.2. Nothing in this
Section 10.10 shall affect the right of any Party to serve legal process in any
other manner permitted by Law. The consents to jurisdiction set
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forth in this Section 10.10 shall not constitute general consents to service of
process in the State of Texas and shall have no effect for any purpose except as
provided in this Section 10.10 and shall not be deemed to confer rights on any
person other than the Parties.
(b)EACH 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, OR THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
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 TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS Section 10.10(b).
Section 10.11Conflicts and Privilege. It is acknowledged by each of the Parties
that the Companies, the Company Holders, and the Seller Representative have
retained McDermott Will & Emery LLP (“McDermott”), to act as their counsel in
connection with the transactions contemplated hereby. The Purchaser hereby
agrees that, in the event that a dispute arises after the Closing between the
Purchaser or any of the Companies, on the one hand, and the Seller
Representative or any of the Company Holders on the other hand, McDermott may
represent the Seller Representative and Company Holders in such dispute, even
though the interests of the Seller Representative and Company Holders may be
directly adverse to the Companies, and even though McDermott may have
represented one or more of the Companies in a matter substantially related to
such dispute. The Purchaser further agrees that, as to all communications among
McDermott, the Companies, the Seller Representative and/or any Company Holders
that relate in any way to the transactions contemplated by this Agreement, the
attorney-client privilege and the expectation of client confidence belongs to
the Seller Representative and the Company Holders and may be controlled by the
Seller Representative and Company Holders and shall not pass to or be claimed by
the Purchaser or the Companies after the Closing. Notwithstanding the
foregoing, in the event that a dispute arises between the Purchaser and the
Companies on the one hand and a third party other than the Seller Representative
or any Company Holder, on the other hand, the Purchaser and the Companies may
assert the attorney-client privilege to prevent disclosure of confidential
communications to such third party; provided, however, that neither the
Purchaser or the Companies may waive such privilege without the prior written
consent of the Seller Representative (which consent may not be unreasonably
withheld or delayed).
Section 10.12Construction. The language used in this Agreement shall be deemed
to be the language chosen by the Parties to express their mutual intent, and no
rule of strict construction shall be applied against any Party.
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Section 10.13Disclaimer of Warranties. EXCEPT AS TO THOSE MATTERS EXPRESSLY
COVERED BY THE REPRESENTATIONS AND WARRANTIES IN THIS AGREEMENT, THE COMPANY
HOLDERS AND THE COMPANIES DISCLAIM ALL OTHER WARRANTIES, REPRESENTATIONS AND
GUARANTIES, WHETHER EXPRESS OR IMPLIED, AS TO THE COMPANIES AND THEIR ASSETS AND
OPERATIONS. THE COMPANY HOLDERS MAKE NO REPRESENTATIONS AS TO MERCHANTABILITY
OR FITNESS FOR PARTICULAR PURPOSE AND NO IMPLIED WARRANTIES WHATSOEVER. The
Purchaser acknowledges that no other Person has made any representation or
warranty, express or implied, as to the accuracy or completeness of any
memoranda, charts, summaries or schedules heretofore made available to the
Purchaser by the Company Holders or the Companies or any of their respective
representatives or any other information which is not included in this Agreement
or the Disclosure Schedule. Neither the Company Holders nor any of their
respective representatives nor any other Person will have or be subject to any
liability to the Purchaser or any of its Affiliates or any other Person
resulting from the distribution of any such information to, or use of any such
information by, the Purchaser, any of its Affiliates, agents, accountants,
counsel, or other representatives.
Section 10.14Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties hereto. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by,
the parties and their respective successors and assigns, and except to the
extent necessary to enforce the provisions of Section 6.7 (Employee Benefits)
and Section 6.10 (Indemnification of Managers, Directors and Officers) hereof
the provisions of this Agreement are not intended to confer upon any Person
other than the parties hereto any rights or remedies hereunder.
Section 10.15Definitions. For purposes of this Agreement, the term:
“401(k) Plan” means WSILC, LLC 401(k) Plan that was originally formed effective
as of January 1, 2007.
“Action” shall have the meaning set forth in Section 4.6.
“Adjusted Current Assets” shall mean all of current assets of the Companies,
including Cash on Hand, of the type reflected on, and determined in a manner
consistent with the preparation of, the April 30, 2014 current assets and
liabilities statement attached as Schedule 10.15 (WC Statement) but only to the
extent that possession and control of such current assets is effectively
transferred to Purchaser, directly or indirectly. Notwithstanding the
foregoing, Adjusted Current Assets excludes the following items referred to
Schedule 10.15 (WC Statement): accounts receivable purchased, rebates
receivables, inventory assets, ATM Inventory, amounts due/from Welch Gaming,
LLC, prepaid tax, prepaid commissions, construction in progress and reserves for
bad debt. Consistent with Schedule 10.15 (WC Statement), Adjusted Current
Assets excludes Excluded Assets other than Vault Cash in the COD/WG ATMs.
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“Adjusted Current Liabilities” shall mean all of the current liabilities of all
of the Companies of the type reflected on, and determined in a manner consistent
with the preparation of, the April 30, 2014 current assets and liabilities
statement attached as Schedule 10.15 (WC Statement) (including Vault Cash
Borrowings but excluding any current portion of all Indebtedness for Borrowed
Money). Notwithstanding the foregoing, Adjusted Current Liabilities excludes
the following items referred to Schedule 10.15 (WC Statement): accrued interest,
accrued income tax and the Idel Note. Consistent with Schedule 10.15 (WC
Statement), Adjusted Current Liabilities excludes Excluded Liabilities other
than Vault Cash Borrowings.
“Affiliate” shall have the meaning set forth in Section 10.3(b).
“Affordable Care Act” shall have the meaning set forth in Section 4.10(g)(iv).
“Agreement” shall have the meaning set forth in Section the Preamble.
“Asset Allocation” shall have the meaning set forth in Section 6.6(c).
“Asset Sellers” shall have the meaning set forth in the Preamble.
“Assumed Liabilities” shall have the meaning set forth on Schedule 10.15(iii).
“ATM” means any automated device or machine that provides (i) traditional
automated teller machine functions including cash withdrawals, balance inquiries
and account transfers and/or (ii) other services such as check cashing, money
orders, money transfer, bill payment and telecommunications products.
“Authorized Action” shall have the meaning set forth in Section 9.9(e).
“Beneficial Ownership” shall have the meaning set forth in Section 10.3(b).
“Capital Expenditures” means amounts paid for purchase or installation of ATMs
or ATM upgrades (whether or not capitalized on the books of the Companies),
computers, office equipment, EMV and Windows XP upgrades, other capital assets
or related expenditures.
“Cash on Hand” means the amount of cash and bank deposits of the Target
Companies on the Closing Date and the amount of cash in the EFT Accounts on the
Closing Date, but only to the extent that possession and control of all such
cash and bank deposits are effectively transferred to Purchaser, directly or
indirectly, less escrowed amounts or other restricted cash balances and less the
amounts of any unpaid checks, drafts and wire transfers issued on or prior to
the date of determination. Cash on Hand includes Vault Cash, currency, bank
account balances and short-term, highly-liquid instruments maturing in 90 days
or less such as T-bills, short-term CDs and other short-term financial
instruments.
“Cause” means, solely for the purposes of this Agreement, a determination by
Purchaser, or if disputed by Hewitt, by a final non-appealable determination of
a court pursuant to an action or proceeding conducted in accordance with
Section 10.9 and Section 10.10, that Hewitt (a) has engaged in gross negligence
or willful misconduct in the performance of Hewitt’s duties with respect to
Purchaser and, if capable of being cured, such gross negligence or willful
misconduct
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remains uncured for a period of ten (10) days after written notice to Hewitt
specifying in detail the alleged actions and the required cure, (b) has refused
without proper legal reason to perform Hewitt’s duties and responsibilities to
Purchaser, (c) has breached any material provision of this Agreement, any
written agreement between Hewitt and Purchaser or corporate policy or code of
conduct established by Purchaser and, if capable of being cured, such breach
remains uncured for a period of thirty (30) days after written notice to Hewitt
specifying in detail the breach and the required cure, (d) has disclosed without
specific authorization from Purchaser Confidential Information (as defined in
Hewitt's employment agreement executed at Closing) or any of its affiliates that
is materially injurious to any such entity, or (e) has been convicted of (or
pleaded no contest to) a crime involving an act of theft, fraud, embezzlement,
misappropriation or willful breach of a fiduciary duty of loyalty.
“Change in Control” shall mean (a) a merger of Cardtronics, Inc., a Delaware
corporation (“Parent Company”), with another entity, a consolidation involving
the Parent Company, or the sale of all or substantially all of the assets of the
Parent Company to another entity if, in any such case, (i) the holders of equity
securities of the Parent Company immediately prior to such transaction or event
do not beneficially own immediately after such transaction or event equity
securities of the resulting entity entitled to 51% or more of the votes then
eligible to be cast in the election of directors generally (or comparable
governing body) of the resulting entity in substantially the same proportions
that they owned the equity securities of the Parent Company immediately prior to
such transaction or event or (ii) the persons who were members of the board of
directors of the Parent Company (the “Board”) immediately prior to such
transaction or event shall not constitute at least a majority of the board of
directors of the resulting entity immediately after such transaction or event;
(b) the dissolution or liquidation of the Parent Company; or (c) when any person
or entity, including a “group” as contemplated by Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended, acquires or gains ownership or
control (including, without limitation, power to vote) of more than 50% of the
combined voting power of the outstanding securities of the Parent Company. For
purposes of the preceding sentence, (i) “resulting entity” in the context of a
transaction or event that is a merger, consolidation or sale of all or
substantially all assets shall mean the surviving entity (or acquiring entity in
the case of an asset sale) unless the surviving entity (or acquiring entity in
the case of an asset sale) is a subsidiary of another entity and the holders of
common stock of the Parent Company receive capital stock of such other entity in
such transaction or event, in which event the resulting entity shall be such
other entity, (ii) subsequent to the consummation of a merger or consolidation
that does not constitute a Change in Control, and (iii) the term “Parent
Company” shall refer to the resulting entity and the term “Board” shall refer to
the board of directors (or comparable governing body) of the resulting entity.
“Closing” shall have the meaning set forth in Section 1.2.
“Closing Date” shall have the meaning set forth in Section 1.2.
“Closing Payment Amount” shall have the meaning set forth in Section 2.2(a).
“Closing Statement Dispute” shall have the meaning set forth in Section
2.4(e)(i).
“Closing Statement Objection” shall have the meaning set forth in Section
2.4(c).
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“COD” shall have the meaning set forth in the Preamble.
“COD/WG ATMs” shall mean those Company-Owned ATMs that are owned by an Asset
Seller as indicated on Schedule 4.19(b)(i).
“Code” shall have the meaning set forth in Section 4.10(b)(v).
“Companies” shall have the meaning set forth in the Preamble.
“Company” shall have the meaning set forth in the Preamble.
“Company ATMs” means, collectively, all of the Company-Owned ATMs and
“Company Financial Statements” shall have the meaning set forth in Section
4.4(a).
“Company Holder” shall have the meaning set forth in the Preamble.
“Company Merchant” means any retailer or other business owner that authorizes
any Company to (i) place one or more Company-Owned ATMs in the business premises
of such retailer or other business owner or (ii) provide processing, maintenance
or other services with respect to a Company-Serviced ATM located in the business
premises of such retailer or other business owner.
“Company Merchant Agreement” means any Contract with a Company Merchant whereby
any Company is authorized to (i) place Company-Owned ATMs in identified retail
stores or other places of business of such Company Merchant or (ii) provide
processing, maintenance or other services or products with respect to a
Company-Serviced ATM located in identified retail stores or other places of
business of such Company Merchant.
“Company-Owned ATM” means an ATM owned by any Company, including those ATMs that
are in service at a Company Merchant’s place of business and those that are out
of service (whether located in storage or in a laboratory or repair shop).
“Company-Serviced ATM” means an ATM (i) owned by a Person other than a Company
(such as a merchant or a Dealer) and (ii) for which the Company provides
processing, maintenance or other services or products pursuant to a Company
Merchant Agreement or a Distribution Agreement.
“Competition Law” shall have the meaning set forth in Section 3.3.
“Confidentiality Agreement” shall have the meaning set forth in Section 6.2(b).
“Confidential Information” shall have the meaning set forth in Section 6.14(c).
“Continuing Target Employee” shall have the meaning set forth in Section
6.7(a)(ii).
“Contract” means any written contract, agreement, indenture, note, bond,
mortgage, loan, instrument, lease, license, commitment or other arrangement,
commitment or obligation.
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“Contract Forms” shall have the meaning set forth in Section 4.11(e)(i).
“Copyrights” shall have the meaning set forth in the definition of Intellectual
Property.
“CPA Firm” shall have the meaning set forth in Section 2.4(e)(ii).
“Cummins” shall have the meaning set forth in Section 1.3(r).
“Damages” shall have the meaning set forth in Section 9.2.
“Data Room” means the virtual data room maintained by Intralinks, Inc. on behalf
of the Companies and the Equity Sellers and to which the Companies have posted
numerous legal documents, financial reports and other data and information
related to the Companies and their respective business, legal and financial
affairs for review by Purchaser. As used herein, the “Data Room” shall refer to
such virtual data room as it was constituted on the date of execution of this
Agreement.
“Dealer” means any dealer, distributor or wholesaler that has (i) made
arrangements to (x) place ATMs owned by such dealer, distributor or wholesaler
in third party retailer locations or (y) service and support ATMs owned by third
party retailers and (ii) entered into a Distribution Agreement with any Company
with respect to some or all of such ATMs.
“Disclosure Schedule” shall mean the Disclosure Schedule delivered in connection
with this Agreement.
“Discontinued Employees” shall have the meaning set forth in Section 6.7(a)(i).
“Distribution Agreement” means any Contract between the Company and a Dealer in
which the Company agrees to provide processing, maintenance or other services or
products with respect to ATM’s of merchants under contract with such Dealer.
“Distributive Share” shall mean for an Equity Seller or an Asset Seller the
percentage set forth on Schedule 10.15 (Distributive Share).
“EFT Accounts” means the bank accounts titled and held in the name of an Asset
Seller at United Community Bank under Account Numbers 951277 and 1178675, which
are the only accounts, other than accounts owned and controlled by the Target
Companies, into which the interchange revenues and surcharge fees, and related
operating revenues attributable to the use of the Company ATMs and sale of
products and related services are directly and automatically deposited.
“Environmental Claim” shall have the meaning set forth in Section 4.13(f)(i).
“Environmental Laws” shall have the meaning set forth in Section 4.13(f)(ii).
“Equity Sellers” shall have the meaning set forth in the Preamble.
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“Equity Seller Units” shall have the meaning set forth in the Preamble.
“ERISA” shall have the meaning set forth in Section 4.10(a).
“ERISA Affiliate” shall have the meaning set forth in Section 4.10(a).
“Escrow Agent” means JPMorgan Chase Bank, N.A.
“Escrow Agreement” means that certain Escrow Agreement, dated as of the Closing
Date, by and among the Seller Representative and the Purchaser, substantially in
the form of Exhibit B.
“Estimated Closing Statement” shall have the meaning set forth in Section
2.4(a).
“Excluded Assets” shall have the meaning set forth on Schedule 10.15(ii).
“Excluded Autos” shall have the meaning set forth in Section 6.19.
“Excluded Liabilities” shall have the meaning set forth on Schedule 10.15(iv).
“Expiration Date shall have the meaning set forth in Section 9.1.
“Final Closing Statement” shall mean: (i) the Estimated Closing Statement if no
Proposed Final Closing Statement is delivered to the Seller Representative
within the ninety (90) calendar day period specified in Section 2.4(a);
(ii) the Proposed Final Closing Statement if (A) no Closing Statement Objection
is delivered to Purchaser by the Seller Representative during the thirty (30)
calendar day period specified in Section 2.4(b) or (B) Seller Representative and
Purchaser so agree in writing; (iii) the Proposed Final Closing Statement,
adjusted in accordance with the Closing Statement Objection, if Purchaser does
not provide Seller Representative with a written notice of disagreement in
response to the Closing Statement Objection within the fifteen (15) calendar day
period specified in Section 2.4(d); or (iv) the Proposed Final Closing
Statement, as adjusted by (A) the written agreement of Purchaser and Seller
Representative and/or (B) the CPA Firm in accordance with Section 2.4(e)(ii).
“Final Determination” shall have the meaning set forth in Section 9.6(b).
“Finally Determined” shall have the meaning set forth in Section 9.6(b).
“Fundamental Reports shall have the meaning set forth in Section 9.1.
“GAAP” shall have the meaning set forth in Section 4.4(a).
“Gaming Redemption Functionality” shall have the meaning set forth in Section
6.14(a).
“Good Reason” means, solely for the purposes of this Agreement, the occurrence
of (i) a material breach of Hewitt's employment agreement by Purchaser and such
breach remaining uncured for a period of thirty (30) days after written notice
to Purchaser of such breach (except notice and cure period shall not apply to
any payment breach); (ii) Hewitt’s primary duties and/or responsibilities as
Executive Vice President, U.S. Sales and Relationship Manager are
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materially reduced; (iii) Hewitt being unable to perform Hewitt’s duties or
fulfill Hewitt’s obligations under Hewitt's employment agreement executed at
Closing by reason of any medically determinable physical or mental impairment
continuous period of not less than six months as determined by a competent
medical physician selected by Hewitt; (iv) Hewitt’s death; (v) Purchaser
requiring that Hewitt relocate his principal office outside of the greater St
Louis, Missouri metropolitan area; or (vi) a Change of Control.
“Governmental Entity” shall have the meaning set forth in Section 3.3.
“Gross Purchase Price” shall have the meaning set forth in Section 2.1.
“Hazardous Substance” shall have the meaning set forth in Section 4.13(f)(iii).
“Hewitt” shall have the meaning set forth in Section 1.3(q).
“Hewitt Employment Agreement” shall mean, as of any time, the then effective
Employment Agreement between the Purchaser (or one of its Affiliates), as
employer, and Hewitt, as employee.
“HIPAA” shall have the meaning set forth in Section 4.10(g)(iv).
“HR Financial” shall have the meaning set forth in Section 6.14(a).
“Idel” shall have the meaning set forth in Section 6.14(a).
“Idel Note” means that certain Nontransferable Conditional Subordinated
Promissory Note dated as of January 1, 2014, in the principal amount of up to
$100,000, issued by WSILC and payable to IDI ATM, LLC, a Missouri limited
liability company.
“Indebtedness for Borrowed Money” means, with respect to any Person,
(a) indebtedness of such Person for borrowed money, (b) obligations of such
Person evidenced by notes, bonds, debentures or other similar instruments
(including the Idel Note and the One Point Note), (c) obligations of such Person
as lessee under leases required to be capitalized pursuant to GAAP consistently
applied, (d) obligations of such Person for amounts drawn under acceptances,
letters of credit or similar facilities, and (e) guarantees and similar
commitments relating to any of the foregoing items; provided, however,
notwithstanding the foregoing, Indebtedness for Borrowed Money shall only
include interest bearing debt and/or debt requiring payment of a premium upon
maturity, and shall not include, other than the Idel Note and the One Point
Note, any purchase money indebtedness for goods purchased from vendors,
operating leases or other trade payables and shall not include Vault Cash
Borrowings.
“Indemnification Cap” shall have the meaning set forth in Section 9.4(b).
“Indemnified Party” shall mean, with respect to any indemnification claim under
Article IX, the Party that is entitled to be indemnified with respect to such
claim in accordance with Article IX.
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“Indemnifying Party” shall mean, with respect to any indemnification claim under
Article IX, the Party that is required to provide indemnification to the
Indemnified Party with respect to such claim in accordance with Article IX.
“Indemnity Escrow Amount” shall have the meaning set forth in Section 1.5.
“Indemnity Share” shall mean for a Company Holder the percentage set forth on
Schedule 10.15 (Indemnity Share).
“Intellectual Property” means all intellectual property rights arising from or
in respect of the following, whether protected, created or arising under the
Laws of the United States or any other jurisdiction, including: (i) all patents
and patent applications, including all continuations, divisionals,
continuations-in-part and provisionals and patents issuing thereon, and all
reissues, reexaminations, substitutions, renewals and extensions thereof
(collectively, “Patents”); (ii) all trademarks, service marks, trade names,
trade dress, logos, corporate names and other source or business identifiers,
together with the goodwill associated with any of the foregoing, and all
applications, registrations, renewals and extensions thereof (collectively,
“Marks”); (iii) all Internet domain names; (iv) all copyrights, works of
authorship and moral rights, and all registrations, applications, renewals,
extensions and reversions thereof (collectively, “Copyrights”); and (v) all
confidential and proprietary information, trade secrets and non-public
discoveries, research and development, technology, know-how, formulae,
inventions, compositions, processes, techniques, technical data and information,
procedures, designs, drawings, specifications, databases, customer lists,
supplier lists, pricing and cost information, and business and marketing plans
and proposals (collectively, “Trade Secrets”).
“Intellectual Property Licenses” means (excluding Shrinkwrap Software): (i) any
grant by a Company to another Person of any license, sublicense, right,
permission, consent or non-assertion relating to or under any Company
Intellectual Property and/or Company Technology; and (ii) any grant by another
Person to a Company of any license, sublicense, right, permission, consent or
non-assertion relating to or under any Intellectual Property and/or Technology
owned by a third Person.
“Interim Financial Statement” shall have the meaning set forth in Section
“Knowledge” with respect to any Company Holder or the Company Holders generally
shall mean the actual knowledge of such Company Holder or Company Holders, as
the case may be. References in this Agreement to the “Knowledge” of any Company
shall mean the actual knowledge of Hewitt, Cummins, Sara Heinzmann and Brian
Bauer.
“Law” means any applicable foreign, federal, state or local law, statute, code,
ordinance, rule or regulation.
“Liens” shall have the meaning set forth in Section 4.2(a).
“Leases” shall have the meaning set forth in Section 4.15(b).
“Legal Proceeding” shall have the meaning set forth in Section 6.9(a).
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“LLC Agreement” means, as to each Company, its limited liability company
agreement or limited liability company operating agreement, with all amendments
thereto.
“LLC Units” shall have the meaning set forth in the Preamble.
“Management Agreement” shall have the meaning set forth in Section 1.3(l).
“Marks” shall have the meaning set forth in the definition of Intellectual
Property.
“Material Adverse Effect” shall mean a material adverse effect on the business,
assets, liabilities, capitalization, condition (financial or otherwise), the
results of operations or prospects of all of the Companies, taken as a whole,
after taking into effect any insurance recoveries; provided, however, that a
Material Adverse Effect shall not include (a) the execution, delivery,
announcement or pendency of this Agreement or the transactions contemplated by
this Agreement; (b) business or political conditions or conditions generally
affecting the industry or segments therein in which the Companies participate,
the U.S. economy as a whole or the capital, credit or financial markets in
general or the markets in which the Companies operate; (c) any action taken or
statement made by Purchaser or its Affiliates or their respective
representatives; (d) compliance with the terms of, or the taking of any action
required by, this Agreement or approved by Purchaser; (e) any change in
accounting requirements or principles or any change in applicable Laws or the
interpretation or enforcement thereof by a Governmental Entity; (f) actions
required to be taken under applicable Laws or Contracts; (g) any action taken in
connection with obtaining regulatory or third party approvals, licenses or
consents or any event, change or effect resulting therefrom; (h) any acts of war
(whether or not declared), armed hostilities, sabotage or terrorism occurring
after the date of this Agreement or the continuation, escalation or worsening of
any such acts of war, armed hostilities, sabotage or terrorism threatened or
underway as of the date of this Agreement; or (i) any earthquakes, hurricanes,
floods or other natural disasters, or force majeure events.
“Material Contracts” shall have the meaning set forth in Section 4.11(a).
“McDermott” shall have the meaning set forth in Section 10.11.
“Negative WC/CapX Adjustment” shall have the meaning set forth in Section 2.1.
“Net Purchase Price” shall have the meaning set forth in Section 2.1.
“Net Working Capital” shall mean the amount (positive or negative) in U.S.
Dollars equal to (i) the aggregate Adjusted Current Assets as of the Closing
Date minus (ii) the aggregate Adjusted Current Liabilities as of the Closing
Date.
“New ADA Rules” means (i) the revised Regulations issued under Title III (Public
Accommodations) of the Americans with Disability Act as signed on July 23, 2010
with an effective date of March 15, 2012 and (ii) the ADA Standards for
Accessible Design adopted by the United States Department of Justice in
September 2010 with an effective date of March 15, 2012.
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“One Point Note” that certain Nontransferable Conditional Subordinated
Promissory Note dated as of August 15, 2013, in the principal amount of up to
$575,000, issued by WSILC and payable to One Point Financial, LLC, a Georgia
limited liability company.
“Order” shall have the meaning set forth in Section 4.8(a).
“Ordinary Course of Business” shall have the meaning set forth in Section
6.1(a).
“Party” or “Parties” shall have the meaning set forth in the Preamble.
“Past Employee Termination Amount” shall mean the total aggregate remaining
payments due and payable from and after the Closing Date from WSILC to one of
its prior employees pursuant to the terms of that certain Resignation and
Release Agreement dated as of August 28, 2013 and entered into by and between
WSILC and such prior employee.
“Patents” shall have the meaning set forth in the definition of Intellectual
Property.
“Permits” shall have the meaning set forth in Section 4.8(b).
“Permitted Gaming Cash Dispenser” shall have the meaning set forth in Section
“Permitted Liens” shall have the meaning set forth in Section 4.15(d).
“Person” shall have the meaning set forth in the definition of Subsidiary.
“Personally Identifiable Information” means information about an individual
that either (i) contains data elements that identify the individual or (ii) with
respect to which there is a reasonable basis to believe the information can be
used to identify the individual. Personally Identifiable Information includes,
but is not limited to, (a) personal identifiers such as name, address, Social
Security Number, date of birth, driver’s license number or state identification
number, and passport number, (b) health information, including any information
relating to treatment or conditions, (c) financial information, including credit
or debit card numbers, account numbers, access codes, consumer report
information, insurance policy number and (d) demographic information.
“Plans” shall have the meaning set forth in Section 4.10(a).
“Positive WC/CapX Adjustment” shall have the meaning set forth in Section 2.1.
“Pre-Closing Returns” shall have the meaning set forth in Section 6.6(b)(i).
“Processor Reports” shall mean the Processor Reports issued by Purchaser, CDS,
Elan, Switch Commerce, and First Data with respect to the Company ATMs during
the months included in calendar year 2013 and the first four months of calendar
year 2014.
“Proposed Final Closing Statement” shall have the meaning set forth in Section
2.4(a)Section 2.4(b).
“Purchase Price” shall have the meaning set forth in Section 2.1.
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“Purchased Assets” shall have the meaning set forth on Schedule 10.15(i).
“Purchaser” shall have the meaning set forth in the Preamble.
“Purchaser Indemnified Parties” shall have the meaning set forth in Section 9.2.
“Purchaser Plan” shall have the meaning set forth in Section 6.7(b).
“Real Property” shall have the meaning set forth in Section 4.15(a).
“Receivables” shall have the meaning set forth in Section 4.4(b).
“Recent Balance Sheet” shall have the meaning set forth in Section 4.4(a).
“Recent CapX” means the Companies’ aggregate Capital Expenditures during the
period commencing April 1, 2014 and ending on the Closing Date.
“Records” shall have the meaning set forth in Section 6.9(a).
“Restricted Business” shall have the meaning set forth in Section 6.14(a).
“Retention Amount” shall have the meaning set forth in Section 1.6.
“Return” shall have the meaning set forth in Section 4.12(f)Section 4.12(h).
“RTW” shall have the meaning set forth in the Preamble.
“Schedule Update” shall have the meaning set forth in Section 10.4(c).
“Seller Indemnified Parties” shall have the meaning set forth in Section 9.3.
“Seller Representative” shall have the meaning set forth in Section 9.9(a).
“Seller Transaction Expenses” means any and all legal fees of McDermott,
accounting, consulting, investment banking, investment advisory and other third
party fees, costs and expenses of the Seller Representative and the Companies
relating to or arising as a result of the transactions contemplated hereby,
including, without limitation, those costs, expenses and other payments
identified in Section 6.7(a)(ii) with respect to Discontinued Employees.
“Shrinkwrap Software” means Software licensed to a Company under a shrink-wrap
or click-through agreement on reasonable terms through commercial distributors
or in consumer retail stores.
“Software” means any and all: (i) computer programs, including any and all
software implementations of algorithms, models and methodologies, whether in
source code or object code; (ii) databases and compilations, including any and
all data and collections of data, whether machine readable or otherwise;
(iii) descriptions, flow-charts and other work product used to design, plan,
organize and develop any of the foregoing, screens, user interfaces, report
formats,
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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.
“Statutory Representations” shall have the meaning set forth in Section 9.1.
“Straddle Returns” shall have the meaning set forth in Section 6.6(b)(ii).
“Subsidiary” shall mean, with respect to any Person, any corporation or other
entity of which more than 50% of the securities or other interests having by
their terms ordinary voting power to elect a majority of the Board of Directors
or Managers or others performing similar functions with respect to such entity
is directly or indirectly owned by such Person. “Person” shall mean an
individual, partnership, joint venture, trust, corporation, unincorporated
entity or Governmental Entity.
“Subsidiary Interest” shall have the meaning set forth in the Preamble.
“Systems” shall have the meaning set forth in Section 4.21.
“Taxes” shall have the meaning set forth in Section 4.12(h).
“Technology” means (excluding Shrinkwrap Software) all Software, information,
designs, formulae, algorithms, procedures, methods, techniques, ideas, know-how,
research and development, technical data, programs, tools, materials,
specifications, processes, inventions (whether patentable or unpatentable and
whether or not reduced to practice), apparatus, creations, improvements and
other similar materials, and all recordings, graphs, drawings, reports,
analyses, and other writings, and other embodiments of any of the foregoing, in
any form or media, and all related technology that are used in, incorporated in,
embodied in, displayed by or relate to, any of the foregoing.
“Third-Party Claim” shall have the meaning set forth in Section 9.6(c).
“Trade Secrets” shall have the meaning set forth in the definition of
Intellectual Property.
“United Community Vault Line” shall mean that certain Universal Note and
Security Agreement by and between COD and United Community Bank-Chatham, dated
June 30, 2013.
“WARN Act” shall have the meaning set forth in Section 6.11.
“WC/CapX Adjustment” shall have the meaning set forth in Section 2.1.
“WG” shall have the meaning set forth in the Preamble.
“WSILC” shall have the meaning set forth in the Preamble.
“Vault Cash” means the currency supplied by one or more third party financial
institutions pursuant to the terms of a vault cash agreement for the exclusive
purpose of stocking the Company ATMs, which includes currency that is (i) loaded
into a Company ATM and/or (ii) in the possession of an armored carrier service
under contract with a Company for the
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express purpose of delivering such currency to (or retrieving such currency
from) a Company ATM.
“Vault Cash Agreements” shall have the meaning set forth in Section
4.11(a)(vii).
“Vault Cash Borrowings” shall have the meaning set forth in Section
“Welch License Agreement” means that certain License Agreement dated July 31,
2010 and entered into by and between Welch Systems, Inc., as licensor, and
WSILC.
“Year-End Financial Statements” shall have the meaning set forth in Section
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed by
their respective officers thereunto duly authorized as of the date first written
above.
PURCHASER:
By:/s/ Steven A. Rathgaber
Name:Steven A. Rathgaber
Title:Chief Executive Officer
COMPANIES:
WSILC, L.L.C.
By: /s/ Michael E. Nugent
Name:Michael E. Nugent
Title:Manager
RTW ATM, LLC
Name:Michael E. Nugent
Title:Manager
C.O.D., LLC
By: /s/ Steven W. Schweizer
Name:Steven W. Schweizer
Title:President
WG ATM, LLC
Name:Steven W. Schweizer
Title:President
[Signature Pages to Welch Purchase Agreement]
COMPANY HOLDERS:
ROCK ISLAND CAPITAL FUND I, L.P.
By: RIC GP I, LLC, its general partner
Name:Michael E. Nugent
Title:Managing Member
ROCK ISLAND CAPITAL Q FUND I, L.P.
Name:Michael E. Nugent
Title:Managing Member
LANIGAN HOLDINGS, LLC
By: /s/ Steven J. Bayers
Name:Steven J. Bayers
Title:Chief Financial Officer
COMMUNITY MERCHANT SERVICES, INC.
By: /s/ Frank F. Lunn IV
Name:Frank F. Lunn IV
Title:Chief Executive Officer
KAHUNA BUSINESS HOLDINGS, LLC
Title:Chief Executive Officer
HR FINANCIAL SERVICES, INC.
Name:Steven W. Schweizer
Title:President
ARCH ATM, INC.
By: /s/ Jeffrey M. Hewitt
Name:Jeffery M. Hewitt
Title:President
WELCH SYSTEMS, INC.
By: /s/ Jeffrey A. Martin
Name:Jeffrey A. Martin
Title:President
/s/ Jeffery M. Hewitt
Jeffery M. Hewitt
/s/ Jeffrey A. Martin
Jeffrey A. Martin
/s/ David W. Welch
David W. Welch
/s/ Brad Cummins
Brad Cummins
/s/ Sara J. Heinzmann
Sara J. Heinzmann
/s/ Jason W. Green
Jason W. Green
/s/ Mark Idel
Mark Idel
/s/ Bryan Bauer
Bryan Bauer
SELLER REPRESENTATIVE:
Name:Michael E. Nugent
Title:Managing Member
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Exhibit 32.1 Certification of Form 10-K for the Year ended December 31, 2016, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 The undersigned Chief Executive Officer of Omega Protein Corporation, certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: ● the Annual Report on Form 10-K for the year ended December 31, 2016 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, and ● the information contained in the Annual Report on Form 10-K for the year ended December31, 2016 fairly presents, in all material respects, the financial condition and results of operations of Omega Protein Corporation. Dated: March 1, 2017 /s/ BRET D. SCHOLTES Bret D. Scholtes President and Chief Executive Officer A signed original of this written statement required by Section 906 has been provided to Omega Protein Corporation and will be retained by Omega Protein Corporation and furnished to the Securities and Exchange Commission or its staff upon request.
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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 15, 2011 TrustCo Bank Corp NY (Exact name of registrant as specified in its charter) NEW YORK 0-10592 14-1630287 State or Other Jurisdiction of Incorporation or Organization Commission File No. I.R.S. Employer Identification Number 5 SARNOWSKI DRIVE, GLENVILLE, NEW YORK 12302 (Address of principal executive offices) (518) 377-3311 (Registrant’s Telephone Number, Including Area Code) 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: 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)) TrustCo Bank Corp NY Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers On November 15, 2011, the Board of Directors of TrustCo Bank Corp NY (“TrustCo”) approved awards of incentive stock options and restricted stock to eligible employees, including its named executive officers, under the TrustCo Bank Corp NY 2010 Equity Incentive Plan. The board also approved awards of options and restricted stock to members of the board under the TrustCo Bank Corp NY 2010 Directors Equity Incentive Plan.The exercise price of all options granted was $5.14, the closing price of the Company’s common shares on November 15, 2011.The options awarded to employees and officers of TrustCo vest in equal amounts over a five year period, with all options being fully vested as of November 15, 2016 and expiring on November 15, 2021. The options awarded to directors vested immediately. The periods of restriction applicable to the restricted stock awards will lapse as to all stock awarded on November 15, 2014. Exhibit 99 hereto describes the amount of the awards to each named executive officer and director. The forms of the Incentive Stock Option Award Agreement, Restricted Stock Award Agreement, Director Stock Option Agreement and Director Restricted Stock Award Agreement are included as exhibits hereto. The forms of agreement are substantially the same for all award recipients under each plan noted above. Item 8.01. Other Events Please refer to the discussion of the awards to members of the board of directors under Item 5.02 above. Item 9.01. Financial Statements and Exhibits (c) Exhibits Reg S-K Exhibit No. Description 10(a) Incentive Stock Option Award Agreement dated November 15, 2011 10(b) Restricted Stock Award Agreement dated November 15, 2011 10(c) Director Incentive Stock Option Award Agreement dated November 15, 2011 10(d) Director Restricted Stock Award Agreement dated November 15, 2011 99 Awards to Named Executive Officers and Directors 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. Dated: November 17, 2011 TrustCo Bank Corp NY (Registrant) By: /s/ Robert T. Cushing Robert T. Cushing Executive Vice President and Chief Financial Officer
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Exhibit 10.17
SECURITY AGREEMENT
1. THE SECURITY. Each of the undersigned, Twinlab Consolidated Holdings, Inc.,
a Nevada corporation (“Parent”), Twinlab Consolidation Corporation, a Delaware
corporation (“TCC”), Twinlab Holdings, Inc., a Michigan corporation (“Twinlab
Holdings”), ISI Brands Inc., a Michigan corporation (“ISI Brands”), and Twinlab
Corporation, a Delaware corporation (“Twinlab Corporation”; together with
Parent, TCC, Twinlab Holdings and ISI Brands, the “Companies”; and each
individually, a “Company”) hereby assigns and grants to PENTA MEZZANINE SBIC
FUND I, L.P., a Delaware limited partnership, its subsidiaries and affiliates
(collectively, the “Purchaser”) a security interest in the following described
property now owned or hereafter acquired by such Company (“Collateral”):
(a) All accounts, contract rights, chattel paper, instruments, deposit
accounts, letter of credit rights, payment intangibles and general intangibles,
including all amounts due to such Company from a factor; and all returned or
repossessed goods which, on sale or lease, resulted in an account or chattel
paper.
(b) All inventory, including all materials, work in process and finished goods.
(c) All machinery, furniture, fixtures and other equipment of every type now
owned or hereafter acquired by such Company.
(d) All instruments, notes, chattel paper, documents, certificates of deposit,
securities and investment property of every type. The Collateral shall include
all liens, security agreements, leases and other contracts securing or otherwise
(e) All general intangibles, including, but not limited to, (i) all patents,
and all unpatented or unpatentable inventions; (ii) all trademarks, service
marks, and trade names; (iii) all copyrights and literary rights; (iv) all
computer software programs; (v) all mask works of semiconductor chip products;
(vi) all trade secrets, proprietary information, customer lists, manufacturing,
engineering and production plans, drawings, specifications, processes and
systems. The Collateral shall include all good will connected with or symbolized
by any of such general intangibles; all contract rights, documents,
applications, licenses, materials and other matters related to such general
intangibles; all tangible property embodying or incorporating any such general
intangibles; and all chattel paper and instruments relating to such general
intangibles.
(f) All negotiable and nonnegotiable documents of title covering any
Collateral.
(g) All accessions, attachments and other additions to the Collateral, and all
tools, parts and equipment used in connection with the Collateral.
(h) All substitutes or replacements for any Collateral, all cash or non-cash
proceeds, product, rents and profits of any Collateral, all income, benefits and
property receivable on account of the Collateral, all rights under warranties
and insurance contracts, letters of credit, guaranties or other supporting
obligations covering the Collateral, and any causes of action relating to the
Collateral, and all proceeds (including insurance proceeds) from the sale,
destruction, loss, or other disposition of any of the Collateral and sums due
from a third party which has damaged or destroyed the Collateral or from that
party’s insurer, whether due to judgment, settlement or other process.
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(i) All books, data and records pertaining to any Collateral, whether in the
form of a writing, photograph, microfilm or electronic media, including but not
limited to any computer-readable memory and any computer hardware or software
necessary to process such memory (“Books and Records”).
Notwithstanding anything to the contrary in this Agreement or any other
Transaction Document (as defined in the Note Purchase Agreement), the
Purchaser’s security interest in and lien on the Collateral shall be
subordinated to the lien of the Senior Lender (as defined in the Note Purchase
Agreement) and subject to the terms of the Subordination Agreement (as defined
in the Note Purchase Agreement).
2. THE INDEBTEDNESS. The Collateral secures and will secure all Indebtedness of
the Companies to the Purchaser. Each party obligated under any Indebtedness is
referred to in this Agreement as a “Debtor.” “Indebtedness” means all debts,
obligations or liabilities now or hereafter existing, absolute or contingent of
the Debtor or any one or more of them to the Purchaser, whether voluntary or
involuntary, whether due or not due, or whether incurred directly or indirectly
or acquired by the Purchaser by assignment or otherwise, including but not
limited to debts, obligations or liabilities arising under that certain Note and
Warrant Purchase Agreement, dated as of the date hereof, by and between the
Companies and the Purchaser (the “Note Purchase Agreement”).
3. COMPANIES’ COVENANTS. Each Company represents, covenants and warrants that
unless compliance is waived by the Purchaser in writing:
(a) Such Company will properly preserve the Collateral; defend the Collateral
against any adverse claims and demands other than Permitted Encumbrances (as
defined in the Note Purchase Agreement); and keep accurate Books and Records.
(b) Such Company's chief executive office is located, in the state specified on
the signature page hereof. In addition, such Company (if not an individual or
other unregistered entity), is incorporated in or organized under the laws of
the state specified on such signature page. Such Company shall give the
Purchaser at least thirty (30) days’ notice before changing its residence or its
chief executive office or state of incorporation or organization. Such Company
will notify the Purchaser in writing prior to any change in the location of any
Collateral, including the Books and Records.
(c) Such Company will notify the Purchaser in writing prior to any change in
such Company's name, identity or business structure.
(d) Unless otherwise agreed, such Company will keep the Collateral free of all
liens, claims, security interests and encumbrances of any kind or nature except
the security interest of the Purchaser and Permitted Encumbrances.
(e) Such Company will promptly notify the Purchaser in writing of any event
which materially affects the value of the Collateral, the ability of such
Company to dispose of the Collateral, or the rights and remedies of the
Purchaser in relation thereto, including, but not limited to, the levy of any
legal process against any Collateral.
(f) Such Company shall pay all costs necessary to preserve, defend, enforce and
collect the Collateral, including but not limited to taxes, assessments,
insurance premiums, repairs, rent, storage costs and expenses of sales, and any
costs to perfect the Purchaser’s security interest (collectively, the
“Collateral Costs”). Without waiving any Company's default for failure to make
any such payment, the Purchaser at its option may pay any such Collateral Costs,
and discharge encumbrances (other than Permitted Encumbrances) on the
Collateral, and such Collateral Costs payments shall be a part of the
Indebtedness and bear interest at the rate set out in the documents evidencing
such Indebtedness. Each Company agrees to reimburse the Purchaser on demand for
any Collateral Costs so incurred.
-2-
(g) Until the Purchaser exercises its rights to make collection, such Company
will diligently collect all Collateral.
(h) If any Collateral is or becomes the subject of any registration certificate,
certificate of deposit or negotiable document of title, including any warehouse
receipt or bill of lading, such Company shall immediately deliver such document
to the Purchaser or the Senior Lender, as bailee for the benefit of the
Purchaser for purposes of perfection in accordance with Section 31 of the
Subordination Agreement, together with any necessary endorsements.
(i) Such Company will not sell, lease, agree to sell or lease, or otherwise
dispose of any Collateral except Permitted Dispositions (as defined in the Note
Purchase Agreement) without the prior written consent of the Purchaser.
(j) Such Company will maintain and keep in force all risk insurance covering the
Collateral against fire, theft, liability and extended coverages (including
without limitation windstorm coverage and hurricane coverage as applicable), to
the extent that any Collateral is of a type which can be so insured. Such
insurance shall be in form, amounts, coverages and basis reasonably acceptable
to the Purchaser, shall require losses to be paid on a replacement cost basis,
shall be issued by insurance companies reasonably acceptable to the Purchaser
and include a loss payable endorsement in favor of the Purchaser in a form
reasonably acceptable to the Purchaser. Upon the request of the Purchaser, such
Company will deliver to the Purchaser a copy of each insurance policy, or, if
permitted by the Purchaser, a certificate of insurance listing all insurance in
force.
(k) Such Company will not attach any Collateral to any real property or fixture
in a manner which might cause such Collateral to become a part thereof unless
such Company first obtains the written consent of any owner, holder of any lien
on the real property or fixture, or other person having an interest in such
property to the removal by the Purchaser of the Collateral from such real
property or fixture. Such written consent shall be in form and substance
reasonably acceptable to the Purchaser and shall provide that the Purchaser has
no liability to such owner, holder of any lien, or any other person.
(l) To the extent material to the conduct of its business, such Company will, at
its expense, diligently prosecute all patent, trademark or service mark or
copyright applications pending on or after the date hereof, will maintain in
effect all issued patents and will renew all trademark and service mark
registrations, including payment of any and all maintenance and renewal fees
relating thereto, except for such patents, service marks and trademarks that are
being sold, donated or abandoned by such Company in its reasonable business
judgment. Such Company also will promptly make application on any patentable but
unpatented inventions, registerable but unregistered trademarks and service
marks, and copyrightable but uncopyrighted works to the extent material to the
conduct of its business as determined in its reasonable business judgment. To
the extent material to the conduct of its business as determined in its
reasonable business judgment, such Company will at its expense protect and
defend all rights in the Collateral against any material claims and demands of
all persons other than Senior Lender and the Purchaser and will, at its expense,
enforce all rights in the Collateral against any and all infringers of the
Collateral where such infringement would materially impair the value or use of
the Collateral to such Company or the Purchaser. Such Company will not license
or transfer any of the Collateral, except for such licenses as are customary in
the ordinary course of such Company's business, or except with the Purchaser's
prior written consent.
-3-
4. ADDITIONAL OPTIONAL REQUIREMENTS. Each Company agrees that the Purchaser may
at its option at any time, whether or not any Company is in default:
(a) Require such Company to deliver to the Purchaser (i) copies of or extracts
from the Books and Records, and (ii) information on any contracts or other
matters affecting the Collateral.
(b) Examine the Collateral, including the Books and Records, and make copies of
or extracts from the Books and Records, and for such purposes enter at any
reasonable time upon the property where any Collateral or any Books and Records
are located.
(c) Subject to the terms of the Subordination Agreement, require such Company
to deliver to the Purchaser or the Senior Lender, as bailee for the benefit of
the Purchaser for purposes of perfection in accordance with Section 31 of the
Subordination Agreement, any instruments, chattel paper or letters of credit
which are part of the Collateral, and to assign to the Purchaser the proceeds of
any such letters of credit.
(d) Subject to the terms of the Subordination Agreement, notify any account
debtors, any buyers of the Collateral, or any other persons of the Purchaser's
interest in the Collateral.
5. DEFAULTS. Any one or more of the following shall be a default hereunder:
(a) Any Indebtedness is not paid when due, after giving effect to any
applicable grace or cure periods.
(b) Any Company breaches any term, provision, warranty or representation under
this Agreement, and such breach remains uncured after any applicable cure
period.
(c) Subject to Section 5.17 of the Note Purchase Agreement, the Purchaser fails
to have an enforceable first lien (except for the liens of Senior Lender or any
prior liens to which the Purchaser has consented in writing) on or security
interest in the Collateral except as a result of Purchaser not taking action, or
not requesting a Company to take action, to perfect such lien (unless
Purchaser’s failure to take action to perfect such lien is caused in whole or in
party by a Company’s failure to take any action or provide any document
requested by Purchaser).
(d) A default occurs under the Note Purchase Agreement, any Transaction
Document or other agreement evidencing the Indebtedness, and such default
remains uncured after any applicable cure period.
6. PURCHASER'S REMEDIES AFTER DEFAULT. Upon the occurrence and continuation of
an event of any default, the Purchaser may do any one or more of the following,
to the extent permitted by law and subject to the terms of the Subordination
Agreement:
(a) Declare any Indebtedness immediately due and payable, without notice or
demand.
-4-
(b) Enforce the security interest given hereunder pursuant to the Uniform
Commercial Code and any other applicable law.
(c) Enforce the security interest of the Purchaser in any deposit account of
any Company maintained with the Purchaser by applying such account to the
Indebtedness.
(d) Require any Company to obtain the Purchaser's prior written consent to any
sale, lease, agreement to sell or lease, or other disposition of any Collateral
consisting of inventory.
(e) Require any Company to segregate all collections and proceeds of the
Collateral so that they are capable of identification and deliver daily such
collections and proceeds to the Purchaser in kind.
(f) Require any Company to direct all account debtors to forward all payments
and proceeds of the Collateral to a post office box under the Purchaser's
exclusive control.
(g) Require any Company to assemble the Collateral, including the Books and
Records, and make them available to the Purchaser at a place designated by the
Purchaser.
(h) Enter upon the property where any Collateral, including any Books and
Records, are located and take possession of such Collateral and such Books and
Records, and use such property (including any buildings and facilities) and any
of any Company's equipment, if the Purchaser deems such use necessary or
advisable in order to take possession of, hold, preserve, process, assemble,
prepare for sale or lease, market for sale or lease, sell or lease, or otherwise
dispose of, any Collateral.
(i) Demand and collect any payments on and proceeds of the Collateral. In
connection therewith each Company irrevocably authorizes the Purchaser to
endorse or sign such Company's name on all checks, drafts, collections, receipts
and other documents, and to take possession of and open the mail addressed to
such Company and remove therefrom any payments and proceeds of the Collateral.
(j) Grant extensions and compromise or settle claims with respect to the
Collateral for less than face value, all without prior notice to any Company.
(k) Use or transfer any of any Company's rights and interests in any
Intellectual Property now owned or hereafter acquired by such Company, if the
Purchaser deems such use or transfer necessary or advisable in order to take
possession of, hold, preserve, process, assemble, prepare for sale or lease,
market for sale or lease, sell or lease, or otherwise dispose of, any
Collateral. Each Company agrees that any such use or transfer shall be without
any additional consideration to such Company. As used in this paragraph,
“Intellectual Property” includes, but is not limited to, all trade secrets,
computer software, service marks, trademarks, trade names, trade styles,
copyrights, patents, applications for any of the foregoing, customer lists,
working drawings, instructional manuals, and rights in processes for technical
manufacturing, packaging and labeling, in which any Company has any right or
interest, whether by ownership, license, contract or otherwise.
-5-
(l) Have a receiver appointed by any court of competent jurisdiction to take
possession of the Collateral. Each Company hereby consents to the appointment of
such a receiver and agrees not to oppose any such appointment.
(m) Take such measures as the Purchaser may deem necessary or advisable to take
possession of, hold, preserve, process, assemble, insure, prepare for sale or
Collateral, and each Company hereby irrevocably constitutes and appoints the
Purchaser as such Company's attorney-in-fact to perform all acts and execute all
documents in connection therewith.
(n) Without notice or demand to any Company, set off and apply against any and
all of the Indebtedness any and all deposits (general or special, time or
demand, provisional or final) and any other indebtedness, at any time held or
owing by the Purchaser or any of the Purchaser's agents or affiliates to or for
the credit of the account of any Company or any guarantor or endorser of any
Company's Indebtedness.
(o) Exercise any other remedies available to the Purchaser at law or in equity.
7. WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO
WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION
DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
TRANSACTION. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS
AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED
FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
8. MISCELLANEOUS.
(a) Any waiver, express or implied, of any provision hereunder and any delay or
failure by the Purchaser to enforce any provision shall not preclude the
Purchaser from enforcing any such provision thereafter.
(b) Each Company shall, at the request of the Purchaser, execute such other
agreements, documents, instruments, or financing statements in connection with
this Agreement as the Purchaser may reasonably deem necessary.
-6-
(c) All notes, security agreements, subordination agreements and other
documents executed by each Company or furnished to the Purchaser in connection
with this Agreement must be in form and substance satisfactory to the Purchaser.
(d) This Agreement is governed by and shall be interpreted according to federal
law and the laws of New York. If state or local law and federal law are
inconsistent, or if state or local law is preempted by federal law, federal law
governs. If the Purchaser has greater rights or remedies under federal law, this
paragraph shall not be deemed to deprive the Purchaser of such rights and
remedies as may be available under federal law. Jurisdiction and venue for any
action or proceeding to enforce this Agreement shall be the forum appropriate
for such action or proceeding against the Debtor, to which jurisdiction each
Company irrevocably submits and to which venue each Company waives to the
fullest extent permitted by law any defense asserting an inconvenient forum in
connection therewith.
(e) All rights and remedies herein provided are cumulative and not exclusive of
any rights or remedies otherwise provided by law. Any single or partial exercise
of any right or remedy shall not preclude the further exercise thereof or the
exercise of any other right or remedy.
(f) All terms not defined herein are used as set forth in the Uniform
Commercial Code.
(g) In the event of any action by the Purchaser to enforce this Agreement or to
protect the security interest of the Purchaser in the Collateral, or to take
Collateral, each Company agrees to pay immediately the costs and expenses
thereof, together with reasonable attorneys' fees and allocated costs for
in-house legal services to the extent permitted by law.
(h) In the event the Purchaser seeks to take possession of any or all of the
Collateral by judicial process, each Company hereby irrevocably waives any bonds
and any surety or security relating thereto that may be required by applicable
law as an incident to such possession, and waives any demand for possession
prior to the commencement of any such suit or action.
(i) This Agreement shall constitute a continuing agreement, applying to all
future as well as existing transactions, whether or not of the character
contemplated at the date of this Agreement, and if all transactions between the
Purchaser and the Companies shall be closed at any time, shall be equally
applicable to any new transactions thereafter.
(j) The Purchaser's rights hereunder shall inure to the benefit of its
successors and assigns. In the event of any assignment or transfer by the
Purchaser of any of the Indebtedness or the Collateral, the Purchaser thereafter
shall be fully discharged from any responsibility with respect to the Collateral
so assigned or transferred, but the Purchaser shall retain all rights and powers
hereby given with respect to any of the Indebtedness or the Collateral not so
assigned or transferred. All representations, warranties and agreements of each
Company if more than one are joint and several and all shall be binding upon the
personal representatives, heirs, successors and assigns of such Company.
(k) Each Company hereby agrees that the obligations of the Companies hereunder
are joint and several.
-7-
9. Final Agreement. BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES
THAT: (A) THIS DOCUMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HEREOF, (B) THIS DOCUMENT SUPERSEDES ANY
COMMITMENT LETTER, TERM SHEET, OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONS
RELATING TO THE SUBJECT MATTER HEREOF, UNLESS SUCH COMMITMENT LETTER, TERM
SHEET, OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONS EXPRESSLY PROVIDES TO
THE CONTRARY, (C) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES,
AND (D) THIS DOCUMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.
[The remainder of this page intentionally left blank.]
-8-
Dated: As of November 13, 2014.
PENTA MEZZANINE SBIC FUND I,
L.P., a Delaware limited partnership
By: Penta Mezzanine SBIC Fund I GP, LLC, its General Partner
By: /s/ Richard E. Mount Name: Richard E. Mount Title: Authorized
Member Address for Notices: 20 N. Orange Avenue, Suite 1550 Orlando,
Florida 32801
[SIGNATURE PAGE TO SECURITY AGREEMENT]
Address for Notices:
TWINLAB CONSOLIDATED HOLDINGS, INC., a
Nevada corporation
Twinlab Consolidation Corporation 600 East Quality Drive American Fork,
UT 84003 By: /s/ Thomas A. Tolworthy Attention: Mark Jaggi, Chief
Financial Officer Name: Thomas A. Tolworthy Email: [email protected] Title:
Chief Executive Officer and President and
TWINLAB CONSOLIDATION CORPORATION, a
Delaware corporation
Twinlab Consolidation Corporation 632 Broadway, Suite 201 New York, NY
10012 By: /s/ Thomas A. Tolworthy Attention: Richard Neuwirth, Chief Legal
Name: Thomas A. Tolworthy Officer Title: Chief Executive Officer and President
Facsimile: 212-260-1853 Email: [email protected] TWINLAB HOLDINGS, INC.,
a Michigan corporation With a copy to By: /s/ Thomas
A. Tolworthy Vanum LLP Name: Thomas A. Tolworthy Bridgewater Place Title: Chief
Executive Officer and President P.O. Box 352 Grand Rapids, MI 49501 ISI
BRANDS INC., a Michigan corporation Attention: Mary Kay Shaver Facsimile:
616-336-7000 By: /s/ Thomas A. Tolworthy Name: Thomas A.
Tolworthy Title: Chief Executive Officer and President TWINLAB
CORPORATION, a Delaware corporation By: : /s/ Thomas A.
Tolworthy Name: Thomas A. Tolworthy Title: Chief Executive Officer and
President
|
Exhibit 10.1
SFSB, Inc.
FORM OF
RESTRICTED STOCK AGREEMENT
AGREEMENT, by and between SFSB, Inc., a Maryland corporation (the ”Company”),
and (the “Participant”):
1. Award of Shares:
Pursuant to the SFSB, Inc. 2005 Recognition and Retention Plan (the “Plan”), the
Company has awarded to the Participant, and has caused to be recorded on the
books of the Company, a restricted stock award on
(the “Award Date”), of shares (the “Award Shares”)
of the Company’s common stock, par value $0.01 per share (the “Common Stock”)
subject to the terms and conditions set forth in this Agreement, the Plan and
any applicable securities laws or regulations.
2. Terminology:
All capitalized words that are not defined in this Agreement have the meanings
ascribed to them in the Plan. Except where the context otherwise requires, the
term “Company” shall include SFSB, Inc. and its Affiliates.
3. Award Restrictions:
Except in the event of the Death, Disability, Normal Retirement of following a
Change in Control, and subject to the limitations in the Plan, the Award Shares
are nontransferable (whether by sale, assignment, exchange, pledge,
hypothecation, or otherwise) and are subject to forfeiture until they vest in
accordance with the attached Vesting Schedule (the “Restricted Period”). Vesting
during the Restricted Period shall occur so long as the Participant is in
Continuous Service of the Company from the Award Date through the applicable
date upon which the Restricted Period expires.
Upon the vesting of Award Shares by virtue of the lapse of the Restricted Period
and the other conditions in the Plan, the Company shall deliver to the
Participant (or his/her estate, as may be applicable) a stock certificate
covering the requisite number of vested shares registered on the Company’s books
in the name of the Participant within a reasonable period of time after the
Restricted Period expires.
4. Stock Certificates and Stock Power:
The stock certificate(s) evidencing the Award Shares shall be registered on the
Company’s books in the name of the Participant as of the Award Date as described
in the Plan. Physical possession or custody of such stock certificate(s) shall
be retained by the Company, or its escrow agent, until such time as the shares
are vested (i.e., the Restricted Period lapses). The stock certificate shall
include a legend on the stock certificate(s) restricting the transferability of
such certificate(s) and referring to the terms and conditions (including
forfeiture) of the Plan. The Participant shall deliver to the Company a stock
power in the form as attached hereto as Exhibit A, endorsed in blank, with
respect to the Award Shares to be held by the Company during the Restricted
Period.
- 6 -
During the Restricted Period, except as otherwise provided in Section 3 of this
Agreement and in the Plan, the Participant shall be entitled to all rights of a
stockholder of the Company, including the right to vote the shares and receive
dividends and/or other distributions declared on such shares as described in the
Plan.
5. Termination of Employment or Service Relationship:
Except as provided in the Plan, no Restricted Stock shall be earned unless the
Recipient maintains Continuous Service with the Company or an Affiliate until
the Restricted Period expires. The Board of Directors of the Company may revoke,
rescind, or terminate any Award, or a portion thereof.
6. Administration:
The Committee shall have full authority and discretion to decide all matters
relating to the administration, interpretation, and implementation of this
Agreement. All such determinations of the Committee shall be final, conclusive
and binding upon the Company and the Participant.
7. Withholding Taxes:
Upon the termination of the Restricted Period with respect to any shares of
Restricted Stock (or at any such earlier time that an election is made by the
Participant under Section 83(b) of the Code, or any successor provision thereto,
to include the value of such shares in taxable income), the Company or its
Affiliate, shall have the right to require the Participant or other person
receiving such shares to pay the amount of any taxes that the Company or its
Affiliate is required to withhold with respect to such shares, or, in lieu
thereof, to retain or sell without notice, a sufficient number of shares held by
it to cover the minimum amount of tax required to be withheld by an governmental
authority. The Company or its Affiliate shall have the right to deduct from all
dividends paid with respect to shares of Restricted Stock the amount of any
taxes which the Company or its Affiliate is required to withhold with respect to
such dividend payments.
8. Tax Election and Tax Withholding:
(a) Section 83(b) Election. The Participant hereby acknowledges that he/she has
been advised by the Company to seek independent tax advice regarding the
availability and advisability of making an election under Section 83(b) of the
Internal Revenue Code of 1986, as amended, with respect to the Award Shares, and
that any such election, if made, must be made within 30 days of the Award Date.
(b) Tax Withholding. At the Participant’s election, the Company shall either (i)
withhold the issuance of a portion of the Award Shares, (ii) deduct from any
other payment of any kind due the Participant, or (iii) accept a cash payment by
the Participant, in each case in an amount equal to the amount of any federal,
state or local taxes required by law to be withheld as a result of the award or
vesting of the Award Shares; provided, however, that if the Award Shares are
withheld, the value of the Award Shares withheld may not exceed the statutory
minimum withholding amount required by law. The Participant hereby acknowledges
and agrees that the Company shall have the right to effect such withholding or
deduction in accordance with his election.
- 7 -
9. Notices:
All notices and other communications made or given pursuant to this Agreement
shall be in writing and shall be sufficiently made or given if hand delivered or
mailed by certified mail, addressed to the Participant at the address contained
in the records of the Company, or addressed to the Committee, care of the
Company for the attention of its Corporate Secretary at its principal office or,
if the receiving party consents in advance, transmitted and received via
telecopy or via such other electronic transmission mechanism as may be available
to the parties.
10. Amendments:
This Agreement may be amended from time to time by the Committee in its
discretion; provided that this Agreement may not be modified in a manner that
would have a materially adverse effect on the Award Shares as determined in the
discretion of the Committee, except as provided in the Plan or in a written
document signed by each of the parties hereto.
11. Conformity with Plan:
This Agreement is intended to conform in all respects with, and is subject to
all applicable provisions of, the Plan. Inconsistencies between this Agreement
and the Plan shall be resolved in accordance with the terms of the Plan. In the
event of any ambiguity in this Agreement or any matters as to which this
Agreement is silent, the Plan shall govern. A copy of the Plan has been provided
to the Participant with this Agreement.
12. Governing Law:
The validity, construction and effect of this Agreement, and of any
determinations or decisions made by the Committee relating to this Agreement,
and the rights of any and all persons having or claiming to have any interest
under this Agreement, shall be determined exclusively in accordance with the
laws of the State of Maryland, without regard to its provisions concerning the
applicability of laws of other jurisdictions. Any suit with respect hereto will
be brought in the federal or state courts in the districts which include the
city and state in which the principal offices of the Company are located, and
the Participant hereby agrees and submits to the personal jurisdiction and venue
thereof.
13. Headings:
The headings in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement.
- 8 -
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer, and the Participant has hereunto set his or her hand
and seal, on this day of , .
SFSB, INC. By:
Print Name:
Participant
Title:
ACCEPTED AND AGREED:
Participant
- 9 -
VESTING SCHEDULE
[Intentionally left blank]
- 10 -
EXHIBIT A
STOCK POWER
FOR VALUE RECEIVED, the undersigned, , hereby
assigns and transfers unto SFSB, Inc. (the “Company”) or its successor
shares of common stock of the Company, par
value $0.01 per share, standing in my name of the books of the Company,
represented by Certificate No. , which is attached hereto,
and hereby irrevocably constitutes and appoints
as my attorney to transfer the said
stock on the books of the Company with full power of substitution in the
premises.
WITNESS:
Participant Dated:
|
Exhibit 10.6
Execution
LOAN AGREEMENT
between
THE DIRECTOR OF DEVELOPMENT
OF THE STATE OF OHIO
and
INTELLINETICS, INC.
Dated
as of
June 3, 2011
Execution
TABLE OF CONTENTS
(The Table of Contents is not a part of this Agreement
and is only for convenience of reference.)
Page
Preambles
1 ARTICLE I Definitions
Section 1.1
Use of Defined Terms
1
Section 1.2
Definitions
1
Section 1.3
Certain Words and References
8 ARTICLE II Determinations and Representations
Section 2.1
Determinations of the Director
9
Section 2.2
9 ARTICLE III Loan; Provision of Project; Conditions to
Disbursement
Section 3.1
Loan and Repayment
13
Section 3.2
Provision of Project
14
Section 3.3
Plans and Specifications; Inspections
15
Section 3.4
Company Required to Pay Costs in Event Proceeds Insufficient
15
Section 3.5
Completion Date
15
Section 3.6
Conditions to Disbursement
15
Section 3.7
Postponement of Escrow Disbursement Termination Date
20
Section 3.8
Payment of Costs; Indemnification
20 ARTICLE IV Additional Covenants and Agreements
Section 4.1
Employment Statement; Job Creation
22
Section 4.2
Public Offering
22
Section 4.3
Affirmative Covenants of the Company
22
Section 4.4
Negative Covenants of the Company
26
ARTICLE V Events of Default and Remedies; Termination
Section 5.1
Events of Default
28
Section 5.2
Remedies on Default
30
Section 5.3
No Remedy Exclusive
31
Section 5.4
Agreement to Pay Expenses and Attorneys’ Fees
31
Section 5.5
No Waiver
31 ARTICLE VI Miscellaneous
Section 6.1
Term of Agreement
32
Section 6.2
Notices
32
Section 6.3
Extent of Covenants of the Director; No Personal Liability
32
Section 6.4
Binding Effect
33
Section 6.5
Amendments and Supplements
33
Section 6.6
Execution Counterparts
33
Section 6.7
Severability
33
Section 6.8
Captions; Entire Agreement
33
Section 6.9
Interpretation
33
Section 6.10
Waiver of Jury Trial
33
Section 6.11
Governing Law
34
Signatures
34
Exhibit A - FORM OF NOTE
Exhibit B - PROJECT EQUIPMENT
Exhibit C - PROJECT INTANGIBLE FACILITIES
Schedule 1.2 - SCHEDULE OF DEVELOPMENT
ii
LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into as of June 3, 2011 by and between
the Director of Development (the “Director”) of the State of Ohio (the “State”),
acting on behalf of the State, and Intellinetics, Inc., an Ohio corporation (the
“Company”), under the circumstances summarized in the following recitals (the
capitalized terms used in the recitals being used therein as defined in Article
I hereof):
A. Pursuant to the Act, the Director is authorized, among other things, to make
loans to assist in the financing of an Eligible Innovation Project.
B. The Company has requested that the Director provide the financial assistance
for the Project hereinafter described.
C. The Director has determined that the Project constitutes an Eligible
Innovation Project and that the financial assistance to be provided pursuant to
this Agreement is appropriate under the Act and will be in furtherance and in
D. The financial assistance to be provided pursuant to this Agreement has been
reviewed and approved by the Development Financing Advisory Council and the
Controlling Board, pursuant to the Act.
NOW, THEREFORE, in consideration of the premises and the representations and
agreements hereinafter contained, the Director and the Company agree as follows:
ARTICLE I
Definitions
Section 1.1. Use of Defined Terms. In addition to the words and terms elsewhere
defined in this Agreement or by reference to the Security Documents or other
instruments, the words and terms set forth in Section 1.2 hereof shall have the
meanings therein set forth unless the context or use expressly indicates
different meaning or intent. Such definitions shall be equally applicable to
both the singular and plural forms of any of the words and terms therein
defined.
Section 1.2. Definitions. As used herein:
“Act” means Chapter 166, Ohio Revised Code, as from time to time enacted and
amended.
“Agreement” means this Loan Agreement, as the same may be amended, modified,
supplemented, restated or replaced from time to time.
“Allowable Innovation Costs” means “allowable innovation costs” of the Project
within the meaning of the Act.
“Application” means the Application of the Company submitted to the Director
requesting assistance under the Act dated March 31, 2010.
“Business Day” means any day that is not a Saturday, a Sunday or a day on which
banks are required or permitted to be closed in the State of Ohio and on which
the New York Stock Exchange is not closed.
“City” means the city of Columbus, Ohio.
“Closing Date” means June 3, 2011, the date of execution and delivery of the
Loan Documents.
“Collateral” shall have the same meaning given that term in the Security
Agreement.
“Commitment” means the Commitment Letter between the Director and the Company
dated February 4, 2011.
“Code” means the Internal Revenue Code of 1986, and any successor statute of
similar import, together with all rules and regulations thereunder, as amended,
reformed or otherwise modified from time to time. References to sections or
titles of the Code shall be construed to also refer to successor sections or
titles.
“Completion Date” means the date of completion of the Project as follows: the
earlier of (i) September 31, 2011, and (ii) as certified by the Company pursuant
to Section 3.5 hereof, unless extended by agreement between the Director and
Company.
“Controlling Board” means the Controlling Board of the State.
“Corrective Work” means all activities of removal, response, investigation,
testing, analysis, remediation (including, but not limited to disposal of
Hazardous Substances) taken pursuant to Environmental Requirements (i) to
prevent, abate, or correct a Release or threatened Release of Hazardous
Substances at, about, affecting, or affected by the Project or the Project Site
or (ii) to comply with any and all Environmental Requirements applicable to the
Project or the Project Site or areas at, about, affecting, or affected by the
Project or the Project Site.
“Cost Certification” means a certification of the Company, as of a specified
date, setting forth in reasonable detail the costs incurred and, if appropriate,
to be incurred by the Company in completing the provision of the Project,
including a detail by category of all Allowable Innovation Costs.
“DCB Loan” means the loan in the principal amount of Two Hundred One Thousand
Twenty-Four Dollars ($201,024.00) made by Delaware County Bank and Trust Company
to the Company pursuant to the DCB Loan Documents.
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“DCB Loan Documents” means all documents, instruments and agreements evidencing
or securing the DCB Loan, as the same may be amended, modified, supplemented,
restated or replaced from time to time with the prior written consent of the
Director.
“Development Financing Advisory Council” means the Development Financing
Advisory Council of the State.
“Disbursement Request” means each Disbursement Request in the form of Exhibit A
attached to the Escrow Disbursing Agreement.
“Eligible Innovation Project” means an “eligible innovation project” within the
meaning of the Act and, with respect to the Loan, means the Project.
“Environmental Activity” means any actual or threatened storage, holding,
existence, Release, emission, discharge, transportation or disposal of any
Hazardous Substance from, under, into or on the Project and/or the Project Site
or otherwise relating to the Project and/or the Project Site or any Use of the
Project and/or the Project Site which is regulated by or for which standards of
conduct or liability are imposed by any Environmental Requirements.
“Environmental Laws” means the Comprehensive Environmental Response,
Compensation and Liability Act (“CERCLA”), 42 U.S.C. §9601 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. §6901 et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. §5101 et seq., the Toxic Substances Control Act,
15 U.S.C. §2601 et seq., the Federal Water Pollution Control Act (Clean Water
Act), 33 U.S.C. §1251 et seq., the Clean Air Act, 42 U.S.C. §7401 et seq.,
regulations promulgated thereunder, and any other federal, state, county,
municipal, local or other statute, law, principles of common law, ordinance or
regulation and any consent decrees, settlement agreements, judgments, orders,
directives, policies or programs issued by or entered into with a Governmental
Authority which may relate to or deal with (i) pollution or pollution control;
(ii) protection of human health from exposure to regulated substances;
(iii) protection of the environment; (iv) the presence, use, management,
generation, manufacture, processing, extraction, treatment, recycling, refining,
reclamation, labeling, packaging, sale, transport, storage, collection,
distribution, disposal or release or threat of release of regulated substances;
(v) the presence of contamination; (vi) the protection of endangered species;
and (vii) the protection of environmentally sensitive areas. References to
sections or titles of any Environmental Law shall be construed to also refer to
successor sections or titles.
“Environmental Requirements” means all present and future laws, including but
not limited to Environmental Laws, authorizations, judgments, decrees,
concessions, grants, orders, franchises, agreements and other restrictions and
requirements (whether or not arising under statutes or regulations) relating to
any Hazardous Substances or Environmental Activity.
may be amended or supplemented from time to time, and any successor statute of
similar import, and the rules and regulations thereunder, as from time to time
in effect.
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“ERISA Affiliate” means at any time, the Company and all members of a controlled
under common control and all other entities which, together with the Company,
are treated as a single employer under Section 414(b) and/or (c) of the Internal
Revenue Code.
“Escrow Account” means the Escrow Account as defined in the Escrow Disbursing
Agreement.
“Escrow Agent” means The Huntington National Bank, in its capacity as Escrow
Agent under the Escrow Disbursing Agreement.
“Escrow Disbursement Date” means each date upon which Escrow Funds are disbursed
to, or for the benefit of, the Company from the Escrow Account pursuant to the
Escrow Disbursing Agreement, and the final Escrow Disbursement Date shall not be
later than June 30, 2011. There shall not be more than one (1) Escrow
Disbursement Date in any thirty (30) day period.
“Escrow Disbursement Termination Date” means June 3, 2012, or such subsequent
date as may be established by the Director in writing in accordance with
Section 3.7 hereof for the disbursement of the Loan.
“Escrow Disbursing Agreement” means the Escrow Disbursing Agreement of even date
herewith among the Company, the Director and the Escrow Agent, as the same may
be amended, modified, supplemented, restated or replaced from time to time.
“Escrow Funding Date” means each date proceeds of the Loan are funded to the
Escrow Account in accordance with the terms of this Agreement and the Escrow
Disbursing Agreement. There shall not be more than two (2) Escrow Funding Dates.
“Escrow Funds” means the proceeds of the Loan disbursed into the Escrow Account
in accordance with the terms of this Agreement and the Escrow Disbursing
Agreement.
“Event of Default” means any of the events described as an event of default in
Section 5.1 hereof.
“Final Cost Certification” means the Cost Certification dated as of the
Completion Date.
“Governing Instruments” means the articles of incorporation and code of
regulations of the Company.
“Governmental Authority” means, collectively, the United States of America, the
State, any political subdivision thereof, any municipality, and any agency,
department, commission, board or bureau of any of the foregoing having
jurisdiction over the Project and/or the Project Site.
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“Hazardous Substances” means:
(a) any “hazardous substance” as defined in §101(14) of CERCLA (42 U.S.C.
§9601(14)) or regulations promulgated thereunder;
(b) any “solid waste”, “hazardous waste”, “infectious waste”, “pollutant”, or
“hazardous air pollutant”, as such terms are defined in any Environmental Law at
such time;
(c) asbestos, urea-formaldehyde, polychlorinated biphenyls, source, special
nuclear or by-product material, chemical waste, radioactive material,
explosives, known carcinogens, petroleum products and by-products and other
dangerous, toxic or hazardous pollutants, contaminants, chemicals, material or
substances listed or identified in, or regulated by, any Environmental Law; and
(d) any additional substances or materials which at such time are classified
or considered to be hazardous or toxic under any Environmental Law.
“Intercreditor Agreement” means the Intercreditor Agreement among the Company,
the Director and the Delaware County Bank and Trust Company, dated as of
June 27, 2011, as the same may be amended, modified, supplemented, restated or
replaced from time to time.
“Landlord Waiver” means the Landlord Waiver and Consent between the Director and
Dividend Drive, LLC, dated as of May 31, 2011, consented to by the Company as
the same may be amended, modified, supplemented, restated or replaced from time
to time.
“Loan” means the loan by the Director to the Company in the total sum of the
Loan Amount, to be disbursed pursuant to the terms hereof and the Escrow
Disbursing Agreement.
“Loan Amount” means the lesser of (i) $750,000 and (ii) 75% of the Allowable
Innovation Costs of the Project, as determined by the Director in the Director’s
sole discretion pursuant to this Agreement.
“Loan Approval Documents” means, with respect to the Loan, the Recommendation of
the Director to the Development Financing Advisory Council dated December 6,
2010, the Resolution of the Development Financing Advisory Council dated
December 6, 2010, the Approval of the Controlling Board dated January 31, 2011,
and the Commitment.
“Loan Documents” means all documents, instruments and agreements delivered to or
required by the Director to evidence or secure the Loan, including, but not
limited to, this Agreement, the Note, the Security Documents, and the Escrow
Disbursing Agreement as required by the Commitment and this Agreement, as the
time.
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“Loss” is defined in Section 3.8(b)(viii) hereof.
“Market Conditions” means those conditions determined by the Director, with
advice from the Federal Reserve Bank of Cleveland, with respect to which the
Director shall consider the following:
(i) two consecutive quarters of decline in information technology employment
in the State as a whole, or when possible by relevant manufacturing sector.
Employment figures will be those reported by the Department of Job and Family
Services of the State;
(ii) a decline, as a whole or by relevant sector, in twelve (12) of the last
thirty-six (36) months as detailed in the Federal Reserve’s National Industrial
Production Index; and
(iii) a decline within the relevant sector of Standard & Poor’s “Industrial
Outlook”.
“Multiemployer Plan” means any employee benefit plan that is a “multiemployer
plan” Within the meaning of Section 4001(a)(3) of ERISA and to which the Company
or any ERISA Affiliate is then making or accruing an obligation to make
contributions or, within the preceding five plan years, has made or had an
obligation to make such contributions.
“Note” means the cognovit promissory note, in the form attached hereto as
Exhibit A, evidencing the obligation of the Company to repay the Loan, as the
time.
“Notice Address” means:
(a)
As to the Director:
Ohio Department of Development Strategic Business Investment Division
77 South High Street, 28th Floor P.O. Box 1001 Columbus, OH
43216-1001 Attn: Office of Financial Incentives With a copy to:
Climaco, Wilcox, Peca, Tarantino & Garofoli Co., L.P.A.
55 Public Square, Suite 1950 Cleveland, OH 44114 Attn: John A Peca,
Esq. (b) As to the Company:
Intellinetics,Inc.
2190 Dividend Drive Columbus, OH 43228 Attn: Matthew Chretien
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With a copy to: Calfee, Halter & Griswold LLP 1100 Fifth Third
Center 21 East State Street Columbus, OH 43215 Attn: Steven
Karzmer, Esq.
or such additional or different address, notice of which is given under
Section 6.2 hereof.
“Ohio Commercial Code” means the Uniform Commercial Code as in effect in the
State of Ohio on the date hereof and as amended from time to time except to the
extent that the conflict of law rules of such Uniform Commercial Code shall
apply the Uniform Commercial Code as in effect from time to time in any other
state to specific property or other matters.
“PBGC” means the Pension Benefit Guaranty Corporation established pursuant
Subtitle A of Title IV of ERISA or any successor.
“Plan” means any “employee pension benefit plan” (as such term is defined in
Section 3(2) of ERISA), other than a Multiemployer Plan) that is covered by
Title IV of ERISA or is subject to the minimum funding standards under
Section 412 of the Code and either (i) is maintained by the Company or any ERISA
Affiliate, or (ii) has at any time within the preceding five years been
maintained by the Company or any ERISA Affiliate or to which at any time within
the preceding five years contributions had been made by the Company or any ERISA
Affiliate.
“Plans and Specifications” means the plans and specifications or other
appropriate documents describing the Project prepared by or at the direction of
the Company, including, but not limited to, the Schedule of Development attached
hereto as Schedule 1.2.
“Prohibited Transaction” means a transaction described in Section 4975 of the
Code or Section 406 of ERISA that is not the subject of an exemption pursuant to
Section 4975(c)(2) of the Code or Section 408 of ERISA, respectively.
“Project” means the Project Site, the Project Equipment and the Project
Intangible Facilities, together constituting an Eligible Innovation Project.
“Project Equipment” means the equipment, machinery and other personal property
described on Exhibit B attached hereto, as such Exhibit B is amended and
supplemented from time to time in accordance with the terms of the Security
Agreement.
“Project Intangible Facilities” means the intangible property related to a new
product or process based on new technology or the creative application of
existing technology, including research and development, product or process
testing, quality control, market research, and related activities, that is to be
acquired, established, expanded, remodeled, rehabilitated, or modernized for
industry, commerce, distribution, or research, or any combination thereof, the
operation of which, alone or in conjunction with other eligible projects,
eligible innovation projects, or innovation property described in Exhibit C
attached hereto.
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“Project Purposes” means the development of, testing of, training on, and
protection of intellectual property rights relating to the development of
Company’s Redactivue software application into software as a service
application.
“Project Site” means 2190 Dividend Drive, Columbus, Ohio 43228, or any
subsequent location of the Company’s principal place of business that the
Company may move to in accordance with, and as permitted by, this Agreement and
“Provision” means, as applicable, the acquiring, constructing, reconstructing,
rehabilitating, renovating, enlarging, installing, improving, equipping or
furnishing of the Project.
“Release” means spilling, leaking, pumping, paving, emitting, emptying,
discharging, injecting, escaping, contaminating, leaching, disposing, releasing
or dumping of any Hazardous Substance into the environment.
“Reportable Event” means a “reportable event” within the meaning of Section 4043
of ERISA and the Regulations thereunder.
“Required Equity Contribution” means $250,000 to be provided by the Company in
cash to pay a portion of the Allowable Innovation Costs of the Project.
“Security Agreement” means the Security Agreement between the Director and the
Company, of even date herewith, as the same may be amended, modified,
“Security Documents” means, collectively, the Security Agreement, the
Intercreditor Agreement, the Landlord Waiver, the Perfection Certificate, and
the UCC Financing Statements, as the same may be amended, modified,
“State” means the State of Ohio.
“UCC Financing Statement” means a financing statement under Article 9 of the
Ohio Commercial Code providing notice of the Director’s security interest in the
Collateral.
“Use” means the use, ownership, development, construction, renovation,
maintenance, management, operation or occupancy of real property, including the
Project Site.
Section 1.3. Certain Words and References. Any reference herein to the Director
shall include those succeeding to the Director’s functions, duties or
responsibilities pursuant to or by operation of law or lawfully performing such
functions. Any reference to a section or provision of the Constitution of the
State or to the Act or to a section, provision or chapter of the Ohio Revised
Code shall include such section, provision or chapter as from time to time
amended, modified,
8
revised, supplemented or superseded, provided that no such amendment,
modification, supplementation, revision or supersession shall alter the
obligation of the Company to pay all the amounts payable hereunder on the terms
provided herein. All references to “generally accepted accounting principles”
shall have the meaning set forth in Statement on Auditing Standards No. 69, or
any predecessor or successor pronouncement of the American Institute of
Certified Public Accountants, in effect for any applicable fiscal period.
Unless the context of this Agreement otherwise clearly requires, the following
rules of construction shall apply to this Agreement and each of the other Loan
Documents: (i) references to the plural include the singular, the plural, the
part and the whole and the words “include,” “includes” and “including” shall be
deemed to be followed by the phrase “without limitation”; (ii) the words
“hereof,” “hereby,” “herein,” “hereto,” “hereunder” and similar terms refer to
this Agreement or such other Loan Document as a whole; (iii) the term
“heretofore” means before, and the term “hereafter” means after, the date of
delivery of this Agreement or such other Loan Document; (iv) article, section,
subsection, clause, schedule and exhibit references are to this Agreement or
other Loan Document, as the case may be, unless otherwise specified;
(v) reference to any person includes such person’s successors and assigns;
(vi) reference to any agreement, including this Agreement and any other Loan
Document together with the schedules and exhibits hereto or thereto, document or
instrument means such agreement, document or instrument as amended, modified,
replaced, substituted for, superseded or restated; (vii) relative to the
determination of any period of time, “from” means “from and including”;
(viii) the words “asset” and “property” shall be construed to have the same
meaning and effect and to refer to any and all applicable tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights, (ix) section headings herein and in each other Loan Document
are included for convenience and shall not affect the interpretation of this
Agreement or such Loan Document; and (x) words of the masculine gender include
the feminine and the neuter, and when the sense so indicates, words of the
neuter gender may refer to any gender.
ARTICLE II
Determinations and Representations
Section 2.1. Determinations of the Director. Pursuant to the Act and on the
basis of the representations and other information provided by the Company, the
Director has heretofore made certain determinations, as set forth in the Loan
Approval Documents, which are hereby confirmed, and the Director hereby
determines that the financial assistance to be provided by the State pursuant to
166.12 to 166.16 thereof, and will further and implement the purposes of the Act
by creating new jobs or preserving existing jobs and employment opportunities
and improving the economic welfare of the people of the State.
Section 2.2. Representations and Warranties of the Company. The Company hereby
represents and warrants that:
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(a) It is a corporation for profit duly incorporated, organized, validly
existing and in good standing under the laws of the State, and has all requisite
power to conduct its business as now conducted and to own, hold and lease its
assets and properties and is duly qualified to do business in all other
jurisdictions in which it owns property or conducts its business, except where
the failure to so qualify would not impair the ability of the Company to perform
any of its obligations under the Loan Documents or would not materially
adversely affect the financial condition of the Company, and will remain so
qualified and in good standing in such jurisdictions during the term of this
Agreement.
(b) It has full power and authority to execute, deliver and perform the Loan
Documents, and to enter into and carry out the transactions contemplated
thereby. Such execution, delivery and performance do not, and will not, violate
any provision of law applicable to the Company or the Governing Instruments of
the Company and do not, and will not, conflict with or result in a default under
any agreement or instrument to which the Company is a party or by which it or
any of its property or assets is or may be bound. The Loan Documents have, by
proper action, been duly authorized, executed and delivered and constitute
legal, valid and binding obligations of the Company.
(c) The provision of financial assistance pursuant to the Loan Approval
Documents and this Agreement induced the Company to provide the Project, thereby
creating new jobs or preserving existing jobs and employment opportunities and
improving the economic welfare of the people of the State.
(d) The Provision of the Project will be completed and the Project and the
Company’s business will be operated and maintained in such manner as to conform
with all applicable Environmental Laws and zoning, planning, building and other
applicable governmental regulations imposed by any Governmental Authority and as
to be consistent with the purposes of the Act.
(e) It presently intends that the Project will be used and operated in a
manner consistent with the Project Purposes until the date on which the Loan has
been fully repaid, and the Company knows of no reason why the Project will not
be so operated.
(f) There are no actions, suits or proceedings pending or threatened against
or affecting the Company or the Project which, if adversely determined, would
individually or in the aggregate materially impair the ability of the Company to
perform any of its obligations under the Loan Documents or the DCB Loan
Documents or adversely affect the financial condition of the Company.
(g) It is not in default under any of the Loan Documents or the DCB Loan
Documents, or in the payment of any indebtedness for borrowed money or under any
agreement or instrument evidencing any such indebtedness, and no event has
occurred which by notice, the passage of time or otherwise would constitute any
such event of default.
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(h) The Project Site is zoned by the City under a zoning ordinance which
permits the Provision of the Project thereon in accordance with the Plans and
Specifications and the operation of the Company’s business; and all utilities,
including water, storm and sanitary sewer, gas, electric and telephone, and
rights of access to public ways shall be available or will be provided to the
Project Site in sufficient locations and capacities to meet the requirements of
operating the Project and the Company’s business and of any applicable
Governmental Authority.
(i) It has made no contract or arrangement of any kind, other than the Loan
Documents and the DCB Loan Documents, which has given rise to, or the
performance of which by the other party thereto would give rise to, a lien or
claim of lien on the Project, the Project Site or other collateral covered by
the Loan Documents or the DCB Loan Documents and no materials or labor have
heretofore been supplied to or performed in connection with the Project, except
as permitted under the Commitment.
(j) No representation or warranty of the Company contained in any of the Loan
Approval Documents, Loan Documents or DCB Loan Documents, and no statement
contained in any certificate, schedule, list, financial statement or other
instrument furnished to the Director by or on behalf of the Company (including,
without limitation, the Application), contains any untrue statement of a
material fact, or omits to state a material fact necessary to make the
statements contained herein or therein not misleading.
(k) The financial statements of the Company heretofore delivered to the
Director are true and correct, in all respects, have been prepared in accordance
with generally accepted accounting principles consistently applied, and fairly
present the financial condition and the results of operation of the Company as
of the dates thereof. No materially adverse change has occurred in the financial
condition of the Company reflected therein since the respective dates thereof.
(1) All proceeds of the Loan shall be used for the payment of Allowable
Innovation Costs relating to the Provision of the Project. No part of any such
proceeds shall be knowingly paid to or retained by the Company or any member,
owner, manager, partner, officer, shareholder, director or employee of the
Company as a fee, kick-back or consideration of any type. The Company has no
identity of interest with the general contractor or any architect,
subcontractor, laborer or materialman performing work or services or supplying
materials in connection with the Provision of the Project.
(m) It has a good and marketable title to a leasehold interest in the Project
Site and is the owner of the Project Equipment and Project Intangible
Facilities, subject in all cases to no lien, charge, easement, condition,
restriction or encumbrance except as created by the Loan Documents and the DCB
Loan Documents, or shown as Permitted Encumbrances under the Security Documents.
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(n) (i) It is and has been at all times in compliance with all
applicable Environmental Requirements relating to the
Project, the Project Site and the Use of the Project and the Project Site and
the Company has not engaged in any Environmental Activity in violation of any
applicable Environmental Requirements, nor has any Environmental Activity
otherwise occurred, in violation of any applicable Environmental Requirements.
(ii) No investigations, inquiries, orders, hearings, actions or other
proceedings by or before any court or Governmental Authority are pending or
threatened in connection with any Environmental Activity or alleged
Environmental Activity conducted upon the Project Site.
(iii) No claims at any time have been made or threatened against the Company
or the prior owners of the Project and/or the Project Site relating to damage,
contribution, cost recovery, compensation, penalty, loss or injury resulting
from any Environmental Activity or Hazardous Substance.
(iv) It has no liability, absolute or contingent, in connection with any
Environmental Activity.
(v) No Hazardous Substances have been integrated into the Project, the Project
Site or any component thereof in such manner or quantity as may reasonably be
expected to or in fact would pose a threat to human health or the value of the
(vi) No portion of the Project or the Project Site is located within 2,000
feet of (a) a Release of a Hazardous Substance which has been reported or is
required to be reported under any Environmental Requirements or (b) the location
of any site used, in the past or presently, for the disposal of any Hazardous
Substance.
(vii) No occurrence or condition on any real property adjoining the Project
Site exists which could cause the Project, the Project Site or any part thereof
to be subject to any restrictions on ownership, occupancy, transferability or
operation under any Environmental Requirement.
(viii) It has not engaged in any Environmental Activity and no Environmental
Activity has otherwise occurred, and no notice, order, directive, complaint or
other written communication has been made or issued by a governmental agency or
other person alleging the occurrence of Environmental Activity in, on or about
the Project or the Project Site in violation of any Environmental Requirements.
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(ix) Neither the Project nor the Project Site has been used for the disposal
of Hazardous Substances.
(x) None of its business operations conducted on the Project Site have
contaminated lands, waters or other property of others with Hazardous
Substances.
(xi) No underground or above ground storage tank (regardless of contents) is
now located on, at or beneath the Project Site.
(xii) Neither the Project nor the Project Site is subject to any claim which
might give rise to a lien in favor of any Governmental Authority as a result of
any Release or threatened Release of any Hazardous Substance or Environmental
Activity.
(o) It shall provide the Required Equity Contribution by the Completion Date
and otherwise in accordance with the terms hereof and the Escrow Disbursing
Agreement.
(p) Allowable Innovation Costs which consist of the costs of (i) research and
development of the Project, (ii) obtaining or creating any requisite software or
computer hardware related to Project or the products or services associated
therewith, (iii) testing (including, without limitation, quality control
activities necessary for initial production), perfecting, and marketing of such
products and services, and (iv) creating and protecting intellectual property
related to the Project or any products or services related thereto, including
costs of securing appropriate patent, trademark, trade secret, trade dress,
copyright, or other form of intellectual property protection for the Project or
related products and services, are expenditures that can and will be capitalized
under applicable generally accepted accounting principles.
ARTICLE III
Loan; Provision of Project; Conditions to Disbursement
Section 3.1. Loan and Repayment.
(a) On the terms and conditions of this Agreement and the Commitment, the
Director shall lend to the Company the Loan Amount to assist in the financing of
the Project. The Loan shall be evidenced by this Agreement and the Note and
secured by the Security Documents and the other Loan Documents, as applicable.
Those instruments shall be executed and delivered by the Company to the Director
(b) The terms of repayment of the Loan shall be as set forth in the Note and the
Company shall make all payments required to be made under the Note as and when
due.
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(c) In addition to all other payments required under the Note, upon maturity of
the Loan (whether at scheduled maturity, by acceleration or otherwise), the
Company shall pay to the Director a loan participation fee equal to 10% of the
dollar amount of the Loan actually funded; provided, however, if the Loan is
prepaid in full prior to the end of the term of the Loan, the loan participation
fee shall be paid to the Director at the time of such prepayment. The
anticipated amount of the participation fee is $75,000.
(d) Proceeds of the Loan shall be disbursed into the Escrow Account on each
Escrow Funding Date pursuant to the terms hereof and the Escrow Disbursing
Agreement upon the satisfaction of the conditions set forth in Section 3.6(a)
hereof and held in accordance with the terms of this Agreement and the Escrow
Disbursing Agreement. The Loan shall be disbursed only from, and only to the
extent that on each Escrow Funding Date funds not heretofore committed are
available to make the Loan from moneys in, the “Innovation Ohio Loan Fund”
created by the Act and as defined in the Act.
(e) The Escrow Funds shall be available for disbursement until the Escrow
Disbursement Termination Date, and thereafter, the Director shall have no
obligation to make or approve any further disbursements from the Escrow Account.
Any Escrow Funds disbursed to the Director from the Escrow Account shall reduce
the principal amount of the Note.
(f) The Escrow Funds shall be disbursed from the Escrow Account on each Escrow
Disbursement Date pursuant to the terms of this Agreement and the Escrow
Disbursing Agreement. The Company shall be entitled to submit Disbursement
Requests pursuant to the Escrow Disbursing Agreement not more frequently than
once in any thirty (30) day period and for amounts not less than Fifty Thousand
Dollars ($50,000) minimum, excepting the final disbursement.
(g) Each payment of Allowable Innovation Costs of the Project shall be funded
75% with Escrow Funds and 25% with the Required Equity Contribution.
Section 3.2. Provision of Project. The Company (a) has commenced or shall
promptly hereafter commence the Provision of the Project; (b) shall pay all
expenses incurred in such Provision from funds made available therefor in
accordance with this Agreement, the Required Equity Contribution or otherwise;
and (c) shall demand, sue for, levy and recover all sums of money and debts
which may be due and payable under the terms of any contract, order, receipt,
guaranty, warranty, writing or instruction in connection with the Provision of
the Project and will enforce the terms of any contract, agreement, obligation,
bond or other performance security with respect thereto. The Company confirms
its agreement in the Commitment that, to the extent applicable, all wages paid
to laborers and mechanics employed on the Provision of the Project shall be paid
at not less than the prevailing rates of wages for laborers and mechanics for
the class of work called for by the Project, which wages shall be determined in
accordance with the requirements of Chapter 4115, Ohio Revised Code, for
determination of prevailing wage rates; provided that if the Company undertakes,
as part of the Project, work to be performed by its regular bargaining unit
employees who are covered under a collective bargaining agreement which was in
existence prior to the date of the Commitment, the rate of pay provided under
the applicable collective bargaining agreement may be paid to such employees.
14
Section 3.3. Plans and Specifications; Inspections. At the Director’s option,
the Director may designate an employee or officer of the State or may retain, at
the Company’s expense, an architect, engineer, appraiser or other consultant for
the purpose of approving the Plans and Specifications, verifying costs and
performing inspections of the Project as Provision of the Project progresses.
Such inspections, reviews or approvals shall not impose any responsibility or
liability of any nature upon the Director, the State or officers, employees,
agents, representatives or designees of the Director or the State, or, without
limitation, make or cause to be made any warranty or representation as to the
adequacy or safety of the structures or any of their component parts or any
other physical condition or feature pertaining to the Project and the Project
Site. The Company shall, at the request of the Director, make periodic reports
(including, if required, submission of updated Cost Certifications) to the
Director concerning the status of completion and the expenditures for costs in
respect thereof.
The Company may revise the Plans and Specifications from time to time; provided
that no revision shall be made (a) which would change the Project Purposes to
purposes other than those permitted by the Act; (b) without obtaining, to the
extent required by law, the approval of any applicable Governmental Authority;
and (c) without the prior written approval of the Director if such revision
would change the amounts set forth in the most recently furnished Cost
Certification. In any event, all revisions to the Plans and Specifications shall
be promptly filed with the Director.
Section 3.4. Company Required to Pay Costs in Event Proceeds Insufficient. In
the event that the proceeds of the Loan and the Required Equity Contribution are
not sufficient to pay all costs of the Project, the Company shall, nonetheless
and irrespective of the cause of such deficiency, complete the Project in
accordance with the Plans and Specifications and pay all costs of such
completion in full from its own funds.
Section 3.5. Completion Date. The Completion Date shall occur not later than
September 30, 2011, and shall be evidenced to the Director by a certificate of
the Company stating (a) the Completion Date, (b) that all licenses, permits and
approvals for the Project required by any Governmental Authority have been
procured and/or obtained, (c) that all improvements and additions reflected in
the Plans and Specifications have been made, all Project Equipment, if any, is
installed and operational, and the Provision of the Project has been completed,
(d) that all costs of providing the Project have been paid, and (e) the date as
of which operation of the Project shall commence.
Section 3.6. Conditions to Disbursement.
(a) Disbursement of Loan Proceeds to Escrow Account. Prior to the Director
authorizing disbursement of any proceeds of the Loan to the Escrow Account
pursuant to the terms of this Agreement and the Escrow Disbursing Agreement, the
Director shall have received the following:
(i) the executed Note;
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(ii) evidence of the liability and property insurance required by the Security
Documents (on ACORD form 27);
(iii) determination of prevailing wage by the Wage and Hour Bureau of the
Department of Commerce of the State, if applicable;
(iv) the duly executed Security Documents, Escrow Disbursing Agreement and all
other Loan Documents;
(v) the Company’s Certificate of Corporate Good Standing issued by the
Secretary of State of the State, dated within 10 days of the date of this
Agreement;
(vi) certified copy of the resolutions of the governing board/body of the
Company authorizing execution, delivery and performance of all Loan Documents;
(vii) the UCC Financing Statement to evidence and perfect the security
interests created by the Security Documents;
(viii) certificate of incumbency as to the Company;
(ix) copies, certified by the Company to be true, correct and complete, of the
Governing Instruments of the Company;
(x) an opinion of the Company’s legal counsel which sets forth substantially
the following:
(A) that the Company is a corporation duly incorporated, organized and validly
existing under the laws of, and in good standing with, the State;
(B) that the Company has full power and authority to own its properties and
conduct its business and to execute and deliver the Loan Documents;
(C) that the execution, delivery and performance of the Loan Documents by the
Company have been duly authorized by all necessary corporate action by the
Company;
(D)
that the execution and delivery of the Loan Documents by the Company, and the
performance of its obligations thereunder, do not conflict with the Governing
Instruments of the Company, or, to the knowledge of such counsel, constitute a
default under, conflict with or violate any judgment, decree, indenture,
mortgage, deed of trust,
16
lease, guaranty, agreement or other instrument to which the Company is a party
or by which the Company is bound, or, to the knowledge of such counsel, conflict
with or violate any provisions of law, administrative regulation, or court order
or consent decree;
(E) that the Loan Documents have been duly executed and delivered by the
Company and are valid and binding instruments, enforceable against the Company
in accordance with their respective terms, except as such enforcement may be
limited by bankruptcy, insolvency or other laws or equitable principles
affecting the enforcement of creditor’s rights generally;
(F) that the execution and delivery by the Company of the Loan Documents and
the performance of its obligations thereunder neither is prohibited by, nor
subjects the Company to a fine, penalty or other similar sanction under, any
statute or regulation of any Governmental Authority and the Company has obtained
any and all requisite governmental consents, permits, licenses and approvals
necessary for the Company to enter into, execute and deliver the Loan Documents
and to perform the Company’s obligations thereunder;
(G) that there are no actions, suits or proceedings, at law or in equity, or
before or by any court, public board or body, pending or, to the knowledge of
counsel, threatened affecting the Company or the Project which, if adversely
determined, would individually or in the aggregate materially impair the ability
of the Company to perform any of its obligations under the Loan Documents or
would materially adversely affect the financial condition of the Company; and
(H) The Security Agreement creates in favor of the Director as security for
the Company’s obligations under the Loan Documents, a valid, good and
enforceable security interest in the Company’s rights in the Collateral to which
Article 9 of the Ohio Commercial Code is applicable; and
(I) The UCC Financing Statement is in proper form under the applicable laws of
the State of Ohio to be accepted for filing by the Secretary of State of the
State of Ohio. Upon due recordation with the Secretary of State of Ohio, the UCC
Financing Statement will perfect in favor of the Director a valid, good, and
enforceable lien of record in that portion of the Collateral in which a security
interest may be perfected by filing an initial financing statement with the
Secretary of State of Ohio under the Ohio Commercial Code, as security for the
payment and performance of the Company’s obligations under the Loan Documents.
17
(xi) copies of all licenses and permits required by any Governmental Authority
in connection with the Project and the operation thereof;
(xii) Notice of Commencement as required by Chapter 1311, Ohio Revised Code,
if applicable;
(xiii) evidence satisfactory to the Director that the Project Site is not
located in a an area identified by the Federal Emergency Management Agency as an
area having special flood hazards, or if the Project Site is located in such an
area, that appropriate flood insurance or other satisfactory measures have been
taken to protect the Project Site and the Project from flood damage;
(xiv) a copy of the Plans and Specifications, if requested by the Director;
(xv) UCC security interest, judgment and tax lien searches regarding the
Company from all appropriate jurisdictions;
(xvi) landlord waivers; and
(xvii) such other certifications, documents or opinions as the Director may
reasonably request.
(b) Disbursement of Funds from the Escrow Account. Subject to the terms hereof
and the Escrow Disbursing Agreement, the disbursement of Escrow Funds shall be
made on each Escrow Disbursement Date, provided the affirmations set forth in
subsection (d) below are true, accurate and complete and the Director shall have
received the following on or before each such Escrow Disbursement Date:
(i) a Disbursement Request, duly completed and executed by the Company,
indicating the nature of each Allowable Innovation Cost incurred, the amount
thereof, that the Required Equity Contribution has been paid from retained
earnings and/or working capital of the Company and setting forth a date (which
must be a Business Day) not less than 10 days nor more than 25 days from the
date of the submission of the Disbursement Request, upon which the disbursement
is to be made;
(ii) a Cost Certification;
(iii) a written certification from the Company that certain technical
milestones set forth in Schedule 1.2 attached hereto have been met with respect
to the Project and that the Allowable Innovation Costs are capitalizable
expenses under generally accepted accounting principles, consistently applied;
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(iv) such other certifications, documents or opinions as the Director may
reasonably request; and
(v) in connection with the final Escrow Disbursement Date, the following
additional items:
(1) the items required by Section 3.5 hereof;
(2) if applicable, certificate of compliance issued by the Wage and Hour
Bureau of the Department of Commerce of the State, certifying as to full
compliance with Chapter 4115, Ohio Revised Code;
(3) Final Cost Certificate;
(4) certificate of occupancy, if applicable; and
(5) list of all contractors and subcontractors (names and addresses) who
worked on the Project, if applicable.
(c) If the items described in subsection 3.6(b) received by the Director are
deemed by it to be satisfactory in form, substance and execution and if the
Director shall have approved the disbursement of Escrow Funds as set forth in
the Disbursement Request, the Director shall instruct the Escrow Agent to
disburse the appropriate portion of the Escrow Funds to the Company and in the
amounts shown on the Disbursement Request.
(d) Each Disbursement Request shall be deemed an affirmation by the Company that
(i) the undisbursed portion of the Escrow Funds, after the requested
disbursement, together with the undisbursed portion of the Required Equity
Contribution, will be sufficient to complete the Project, (ii) the Project
Equipment which is described in the Disbursement Request has been delivered and
accepted by the Company, (iii) the representations and warranties of Company set
forth in the Loan Documents and the Loan Approval Documents remain true and
correct as of the date of the disbursement of Escrow Funds in accordance with
such Disbursement Request, (iv) no Event of Default shall have occurred as of
the date of the disbursement of Escrow Funds in accordance with such
Disbursement Request, (v) each item for which payment is requested hereunder is
an Allowable Innovation Cost, properly payable out of the Escrow Funds in
accordance with the terms and conditions of this Agreement and the other Loan
Documents; (vi) none of the items for which payment is requested had formed the
basis for any payment heretofore made from the Escrow Funds; and (vii) each item
for which payment is requested is necessary in connection with the Project.
(e) Upon the giving of written notice by the Director to the Escrow Agent that
no further disbursements of the Escrow Funds and/or interest accrued on the
Escrow Funds shall be made (whether due to the occurrence of an Event of Default
under the Loan Documents or upon the occurrence of such other event permitting
the Director to terminate disbursement as provided for herein), the Escrow Agent
shall not make any further disbursements of the Escrow Funds and/or such
19
accrued interest until the Escrow Agent is notified in writing by the Director
that either (i) such disbursements may resume, or (ii) the Escrow Agent shall
disburse all remaining Escrow Funds, together with all accrued interest thereon,
to the Director.
Section 3.7. Postponement of Escrow Disbursement Termination Date. At the
written request of the Company setting forth the reasons therefor and received
at least 20 days prior to the Escrow Disbursement Termination Date, the Director
may, but shall be under no obligation to, postpone the Escrow Disbursement
Termination Date to a later date. No such postponement shall be deemed to have
been granted unless stated in a writing signed by the Director specifying the
length of the extension given. If for any reason the Loan and the Escrow Funds
shall not have been fully disbursed on or before the Escrow Disbursement
Termination Date or such subsequent date as the Director shall have specified in
writing pursuant to the preceding sentence, the Director shall not have any
obligation to approve or permit any further disbursement of proceeds of the Loan
to the Escrow Account nor disbursement of Escrow Funds from the Escrow Account
to the Company. For purposes of this Section, time is of the essence.
Section 3.8. Payment of Costs; Indemnification.
(a) The Company shall pay all costs incident to the Loan, including, but not
limited to, recording fees, insurance fees, escrow fees and all costs and
expenses incurred by the Director.
(b) The Company shall, at its sole cost and expense, defend, indemnify and
hold the Director and any officials, employees, agents and representatives of
the Director and the State, its and their successors and assigns, harmless from
and against, and shall reimburse the Director and any officials, employees,
agents and representatives of the Director and the State, its and their
successors and assigns for, any and all loss, cost, claim, liability, damage,
judgment, penalty, injunctive relief, action or cause of action arising in
connection with or as the result of:
(i) any past, present or future existence, use, handling, storage,
transportation, manufacture, Release, threat of Release, or disposal of any
Hazardous Substance in, on or under the Project or the Project Site;
(ii) the occurrence of any Environmental Activity in violation of any
Environmental Requirement, or any failure of the Company or any operator of the
Project or Project Site to comply with all applicable Environmental Requirements
relating to the Project or the Project Site or the Use of the Project or the
Project Site;
(iii) any investigation, inquiry, order, hearing, action or other proceeding
by or before any Governmental Authority in connection with any Environmental
Activity occurring or allegedly occurring on or about the Project or the Project
Site;
20
(iv) any failure of any representation and/or warranty set forth herein or in
any other Loan Document to be correct in all respects;
(v) any failure of the Company to perform any covenant set forth herein or in
any other Loan Document;
(vi) any claim, demand or cause of action, or any action or other proceedings,
whether meritorious or not, brought or asserted against the Director and/or any
officials, employees, agents and representatives of the Director and the State,
its and their successors and assigns, which directly or indirectly relates to,
arises from or is based on any of the matters described in clauses (i) through
(v) of this Section 3.8(b) or any allegation of any such matters; or
(vii) the execution and delivery of this Agreement or any other Loan Documents
and the transactions contemplated thereby, and the preparation of documents
relating to the disbursement of the Loan, including all aforementioned costs and
expenses, regardless of whether or not the disbursement of the Loan shall
actually occur; and
(viii) the enforcement of this Agreement or the assertion by the Company of
any defense to its obligations hereunder. This indemnity and hold harmless
provision shall apply to all of clauses (i) through (viii) of this
Section 3.8(b) whether such events, acts or omissions are foreseeable or
unforeseeable, regardless of the source, the time of occurrence or the time of
discovery, and whether any of such matters arise before or after foreclosure of
the Security Documents or other taking of title to all or any portion of the
Project Site and/or the Project by the Director, its successors and/or assigns
(all of this preceding sentence hereinafter collectively referred to as a
“Loss”). The foregoing indemnification against Loss includes, without
limitation, indemnification against all costs in law or in equity of removal,
response, investigation, or remediation of any kind, and disposal of such
Hazardous Substances, all costs of determining whether the Project or the
Project Site is in compliance with, and of causing the Project or the Project
Site to be in compliance with, all applicable Environmental Requirements, all
reasonable costs incurred to take precautions to protect against the Release of
Hazardous Substances on, in, under or affecting the Project and the Project
Site, all reasonable costs associated with any Corrective Work, all reasonable
costs associated with claims for damages to persons, property, or natural
resources, any reasonable loss to the Director from the diminution in the value
of the Project or the Project Site, and the Director’s attorneys’ and
consultants’ fees, court costs and expenses incurred in connection with any
thereof.
(c) The provisions of this Section 3.8 shall survive the termination of this
Agreement.
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ARTICLE IV
Additional Covenants and Agreements
Section 4.1. Employment Statement; Job Creation. The Company shall furnish to
the Director upon request, but in any event not less frequently than
concurrently with the annual financial statements to be furnished pursuant to
Section 4.3(e)(ii) hereof, throughout the term of the Loan a statement
certifying (a) the number of employees of the Company employed on the Project as
of the date of the Application; (b) the number of employees of the Company
currently employed on the Project; (c) the number of any and all employees of
the Company laid off or terminated from the Project since the Closing Date;
(d) the current number of women and minority employees of the Company employed
on the Project; and (e) such other employment, economic and statistical data
concerning the Company as may be reasonably requested by the Director.
The Company has represented that the Loan will permit the Company to secure
twenty-five (25) not at-risk full-time jobs at the Project Site, and create an
estimated fifteen (15) new full-time jobs and employment opportunities at the
Project Site during the three-year period after the Completion Date. If the
Company fails, for reasons other than Market Conditions, to retain and create an
aggregate of at least twenty-five (25) such jobs and employment opportunities,
the interest rate on the outstanding balance of the Loan shall, at the option of
the Director, increase to ten percent (10%) per annum.
Section 4.2. Public Offering. The Loan and all other amounts payable by the
Company under this Agreement and the other Loan Documents shall be due and
payable in full if the Company shall undertake and complete an initial public
offering of its securities.
Section 4.3. Affirmative Covenants of the Company. Throughout the term of this
Agreement, the Company shall:
(a) Taxes and Assessments. Pay and discharge promptly, or cause to be paid and
discharged promptly, when due and payable, all taxes, assessments and
governmental charges, levies or claims imposed upon it, its income or any of its
property, or upon any part thereof, as well as all claims of any kind (including
claims for labor, materials and supplies) which, if unpaid, might by law become
a lien or charge upon its property.
Notwithstanding the preceding paragraph, the Company may, at the Company’s
expense and after prior notice to the Director, by appropriate proceedings
diligently prosecuted, contest in good faith the validity or amount of any such
taxes, assessments, governmental charges, levies and claims and during the
period of contest, and after notice to the Director, may permit the items so
contested to remain unpaid, provided that adequate reserves or other appropriate
provisions, if any, as shall be required by generally accepted accounting
principles shall have been made by the Company. However, if at any time the
Director shall notify the Company that, in the opinion of legal counsel
satisfactory to the Director, by nonpayment of any
22
such items the lien created by the Security Documents as to any part of the
Project, the Project Site and/or the Collateral will be materially affected or
the Project, the Project Site and/or the Collateral or any part thereof will be
subject to imminent loss or forfeiture, the Company shall promptly pay such
taxes, assessments, charges, levies or claims.
(b) Maintain Existence. Do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and its material rights
and franchises.
(c) Maintain Property. Maintain and keep its property in good repair, working
order and condition, and from time to time make all repairs, renewals and
replacements which, in the opinion of the Company, are necessary and proper so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, subject to the terms
of the Security Documents, that nothing in this subsection (c) shall prevent the
Company from selling or otherwise disposing of any property whenever, in the
good faith judgment of the Company, such property is obsolete, worn out, without
economic value or unnecessary for the conduct of the business of the Company.
(d) Maintain Insurance. Keep all of its insurable property insured against
loss or damage by fire and other risks, maintain public liability insurance
against claims for personal injury, death, or property damage suffered by others
upon, in or about any premises occupied by the Company; and maintain all such
worker’s compensation or similar insurance as may be required under the laws of
any state or jurisdiction in which it may be engaged in business. All insurance
for which provision has been made in this subsection (d) shall be maintained
against such risks and in at least such amounts as set forth in the Security
Documents, and all insurance herein provided for shall be effected and
maintained in force under a policy or policies issued by insurers of recognized
responsibility, except that it may effect worker’s compensation or similar
insurance in respect of operations in any state or other jurisdiction either
through an insurance fund operated by such state or other jurisdiction or by
causing to be maintained a system or systems of self-insurance which is in
accordance with applicable law.
(e) Furnish Information. Furnish to the Director:
(i) Quarterly Reports. Within 30 days after the end of each quarterly period
of each fiscal year of the Company, a copy of its prepared financial statements,
including the balance sheet of the Company as at the end of such quarterly
period, together with related statements of income, retained earnings and cash
flows for such quarterly period and for the period from the beginning of such
fiscal year to the end of such quarter, setting forth in comparative form the
corresponding figures as at the end of or for the corresponding quarter of the
previous fiscal year, all in reasonable detail, prepared in accordance with
generally accepted accounting principles applied on a consistent basis, subject
to usual year-end audit adjustments.
23
(ii) Annual Reports. Within 120 days after the end of each fiscal year of the
Company, a copy of its reviewed financial statements, including the balance
sheet of the Company as at the end of such fiscal year, together with related
statements of income, retained earnings and cash flows for such fiscal year,
setting forth in comparative form the corresponding figures as at the end of or
for the previous fiscal year, all in reasonable detail and all examined by and
accompanied by a review or opinion of its independent certified public
accountants to the effect that such financial statements were prepared in
accordance with the generally accepted accounting principles consistently
applied, and present fairly the Company’s financial position at the close of
such periods and the results of its operations for such periods.
(iii) Certificate; No Default. With each of the financial reports required to
be furnished under this Section, a certificate of the Company’s chief executive
officer or chief financial officer stating that (a) no Event of Default has
occurred and is continuing and no event or circumstance which would constitute
an Event of Default, but for the requirement that notice be given, time elapse
or otherwise, has occurred and is continuing, or, if such an Event of Default or
such event or circumstance has occurred and is continuing, a statement as to the
nature thereof and the action which the Company proposes to take with respect
thereto, and that (b) no action, suit or proceeding by it or against it at law
or in equity, or before any governmental instrumentality or agency, is pending
or threatened, which, if adversely determined, would materially impair the right
or ability of the Company to carry on the business which is contemplated in
connection with the Project or would materially impair the right or ability of
the Company to perform the transactions contemplated by this Agreement, the
other Loan Documents or would materially and adversely affect its business,
operations, properties, assets or condition, all as of the date of such
certificate, except as disclosed in such certificate.
(iv) Other Information. Such other information respecting the business,
properties or the condition or operations, financial or otherwise, of the
Company as the Director may reasonably request.
(f) Deliver Notice. Forthwith upon learning of any of the following, deliver
written notice thereof to the Director, describing the same and the steps being
taken by the Company with respect thereto:
(i) the occurrence of an Event of Default or an event or circumstance which
would constitute an Event of Default, but for the requirement that notice be
given, elapse of time or otherwise; or
24
(ii) any action, suit or proceeding by it or against it at law or in equity,
or before any governmental instrumentality or agency, instituted or threatened
which, if adversely determined, would materially impair the right or ability of
the Company to carry on the business which is contemplated in connection with
the Project or would materially impair the right or ability of the Company to
perform the transactions contemplated by the Loan Documents, or would materially
and adversely affect its business, operations, properties, assets or condition;
or
(iii) the occurrence of a Reportable Event under, or the institution of steps
by the Company to withdraw from, or the institution of any steps to terminate,
any Plan as to which the Company may have liability; or
(iv) any material communication affecting the Project, the Project Site or the
DCB Loan Documents, and the Company will promptly respond fully to any inquiry
of the Director made with respect thereto.
(g) Inspection Rights. Permit the Director, or any agents or representatives
thereof, to examine and make copies of and abstract from the records and books
of account of, and visit the properties of, the Company and discuss the general
business affairs of the Company with any of its officers.
(h) Purchases. Use its best efforts to purchase goods and services from
persons and business entities located in this State.
(i) Environmental Matters.
(i) Comply with all Environmental Requirements relating to the Project and the
Project Site or to the Use of the Project and the Project Site.
(ii) Notify the Director, within 15 days, if it commences to contest the
assertion of any Governmental Authority or any third party of any obligation or
liability affecting it or the Project, the Project Site or any part thereof
regarding an Environmental Activity or an Environmental Requirement, and, if
requested by the Director, shall give the Director monthly reports thereafter
during the period of such contest. If the Company contests the assertion of any
such obligation or liability, such contest shall be diligently prosecuted until
a final judgment is obtained. If such contest is unsuccessful, the Company shall
promptly commence Corrective Work. If the Company is not contesting the
assertion of any such obligation or liability, the Company shall commence
Corrective Work promptly after the Company obtains actual knowledge of any
Hazardous Substances on, in or affecting the Project or the Project Site.
25
(iii) Notify the Director prior to the commencement of any Corrective Work,
and shall promptly submit to the Director, for the Director’s review, reasonably
detailed plans for any such Corrective Work. If the Director, based upon the
proper advice and judgment of the Director’s experts, reasonably rejects such
plans, the Company shall promptly submit revised plans to the Director. The
Director shall have no liability to the Company or any third party for accepting
or rejecting such plans. After the commencement of Corrective Work, the Company
shall, if requested by the Director, give the Director monthly reports during
the performance of such Corrective Work.
(j) Operations; Chief Executive Office. Maintain its primary operations and
chief executive office in the State during the term of the Loan; if such
operations are not so maintained, the Loan and all other amounts payable by the
Company under the Agreement and Loan Documents shall be due and payable in full.
Prior to any change in the location of the Company’s primary operations and
chief executive office, Company shall obtain the written consent of the
Director, which consent may be given or withheld in the Director’s sole
discretion, and shall deliver to the Director a landlord waiver in form and
substance substantially similar to the Landlord Waiver delivered on the Closing
Date or a mortgage in form and substance satisfactory to the Director, as
applicable, and any other documents or agreements as Director requests and deems
necessary and advisable in its discretion to preserve and protect its security
interests granted under the Loan Documents and to exercise and enforce its
rights and remedies thereunder.
Section 4.4. Negative Covenants of the Company. Throughout the term of this
Agreement, the Company and its ERISA Affiliates shall not:
(a) Maintain Existence. Sell, transfer or otherwise dispose of all, or
substantially all, of its assets, consolidate with or merge into any other
entity, or permit one or more entities to consolidate with or merge into it;
provided, however, that the Company may, without violating the agreement
contained in this subsection (a), consolidate with or merge into another entity,
or permit one or more other entities to consolidate with or merge into it, or
sell, transfer or otherwise dispose of all, or substantially all, of its assets
and thereafter dissolve if: (i) the prior written consent of the Director is
obtained; (ii) the surviving, resulting or transferee entity, as the case may
be, assumes in writing all of the obligations of the Company hereunder (if such
surviving, resulting or transferee entity is other than the Company); and
(iii) the surviving, resulting or transferee entity, as the case may be, is an
entity duly organized and validly existing under the laws of the State or duly
qualified to do business therein, and has a net worth of not less than that of
the Company immediately prior to such disposition, consolidation or merger,
transfer or change of form.
(b)
ERISA. (i) Voluntarily terminate, or file a notice of intent to terminate, any
Plan maintained for employees of the Company or any ERISA Affiliate and covered
by Title IV of ERISA; (ii) adopt any amendment to a Plan that is treated as a
termination
26
under Section 4041 or 4041A of ERISA; (iii) withdraw from a Plan subject to
(as defined in Section 4001(a)(2) of ERISA) or have a cessation of operations
that is treated as such a withdrawal under Section 4062(e) of ERISA; (iv) enter
into any Prohibited Transaction involving any Plan; (v) cause the occurrence of
any Reportable Event for which the PBGC has not waived the requirement of
notice; (vi) cause a complete or partial withdrawal from a Multiemployer Plan or
receive notification that a Multiemployer Plan is in reorganization; (vii) allow
or suffer to exist commencement of proceedings by the PBGC to terminate a Plan
or Multiemployer Plan; (viii) allow to exist an event or condition that
appointment of a trustee to administer, any Plan or Multiemployer Plan;
(ix) cause the imposition of any liability under Title IV of ERISA on the
Company or any ERISA Affiliate, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA; or (x) allow or suffer to exist any
other event or condition that results in any material liability of the Company
or any ERISA Affiliate to the PBGC.
(c) Agreements. Enter into any agreement containing any provision which would
be violated or breached by the performance of its obligations hereunder or under
any instrument or document delivered or to be delivered by it hereunder or in
connection herewith.
(d) Assignment or Lease. In whole or in part, assign this Agreement or lease
or grant the right to occupy or use the Project to others, without the prior
written consent of the Director.
(e) Encumbered Assets. Pledge, assign, hypothecate or in any manner encumber
any of its assets excepting, however, pursuant to the Loan Documents and the DCB
Loan Documents.
(f) Removal of Assets. Remove, transfer or transport any of the Company’s
assets from the Project Site other than the operation of motor vehicles or the
shipment of goods in the ordinary course of business.
(g) Environmental Matters. Produce, treat, store, generate, dispose of or
Release any Hazardous Substance in violation of any Environmental Requirement.
(h) Suspension of Operation. Suspend or discontinue operation of its business.
(i) Stock Transfers. Issue, transfer, sell, or cause to be issued, transferred
or sold, any shares of its capital stock.
(j)
Leasebacks. Enter into any arrangements, directly or indirectly, with any person
whereby the Company shall sell or transfer any property, whether now owned or
hereafter acquired, used or useful in the Company’s business, in connection with
the
27
rental or lease or the property so sold or transferred or of other property
which the Company intends to use for substantially the same purpose or purposes
as the property so sold or transferred.
(k) Change of Business. Enter into any business which is substantially
different from that presently conducted by the Company without the written
consent of the Director.
(l) Zoning Changes. Initiate, approve or acquiesce to any change in or
modification to the zoning in effect for the Project Site or any portion thereof
without the prior written consent of the Director. The Company shall promptly
notify the Director of any such proposed change or modification stating in
reasonable detail the anticipated or proposed change and the manner in which
such change would affect the Company’s use and enjoyment of the Project Site, or
any part thereof. The Director shall have the right to participate in any and
all proceedings, judicial, administrative or otherwise, with respect to or in
any way affecting the Project Site, including, without limitation, zoning,
environmental and other matters.
(m) Modification of DCB Loan Documents. Enter into any modification, amendment
or alteration of any DCB Loan Document which changes the amount of the DCB Loan
or the payment schedule for the DCB Loan or which materially affects the rights
and interests of the Director as determined by the Director in its sole
discretion without the prior written consent of the Director.
(n) Shareholder Loans. The Company shall not receive, incur, or have
outstanding, any loan from any officer, director or holder of 5% or more of the
Company’s equity securities (present or future) (a “Shareholder Loan”), unless
such Shareholder Loan is subordinated to the Loan and all obligations owing to
Director pursuant to the Loan Documents. The Company shall promptly obtain and
deliver to Director an executed subordination agreement relating to any such
Shareholder Loan in form and content satisfactory to Director (a “Subordination
Agreement”). The Company shall not pay, or otherwise make a distribution as
satisfaction for, interest on any Shareholder Loan except to the extent as may
be permitted under the Subordination Agreement applicable thereto. Payments of
principal on Shareholder Loans shall not be made except to the extent as may be
permitted under the Subordination Agreement applicable thereto.
ARTICLE V
Events of Default and Remedies; Termination
Section 5.1. Events of Default. Each of the following shall be an “Event of
Default”:
(a) the Company shall fail to pay when due any amount payable pursuant to this
Agreement or under the Note; or
28
(b) failure by the Company to pay when due any other amounts to be so paid to
the Director under this Agreement or any Loan Document; or
(c) failure by the Company to observe and perform any term, covenant or
agreement contained in Section 4.1 hereof; or
(d) the Company shall fail to observe and perform any agreement, covenant,
term or condition contained in this Agreement (other than as required pursuant
to subsections (a), (b) and (c) above), and such failure continues for a period
of 30 days after the Company has knowledge thereof; provided, however, that such
30 day cure period shall not apply to (i) any failure which in the good faith
opinion of the Director is incapable of cure, (ii) any failure which has
previously occurred, or (iii) any failure to maintain and keep in effect any
insurance required by the Loan Documents; or
(e) any representation or warranty made by the Company (or any of its
officers) herein or in any other Loan Documents or Loan Approval Documents or in
connection herewith or therewith shall prove to have been incorrect in any
material respect when made; or
(f) the Company shall fail to pay any indebtedness of the Company, or any
interest or premium thereon, when due (whether by scheduled maturity, required
prepayment, by acceleration, on demand or otherwise), including, without
limitation, the DCB Loan Documents, and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such indebtedness; or any other default under any agreement or
instrument relating to any such indebtedness, including, without limitation, the
DCB Loan Documents, or any other event, shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such default or event is to accelerate, or to permit the
acceleration of, the maturity of such indebtedness; or any such indebtedness
shall be declared to be due and payable, or required to be prepaid (other than
by a regularly scheduled required prepayment), prior to the stated maturity
thereof; or
(g)
the Company commences a voluntary case concerning it under Title 11 of the
United States Code entitled “Bankruptcy” as now or hereafter in effect, or any
successor thereto (the “Bankruptcy Code”); or an involuntary case is commenced
against the Company under the Bankruptcy Code and relief is ordered against the
Company, or the petition is controverted but is not dismissed within 60 days
after the commencement of the case; or the Company is not generally paying its
debts as such debts become due; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of the Company; or the Company commences any other proceeding under any
reorganization, arrangement, readjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect; or there is commenced against the Company
any such proceeding which remains undismissed
29
for a period of 60 days; or the Company is adjudicated insolvent or bankrupt;
or the Company fails to controvert in a timely manner any such case under the
Bankruptcy Code or any such proceeding or any order of relief or other order
approving any such case or proceeding or in the appointment of any custodian or
the like of or for it or any substantial part of its property or suffers any
such appointment to continue undischarged or unstayed for a period of 60 days;
or the Company makes a general assignment for the benefit of creditors; or any
action is taken by the Company for the purpose of effecting any of the
foregoing; or a receiver or trustee or any other officer or representative of
the court or of creditors, or any court, governmental officer or agency, shall
under color of legal authority, take and hold possession of any substantial part
of the property or assets of the Company for a period in excess of 60 days; or
(h) a judgment or order for the payment of money in excess of One Hundred
Thousand Dollars ($100,000.00) shall be rendered against the Company and either
(i) enforcement proceedings shall have been commenced by any creditor upon such
judgment or order or (ii) there shall be any period of 30 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(i) the Company fails to meet its minimum funding requirements under
Section 301 et seq. of ERISA, with respect to any of its Plans; or
(j) any default in the observance or performance of any other covenant,
condition or provision (other than set forth above) under any other Loan
Document or the DCB Loan Documents shall have occurred and be continuing; or
(k) the Project is not completed by the Completion Date.
Section 5.2. Remedies on Default. Whenever an Event of Default shall have
occurred and be continuing, any one or more of the following remedial steps may
be taken:
(a) if none of the proceeds of the Loan has been disbursed into the Escrow
Account, the Director may terminate any and all of the Director’s obligations
under this Agreement and the Commitment;
(b) if the Loan has not been fully disbursed into the Escrow Account, the
Director may terminate any and all of the Director’s obligations under this
Agreement and the Commitment to make any further advance of proceeds of the Loan
into the Escrow Account;
(c) if the Escrow Funds have not been fully disbursed from the Escrow Account,
the Director may terminate any and all of the Director’s obligations under this
Agreement and the Commitment, to approve or permit any further disbursements
from the Escrow Account and at the request of the Director, all amounts then
held in the Escrow Account shall be disbursed to the Director;
30
(d) the Director may declare all payments under the Note to be immediately due
and payable, whereupon the same shall become immediately due and payable;
(e) the Director may exercise any or all or any combination of the remedies
specified in any Loan Document;
(f) the Director may have access to, inspect, examine and make copies of the
books and records, accounts and financial data of the Company; or
(g) the Director may pursue all remedies now or hereafter existing at law or
in equity to collect all amounts then due and thereafter to become due under
this Agreement, the Security Documents, the Note or any other Loan Documents, or
to enforce the performance and observance of any other obligation or agreement
of the Company under the Loan Documents.
Section 5.3. No Remedy Exclusive. No remedy conferred upon or reserved to the
Director by this Agreement is intended to be exclusive of any other available
remedy or remedies, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given under this Agreement, each other Loan
Document, or now or hereafter existing at law, in equity or by statute. No delay
or omission to exercise any right or power accruing upon any default shall
any such right and power may be exercised from time to time and as often as may
be deemed expedient. In order to entitle the Director to exercise any remedy
reserved to the Director in this Article, it shall not be necessary to give any
notice, other than such notice as may be expressly provided for herein or
required by law.
Section 5.4. Agreement to Pay Expenses and Attorneys’ Fees. If an Event of
Default shall occur and the Director shall incur expenses, including reasonable
attorney’s fees, in connection with the enforcement of this Agreement or any
other Loan Document, or the collection of sums due thereunder, the Company shall
reimburse the Director for the expenses so incurred upon demand. If any such
expenses are not so reimbursed, the amount thereof, together with interest
thereon from the date of demand for payment at the Interest Rate for Advances
(as defined in the Security Documents), shall constitute additional indebtedness
secured by the Security Documents, and in any action brought to collect such
indebtedness or to foreclose or enforce the Security Documents, the Director
shall be entitled to seek the recovery of such expenses in such action.
Section 5.5. No Waiver. No failure by the Director to insist upon the strict
performance by the Company of any provision hereof shall constitute a waiver of
the Director’s right to strict performance and no express waiver shall be deemed
to apply to any other existing or subsequent right to remedy the failure by the
Company to observe or comply with any provision hereof.
31
ARTICLE VI
Miscellaneous
Section 6.1. Term of Agreement. This Agreement shall be and remain in full force
and effect from the date of its delivery until (a) the termination of this
Agreement pursuant to Section 5.2(a)-(c) hereof or (b) such time as the Loan
shall have been fully repaid and all other sums payable by the Company under
this Agreement, the Security Documents, the Note and the other Loan Documents
shall have been paid.
Section 6.2. Notices. (a) All notices, certificates, requests or other
communications hereunder shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail, postage
prepaid, or sent by telecopier. The Company or the Director may, by notice given
hereunder, change a Notice Address or designate any further addresses to which
subsequent notices, certificates, requests or other communications shall be
sent. Notices sent by hand or overnight courier service, or mailed by certified
or registered mail, shall be deemed to have been given when received; notices
sent by telecopier shall be deemed to have been given when sent (except that, if
not given during normal business hours for the recipient, shall be deemed to
have been given at the opening of business on the next Business Day for the
provided in Section 6.2(b), shall be effective as provided in such Section.
(b) Notices and other communications hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by the Director. The Director or the Company
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it;
provided that approval of such procedures may be limited to particular notices
or communications. Unless the Director otherwise prescribes, (i) notices and
other communications sent to an e-mail address shall be deemed received upon the
written acknowledgement); provided that if such notice or other communication is
the next Business Day for the recipient, and (ii) notices or communications
Section 6.3. Extent of Covenants of the Director; No Personal Liability. All
covenants, obligations and agreements of the Director contained in this
Agreement and all other Loan Documents shall be effective to the extent
authorized and permitted by applicable law. No such covenant, obligation or
agreement shall be deemed to be a covenant, obligation or agreement of any
present or future Director in other than such Director’s official capacity
acting pursuant to the Act.
32
Section 6.4. Binding Effect. This Agreement shall inure to the benefit of and
shall be binding in accordance with its terms upon the Director, the Company and
their respective successors and assigns; provided, however, the Company may not
assign this Agreement or any of the Loan Documents without the prior written
Section 6.5. Amendments and Supplements. This Agreement may not be amended or
supplemented except by an instrument in writing executed by the Director and the
Company.
Section 6.6. Execution Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be regarded as an original and all
of which shall constitute but one and the same instrument.
Section 6.7. Severability. If any provision of this Agreement, or any covenant,
obligation or agreement contained herein, is determined by a court to be invalid
or unenforceable, such determination shall not affect any other provision,
covenant, obligation or agreement, each of which shall be construed and enforced
as if such invalid or unenforceable provision were not contained herein. Such
invalidity or unenforceability shall not affect any valid and enforceable
application thereof, and each such provision, covenant, obligation or agreement,
shall be deemed to be effective, operative, made, entered into or taken in the
manner and to the full extent permitted by law.
Section 6.8. Captions; Entire Agreement. The captions and headings in this
Agreement shall be solely for convenience of reference and shall in no way
define, limit or describe the scope or intent of any provisions or sections of
this Agreement. All exhibits and schedules to this Agreement shall be annexed
hereto and shall be deemed to be part of this Agreement. This Agreement and the
exhibits and schedules attached hereto and the Loan Documents embody the entire
agreement and understanding between the Director and the Company and supersede
all prior agreements and understandings relating to the subject matter hereof.
Section 6.9. Interpretation. This Agreement shall be deemed to have been
prepared jointly by the parties hereto and any uncertainty or ambiguity existing
herein shall not be interpreted against any party but shall be interpreted
according to the rules for the interpretation of arm’s length agreements.
Section 6.10 WAIVER OF JURY TRIAL. THE COMPANY AND THE DIRECTOR, AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER OF THEM MAY HAVE TO A TRIAL
BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS LOAN AGREEMENT, THE
NOTE, THE SECURITY DOCUMENTS, OR ANY RELATED INSTRUMENT OR AGREEMENT, OR ANY OF
THE TRANSACTIONS CONTEMPLATED THEREBY, OR ANY COURSE OF CONDUCT, DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF ANY OF THEM. THIS WAIVER
SHALL NOT IN ANY WAY AFFECT THE DIRECTOR’S ABILITY TO PURSUE REMEDIES PURSUANT
TO ANY CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED IN THE NOTE, IN
ANY LOAN DOCUMENT OR ANY RELATED INSTRUMENT OR AGREEMENT. NEITHER THE COMPANY
NOR THE DIRECTOR SHALL
33
SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY ACTION IN WHICH A JURY
TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR
HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED
IN ANY RESPECT OR RELINQUISHED BY THE COMPANY OR THE DIRECTOR EXCEPT BY A
WRITTEN INSTRUMENT EXECUTED BY BOTH OF THEM.
Section 6.11. Governing Law. This Agreement shall be deemed to be a contract
made under the laws of the State and for all purposes shall be governed by and
construed in accordance with the laws of the State.
34
IN WITNESS WHEREOF, this Loan Agreement has been executed and delivered as of
the date hereinbefore written.
DIRECTOR OF DEVELOPMENT of the State of Ohio, acting for and on behalf of the
State of Ohio By: /s/ Christiane Schmenk Christiane Schmenk
Chief Legal Counsel
INTELLINETICS, INC., an Ohio corporation By: /s/ Matthew L. Chretien
Matthew L. Chretien, President
EXHIBIT A
(to Loan Agreement between the Director of Development of the State of Ohio
and Intellinetics, Inc., dated June 3, 2011)
Form of Note
COGNOVIT PROMISSORY NOTE
$ 750,000 June 3, 2011
For value received, Intellinetics, Inc., an Ohio corporation (the “Company”),
promises to pay to the order of the Director of Development of the State of Ohio
(the “Director”), at Strategic Business Investment Division, 77 South High
Street, 28th Floor, P.O. Box 1001, Columbus, Ohio 43216-1001, or at such other
address as may be designated in writing by the Director, the principal sum of
Seven Hundred and Fifty Thousand Dollars ($750,000), or such amount thereof as
shall be disbursed to the Company, with interest on the amount of principal from
time to time outstanding from the first Escrow Funding Date as specified under
and defined in the Loan Agreement between the Director and the Company dated as
of June 3, 2011 (the “Loan Agreement”), at the rate of one percent (1%) per
annum during the twelve months next succeeding the first Escrow Funding Date,
and thereafter at the rate of seven percent (7%) per annum until paid, subject
to adjustment as set forth in the Loan Agreement or herein. Interest on this
Note shall be paid in monthly installments, which shall be due and payable on
the first day of each calendar month, commencing with the first day of July,
2011 (the “First Interest Payment Date”) and such amount shall include interest
accrued thereon from the first Escrow Funding Date to the First Interest Payment
Date. The principal of this Note shall be paid in sixty (60) consecutive monthly
installments in the amounts set forth on Schedule A attached hereto, each plus
interest thereon, which shall be due and payable on the first day of each
calendar month commencing on the first day of July 1, 2013 (the “First
Installment Date”) and ending on June 1, 2018 (the “Last Installment Date”) and
the amount of the installment payable on the Last Installment Date shall be
equal to the balance of the principal sum outstanding, together with interest
accrued thereon and yet unpaid. In addition, the Company promises to pay to the
order of the Director a monthly service fee equal to one-twelfth (1/12) of one
percent (1.0%) of the principal balance outstanding from time to time under this
Note (the “Service Fee”), and such Service Fee shall be due and payable on the
first day of each calendar month commencing on the first day of the second month
after the first Escrow Funding Date and continuing each following month until
and including the Last Installment Date.
In addition to all other payments required hereunder, upon maturity of the Loan
(as defined in the Loan Agreement) whether at scheduled maturity, by
acceleration or otherwise, the Company shall pay to the Director a loan
participation fee equal to 10% of the dollar amount of the Loan actually funded;
provided, however, if the Loan is prepaid in full prior to Last Installment
Date, the loan participation fee shall be paid to the Director at the time of
such prepayment.
This Note does not of itself constitute a commitment by the Director to make any
disbursement of the Loan (as defined in the Loan Agreement) to the Company. The
conditions for making such a disbursement are set forth in the Loan Agreement.
The disbursements made by the Director to the Company shall not exceed the face
amount of this Note and the total amount of such disbursement is limited by and
subject to the conditions for making disbursement of the Loan as set forth in
the Loan Agreement.
The annual rate of interest stated herein shall apply to a 360-day period, and
amounts of interest due hereunder shall be computed upon the basis of 30-day
months. Installments of principal, interest and monthly service fee shall be
applied first to monthly service fee, then interest as provided herein and the
balance to principal due hereunder.
The Company may prepay all or any portion of the principal sum hereof at any
time without penalty. All such prepayments shall be applied to the payment of
the principal installments due hereon in the inverse order of their maturity,
and shall be accompanied by the payment of accrued interest and monthly service
fee on the amount of the prepayment to the date thereof.
The payment of this Note and all interest and monthly service fees hereon is
secured by a Security Agreement, Intercreditor Agreement, and UCC Financing
Statements (collectively, the “Security Documents”). The covenants, conditions
and agreements contained in the Security Documents and the Loan Agreement are
hereby made a part of this Note.
The Company, each endorser and any other party liable on this Note severally
waives demand, presentment, notice of dishonor and protest.
If default be made in the payment of any installment of principal, interest
and/or monthly service fee under this Note when any such payment shall have
become due and payable, or if an “Event of Default,” as defined in the Loan
Agreement or the Security Documents, shall have occurred and be subsisting,
then, at the option of the Director, the entire principal sum payable hereunder
and all interest and monthly service fees accrued thereon shall become due and
payable at once, without demand or notice.
To the extent permitted by law, upon the occurrence of an Event of Default and
until such time such Event of Default shall have been cured or waived, the rate
of interest under this Note and on any obligation of the Company under the Loan
Documents shall be increased to ten percent (10%) per annum.
THE COMPANY AND THE DIRECTOR, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO
CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT
EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR
ARISING OUT OF THIS NOTE, THE LOAN AGREEMENT, THE SECURITY DOCUMENTS, OR ANY
RELATED INSTRUMENT OR AGREEMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREBY, OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN), OR ACTIONS OF EITHER OF THEM. THIS WAIVER SHALL NOT IN ANY WAY AFFECT
THE DIRECTOR’S ABILITY TO PURSUE REMEDIES PURSUANT TO ANY CONFESSION OF JUDGMENT
OR COGNOVIT PROVISION CONTAINED HEREIN, IN THE LOAN AGREEMENT, THE SECURITY
DOCUMENTS OR ANY RELATED INSTRUMENT OR AGREEMENT. NEITHER THE COMPANY NOR THE
DIRECTOR SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY ACTION IN
WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL
CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE
2
DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY THE COMPANY OR
THE DIRECTOR EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY BOTH OF THEM.
The Company hereby irrevocably authorizes any attorney-at-law, including any
attorney-at-law employed or retained by the Director, to appear for it in any
action on this Note at any time after the same becomes due as herein provided,
in any court of record situated in Franklin County, Ohio (which the Company
acknowledges to be the place where this Note was signed), or in the county where
the Company then resides or can be found, to waive the issuing and service of
process, and confess a judgment in favor of the Director or other holder of this
Note against the Company for the amount that may then be due, with interest at
the rate provided for herein, together with the costs of suit, and to waive and
release all errors in said proceedings and the right to appeal from the judgment
rendered. The Company consents to the jurisdiction and venue of such court. The
Company waives any conflict of interest that any attorney-at-law employed or
retained by the Director may have in confessing judgment hereunder and consents
to the payment of a legal fee to any attorney-at-law confessing judgment
hereunder.
This Note was executed in Columbus, Ohio, and shall be construed in accordance
with the laws of Ohio.
WARNING—BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL.
IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR
PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU
REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED
GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY
OTHER CAUSE.
INTELLINETICS, INC., an Ohio corporation By: Matthew L. Chretien,
President
This Note is subject to the terms and conditions of a certain Intercreditor
Agreement of even date herewith between the Director and The Delaware County
Bank and Trust Company.
3
EXHIBIT B
Project Equipment
NONE
EXHIBIT C
Project Intangible Facilities
•
Redactivue v2.0 Platform
¡
Redactivue End User Client Module
¡
Redactivue Administrative Tools
•
Host Site Manager
•
Analyst’s Tool/Template Builder
¡
Redactivue Import Services Module
•
Inbound image processing
•
Inbound image capture
¡
Redactivue Export Services
•
Configurable data export
•
Product Specific Connectors
¡
Web Services
•
ICM expansion to support Redactivue v2.0 features
1
SCHEDULE 1.2
Schedule of Development
• Redactivue v2.0 Platform
¡ Redactivue End User Client Module
9/1/2011—1/1/2012
¡ Redactivue Administrative Tools
6/1/2011—4/1/2011
• Host Site Manager
• Analyst’s Tool /Template Builder
¡ Redactivue Import Services Module
6/1/2011—4/1/2012
• Inbound image processing
• Inbound image capture
¡ Redactivue Export Services
9/1/2011—4/1/2012
• Configurable data export
• Product Specific Connectors
¡ Web Services
• ICM expansion to support Redactivue v2.0 features
|
Exhibit 23.1 Consent of Independent Registered Public Accounting Firm We consent to the reference to our firm under the caption "Experts" in this Registration Statement (Form S-3) and related Preliminary Prospectus of National Technical Systems, Inc. for the registration of 1,233,333 shares of its common stock and to the incorporation by reference therein of our report dated May 2, 2011, with respect to the consolidated financial statements and schedule of National Technical Systems, Inc. included in its Annual Report (Form 10-K) for the year ended January 31, 2011, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP Los Angeles, California July 7, 2011
|
Exhibit 10.1
WINDSTREAM CORPORATION
AMENDED AND RESTATED 2006 EQUITY INCENTIVE PLAN
2011 PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT
Summary of Restricted Stock Unit Award
As of the Date of Grant set forth below, Windstream Corporation, a Delaware
corporation (the “Company”), grants to the Grantee named below, in accordance
with the terms of the Windstream Corporation Amended and Restated 2006 Equity
Incentive Plan (the “Plan”) and this Restricted Stock Unit Agreement (the
“Agreement”), the contingent right to receive all, a portion or a multiple of
the Target Number of Restricted Stock Units set forth below:
Name of Grantee:
Target Number of Restricted Stock Units:
Date of Grant: February 8, 2011
Terms of Agreement
1. Grant of Restricted Stock Units. Subject to and upon the terms, conditions,
and restrictions set forth in this Agreement and in the Plan, the Company hereby
grants to the Grantee as of the Date of Grant this Performance-Based Restricted
Stock Unit Award, which represents the contingent right to receive all, a
portion, or a multiple of the Target Number of Restricted Stock Units (the
“Restricted Stock Units”) set forth herein. Each Restricted Stock Unit shall
represent the right to receive one Common Share and shall at all times be equal
in value to one Common Share.
2. Right to Receive Payment.
(a) In General.
(i) The Grantee shall vest in all or a portion of the Target Number of
Restricted Stock Units allocated to a fiscal year listed below, based upon the
extent to which the Company achieves the OIBDA Performance Goal (as defined
below) for the applicable fiscal year in accordance with the performance matrix
attached hereto as Appendix A (the “Performance Matrix”); provided that the
Grantee shall have remained in the continuous employ of the Company or a
Subsidiary through the applicable vesting date set forth below (each a “Vesting
Date”):
Applicable
Fiscal Year Percentage of Target
Restricted Stock Units
Allocated to such
Fiscal Year Vesting Date 2011 Fiscal Year 33 1/3% February 15, 2012
2012 Fiscal Year 33 1/3% February 15, 2013 2013 Fiscal Year 33 1/3%
February 15, 2014
(ii) Notwithstanding the provisions of Section 2(a), the Target Number of
Restricted Stock Units covered by this Agreement (and not previously vested
under Section 2(a) or forfeited under Section 3) shall immediately become vested
(without regard to whether the OIBDA Performance Goals have been satisfied) if,
prior to the applicable Vesting Date, the Grantee (A) dies or becomes
permanently disabled (as determined by the Committee) while in the employ of the
Company or a Subsidiary, or (B) the Grantee’s employment with the Company and
its Subsidiaries is terminated without Cause (as defined in Section 20), or the
Grantee terminates his employment with the Company or a Subsidiary for Good
Reason (as defined in Section 20), in each case within the two year period
immediately following a Change in Control.
(iii) For purposes of this Agreement, the OIBDA Performance Goal for the 2011
fiscal year shall be based on the Company’s operating income before depreciation
and amortization (“OIBDA”) and shall be $2,023 million. With respect to each of
the 2012 and 2013 fiscal years, the Compensation Committee of the Board (the
“Committee”) shall establish in writing and communicate to the Grantee the
applicable OIBDA Performance Goal for each such fiscal year not later than 90
days following the beginning of the applicable year. OIBDA shall be calculated
as operating income, plus depreciation and amortization expense, all of which
shall be determined in accordance with generally accepted accounting principles.
However, the calculation of OIBDA shall exclude items of gain, income, loss or
expense that are determined to be (i) extraordinary or unusual in nature or
infrequent in occurrence, (ii) adjustments as necessary to take into
consideration results of operations from acquired or disposed properties such
that OIBDA performance is determined on a pro forma basis, consistent with the
Company’s quarterly external earnings releases, (iii) related to a change in
accounting principle, or (iv) non-cash expense related to a pension or equity
compensation awards. The Committee may, in its sole discretion, and without the
consent of the Grantee or any other person, increase (but not decrease) the
levels of required achievement for an OIBDA Performance Goal with respect to any
fiscal year to reflect a change in business operations or acquired properties.
(b) Additional Payout Opportunity. Notwithstanding the foregoing provisions of
this Section 2, if the Committee determines that (i) the Company has achieved at
least 90% of the OIBDA Performance Goal with respect to each of the 2011, 2012
and 2013 fiscal years, and (ii) the Company has achieved the Revenue Growth
Performance Goal (as defined below) for the period from January 1, 2011 through
December 31, 2013, then the Grantee shall vest in an additional number of
Restricted Share Units equal to 50% of the Target Number of Restricted Stock
Units, provided that the Grantee shall have remained in the continuous employ of
the Company or a Subsidiary through February 15, 2014. For purposes of this
Agreement, the
2
Revenue Growth Performance Goal shall be achieved if the Company has a positive
average annual revenue growth for the three-year period described above. For
purposes of this Section 2(e), the Company’s revenues shall be determined in
accordance with generally accepted accounting principles. However, the Company’s
revenues shall be determined by excluding items of revenue, gain and income that
are determined to be (i) extraordinary or unusual in nature or infrequent in
occurrence, (ii) related to a change in accounting principle, or (iii) related
to the least cost routing initiative currently undertaken which reduces the
Company’s switch access revenue with a corresponding reduction in
interconnection expense by maximizing the use of the Company’s network to
transport switched traffic. The Committee may, in its sole discretion, and
without the consent of the Grantee or any other person, increase (but not
decrease) the level of required achievement for the Revenue Growth Performance
Goal to reflect a change in business operations or acquired properties.
(c) Adjustment of Performance Goals. If the Committee determines that a change
in the business, operations, corporate structure or capital structure of the
Company, the manner in which it conducts business or other events or
circumstances render any of the Performance Goals to be unsuitable, the
Committee may modify such Performance Goal or the level of achievement, in whole
or in part, as the Committee deems appropriate; provided, however, that no such
action may result in the loss of the otherwise available exemption of the
Restricted Stock Units under Section 162(m) of the Code.
3. Forfeiture.
(a) In General. The Restricted Stock Units that have not yet vested pursuant to
Section 2(a) (and any right to unpaid Dividend Equivalents under Section 7 with
respect to the Restricted Stock Units) shall be forfeited automatically without
further action or notice (i) except as otherwise provided pursuant to
Section 2(a)(ii), to the extent that the OIBDA Performance Goal for a fiscal
year has not been achieved, but only with respect to the percentage of the
Target Number of Restricted Stock Units allocated to such fiscal year; or
(ii) in the event the Grantee ceases to be employed by the Company or a
Subsidiary other than as provided in Section 2(a)(ii).
(b) Additional Payout Opportunity. If either (i) the Company fails to achieve at
least 90% of the OIBDA Performance Goal with respect to any of the 2011, 2012
and 2013 fiscal years, (ii) the Company fails to achieve the Revenue Growth
Performance Goal for the three-year period ending December 31, 2013, or
(iii) the Grantee fails to remain in the continuous employ of the Company or a
Subsidiary through February 15, 2014 for any reason or no reason, then in each
case the Grantee shall forfeit his or her right to the additional payout
opportunity set forth in this Section 2(b) without further action or notice.
4. Payment of Restricted Stock Units.
(a) In General. Except as may be otherwise provided in this Section 4, the
Company shall deliver to the Grantee (or the Grantee’s estate in the event of
death) the Shares underlying the vested Restricted Stock Units within sixty
(60) days after the date that they become vested in accordance with Section 2.
3
(b) Special Payment Terms. To the extent that the Grantee’s right to receive
payment of the Restricted Stock Units constitutes a “deferral of compensation”
within the meaning of Section 409A of the Code, then notwithstanding
Section 4(a), the Shares underlying the Restricted Stock Units that become
vested pursuant to Section 2(a)(ii), if any, shall be subject to the following
rules:
(i) Except as provided in Section 4(b)(ii), the Shares underlying the Restricted
Stock Units that become vested pursuant to Section 2(a)(ii) shall be delivered
to the Grantee (or the Grantee’s estate in the event of death) within sixty
(60) days after the earlier of (x) the Grantee’s “separation from service”
within the meaning of Section 409A of the Code; or (y) the Vesting Date next
following the date that the Restricted Stock Units become vested pursuant to
Section 2(a)(ii).
(ii) If the Restricted Stock Units become payable as a result of
Section 4(b)(i)(x), and the Grantee is a “specified employee” at that time
within the meaning of Section 409A of the Code (as determined pursuant to the
Company’s policy for identifying specified employees), then to the extent
required to comply with Section 409A of the Code, the Shares shall instead be
delivered to the Grantee within sixty (60) days after the first business day
that is more than six months after the date of his or her separation from
service (or, if the Grantee dies during such six-month period, within ninety
(90) days after the Grantee’s death).
(c) Satisfaction of the Company’s Obligations. The Company’s obligations with
respect to the Restricted Stock Units shall be satisfied in full upon the
delivery of the Shares underlying the Vested Restricted Stock Units.
5. Transferability. The Restricted Stock Units may not be sold, exchanged,
assigned, transferred, pledged, encumbered or otherwise disposed of by the
Grantee, unless otherwise provided under the Plan. Any purported transfer or
encumbrance in violation of the provisions of this Section 5 shall be void, and
the other party to any such purported transaction shall not obtain any rights to
or interest in such Restricted Stock Units.
6. No Dividend, Voting or Other Rights. The Grantee shall not possess any
incidents of ownership (including, without limitation, dividend and voting
rights) in the Common Shares underlying the Restricted Stock Units credited to
his or her account until such Common Shares have been delivered to the Grantee
in accordance with Section 4. The obligations of the Company under this
Agreement will be merely that of an unfunded and unsecured promise of the
Company to deliver Common Shares (and pay Dividend Equivalents as defined in
Section 7) in the future, and the rights of the Grantee will be no greater than
that of an unsecured general creditor. No assets of the Company will be held or
set aside as security for the obligations of the Company under this Agreement.
7. Dividend Equivalents. Upon payment of a vested Restricted Stock Unit, the
Grantee shall be entitled to a cash payment equal to the aggregate cash
dividends declared and paid or payable with respect to one (1) Common Share for
each record date that occurs during the period beginning on the Date of Grant
and ending on the date the vested Restricted Stock Unit is paid (the “Dividend
Equivalent”). The Dividend Equivalents shall be forfeited to the extent that the
underlying Restricted Stock Unit is forfeited and shall be paid to the Grantee,
if at all, at the same time that the related vested Restricted Stock Unit is
paid to the Grantee in accordance with Section 4.
4
8. Continuous Employment. For purposes of this Agreement, the continuous
employment of the Grantee with the Company and its Subsidiaries shall not be
deemed to have been interrupted, and the Grantee shall not be deemed to have
ceased to be an employee of the Company and its Subsidiaries, by reason of the
transfer of his employment among the Company and its Subsidiaries or a leave of
absence approved by the Committee.
9. No Employment Contract; Disclaimer. Nothing contained in this Agreement shall
confer upon the Grantee any right with respect to continuance of employment by
the Company and its Subsidiaries, nor limit or affect in any manner the right of
the Company and its Subsidiaries to terminate the employment or adjust the
compensation of the Grantee, in each case with or without Cause. By acceptance
of this Agreement, the Grantee acknowledges and agrees that neither this
Agreement nor any other agreement awarded prior to the date hereof under any
equity compensation plan of the Company or its subsidiaries has created or shall
create, or be deemed or construed to create or have created, (i) a contractual,
equitable, or other right to receive future grants of equity awards, or other
benefits in lieu of equity awards, or (ii) a fiduciary duty or other comparable
duty of trust or confidence owed to the Grantee (or any successor, assign,
affiliate or family member of the Grantee) by the Company and its affiliates and
their respective officers, directors, employees, agents or contractors.
10. Relation to Other Benefits. Any economic or other benefit to the Grantee
under this Agreement or the Plan shall not be taken into account in determining
any benefits to which the Grantee may be entitled under any profit-sharing,
retirement or other benefit or compensation plan maintained by the Company or a
Subsidiary and shall not affect the amount of any life insurance coverage
available to any beneficiary under any life insurance plan covering employees of
the Company or a Subsidiary.
11. Taxes and Withholding. The Grantee is responsible for any federal, state,
local or other taxes with respect to the Restricted Stock Units (including the
vesting of the Restricted Stock Units, the receipt of Common Shares and the
receipt of Dividend Equivalents). The Company does not guarantee any particular
tax treatment or results in connection with the grant or vesting of the
Restricted Stock Units, the delivery of Common Shares or the payment of Dividend
Equivalents. To the extent the Company or any Subsidiary is required to withhold
any federal, state, local, foreign or other taxes in connection with the
delivery of Common Shares under this Agreement, the Grantee shall pay the tax or
make provisions that are satisfactory to the Company or such Subsidiary for the
payment thereof. The Grantee may elect (on a form provided by the Company) for
the Company or Subsidiary (as applicable) to retain a number of Common Shares
otherwise deliverable hereunder with a value equal to the required withholding
(based on the Market Value of the Common Shares on the date of delivery) in
order to satisfy the withholding obligation; provided that in no event shall the
value of the Common Shares retained exceed the minimum amount of taxes required
to be withheld or such other amount that will not result in a negative
accounting impact. If the Company or any Subsidiary is required to withhold any
federal, state, local or other taxes at any time other than upon delivery of
Common Shares under this Agreement, then the Company or Subsidiary (as
applicable) shall have the right in its sole discretion to (a) require the
Grantee to pay or provide for payment of the required tax
5
withholding, or (b) deduct the required tax withholding from any amount of
salary, bonus, incentive compensation or other amounts otherwise payable in cash
to the Grantee (other than deferred compensation subject to Section 409A of the
Code). If the Company or any Subsidiary is required to withhold any federal,
state, local or other taxes with respect to Dividend Equivalents, then the
Company or Subsidiary (as applicable) shall have the right in its sole
discretion to reduce the cash payment related to the Dividend Equivalent by the
applicable tax withholding.
12. Compliance with Law. The Company shall make reasonable efforts to comply
with all applicable federal and state securities laws and listing requirements
of the NASDAQ or any national securities exchange with respect to the Restricted
Stock Units; provided, however, notwithstanding any other provision of this
Agreement, the Restricted Stock Units shall not be delivered if the delivery
thereof would result in a violation of any such law or listing requirement.
13. Amendments. Subject to the terms of the Plan, the Committee may modify this
Agreement upon written notice to the Grantee. Any amendment to the Plan shall be
deemed to be an amendment to this Agreement to the extent that the amendment is
applicable hereto. Notwithstanding the foregoing, and except as specifically
provided in Sections 2(a)(iii) and 2(b), no amendment of the Plan or this
Agreement shall adversely affect the rights of the Grantee under this Agreement
without the Grantee’s consent.
14. Severability. In the event that one or more of the provisions of this
Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
15. Claw-Back Policy. Notwithstanding any provision contained herein to the
contrary, this Agreement, the Restricted Stock Units and any Common Shares that
the Grantee may receive pursuant to this Agreement, are subject to the
Windstream Corporation Claw-Back Policy that was adopted in November 2009, as it
may be amended from time to time, or any successor policy (the “Policy”), and
the Claw-Back Policy Acknowledgement and Agreement that the Grantee signed in
accordance with the Policy (the “Claw-Back Agreement”).
16. Relation to Plan. This Agreement is subject to the terms and conditions of
the Plan. This Agreement, the Policy, the Claw-Back Agreement and the Plan
contain the entire agreement and understanding of the parties with respect to
the subject matter contained in this Agreement, and supersede all prior written
or oral communications, representations and negotiations in respect thereto. In
the event of any inconsistency between the provisions of this Agreement and the
Plan, the Plan shall govern. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Plan. The Compensation Committee
of the Board acting pursuant to the Plan, as constituted from time to time,
shall, except as expressly provided otherwise herein, have the right to
determine any questions which arise in connection with the grant of the
Restricted Stock Units.
6
17. Successors and Assigns. Without limiting Section 5, the provisions of this
Agreement shall inure to the benefit of, and be binding upon, the successors,
administrators, heirs, legal representatives and assigns of the Grantee, and the
successors and assigns of the Company.
18. Governing Law. The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Delaware, without giving
effect to the principles of conflict of laws thereof.
19. Electronic Delivery. The Grantee hereby consents and agrees to electronic
delivery of any documents that the Company may elect to deliver (including, but
not limited to, prospectuses, prospectus supplements, grant or award
notifications and agreements, account statements, annual and quarterly reports,
and all other forms of communications) in connection with this and any other
award made or offered under the Plan. The Grantee understands that, unless
earlier revoked by the Grantee by giving written notice to the Secretary of the
Company, this consent shall be effective for the duration of the Agreement. The
Grantee also understands that he or she shall have the right at any time to
request that the Company deliver written copies of any and all materials
referred to above at no charge. The Grantee hereby consents to any and all
procedures the Company has established or may establish for an electronic
signature system for delivery and acceptance of any such documents that the
Company may elect to deliver, and agrees that his or her electronic signature is
signature. The Grantee consents and agrees that any such procedures and delivery
may be effected by a third party engaged by the Company to provide
administrative services related to the Plan.
20. Definitions. Where used herein, the terms “Cause” and “Good Reason” shall
have the meanings given to such terms in the employment agreement or change in
control agreement in effect for the Grantee immediately prior to his termination
of employment, or if none is in effect at that time, such terms shall be defined
as follows:
(a) “Cause” shall mean the occurrence of any one of the following: (i) the
willful failure by the Grantee substantially to perform the Grantee’s duties
with the Company or a Subsidiary, other than any failure resulting from the
Grantee’s incapacity due to physical or mental illness, that continues for at
least 30 days after the Board delivers to the Grantee a written demand for
performance that identifies specifically and in detail the manner in which the
Board believes that the Grantee willfully has failed substantially to perform
the Grantee’s duties or (ii) the willful engaging by the Grantee in misconduct
that is demonstrably and materially injurious to the Company or any Subsidiary,
monetarily or otherwise. For purposes of this definition, no act, or failure to
act, on the Grantee’s part shall be deemed “willful” unless done, or omitted to
be done, by the Grantee not in good faith and without reasonable belief that the
Grantee’s act, or failure to act, was in the best interest of the Company and
its Subsidiaries.
(b) “Good Reason” shall mean the occurrence, without the Grantee’s express
written consent, of any one of the following: (i) the assignment to the Grantee
of any duties inconsistent with the Grantee’s status as an executive officer of
the Company or of a Subsidiary or a substantial adverse alteration in the nature
or status of the Grantee’s responsibilities from those in
7
effect immediately prior to the Change in Control; (ii) a reduction by the
Company in the Grantee’s annual base salary to any amount less than the
Grantee’s annual base salary as in effect immediately prior to the Change in
Control; (iii) the relocation of the principal executive offices of the Company
or of a Subsidiary, as the case may be, to a location more than 35 miles from
the location of such offices immediately prior to the Change in Control or the
Company’s requiring the Grantee to be based anywhere other than the principal
executive offices of the Company or of a Subsidiary as the case may be, except
for required business travel to an extent substantially consistent with the
Grantee’s business travel obligations immediately prior to the Change in
Control; (iv) the failure by the Company to pay to the Grantee any portion of
the Grantee’s current compensation, or to pay to the Grantee any deferred
compensation under any deferred compensation program of the Company, within five
days after the date the compensation is due or to pay or reimburse the Grantee
for any expenses incurred by him for required business travel; (v) the failure
by the Company to continue in effect any compensation plan in which the Grantee
participates immediately prior to the Change in Control that is material to the
Grantee’s total compensation, including but not limited to, stock option,
restricted stock, stock appreciation right, incentive compensation, bonus, and
other plans, unless an equitable alternative arrangement embodied in an ongoing
substitute or alternative plan has been made, or the failure by the Company to
continue the Grantee’s participation therein (or in a substitute or alternative
plan) on a basis not materially less favorable, both in terms of the amount of
compensation provided and the level of the Grantee’s participation relative to
other participants, than existed immediately prior to the Change in Control; or
(vi) the failure by the Company to continue to provide the Grantee with benefits
substantially similar to those enjoyed by the Grantee under any of the Company’s
pension, profit-sharing, life insurance, medical, health and accident,
disability, or other employee benefit plans in which the Grantee was
participating immediately prior to the Change in Control; the failure by the
Company to continue to provide the Grantee any material fringe benefit or
perquisite enjoyed by the Grantee immediately prior to the Change in Control; or
the failure by the Company to provide the Grantee with the number of paid
vacation days to which the Grantee is entitled in accordance with the Company’s
normal vacation policy in effect immediately prior to the Change in Control.
8
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its
behalf by its duly authorized officer and the Grantee has also executed this
Agreement, as of the Date of Grant.
WINDSTREAM CORPORATION By:
Name: Jeffery R. Gardner Title: President and CEO
The undersigned hereby acknowledges that a copy of the Plan, Plan Summary and
Prospectus, and the Company’s most recent Annual Report and Proxy Statement (the
“Prospectus Information”) are available for viewing on the Company’s intranet
site at windstream.com. The Grantee hereby consents to receiving this Prospectus
Information electronically, or, in the alternative, agrees to contact Susan
Carson at (501) 748-6462 to request a paper copy of the Prospectus Information
at no charge. The Grantee represents that he or she is familiar with the terms
and provisions of the Prospectus Information and hereby accepts the award of
Restricted Stock Units on the terms and conditions set forth herein and in the
Plan.
Grantee Date:
9
APPENDIX A
PERFORMANCE MATRIX
Percent of OIBDA Performance Goal
Attained with Respect to a Fiscal
Year
Percent of Target Number of Stock
Units Allocated to such Fiscal Year
that are
Earned
Less than 90%
0%
90%
50%
91%
60%
92%
70%
93%
80%
94%
90%
95%
100%
Appropriate proration will be made between levels listed above.
10 |
Informal summit in Lahti and EU-Russia relations following the murder of journalist Anna Politkovskaya (debate)
We shall proceed to the next item on the agenda. This is the Council and Commission statements on the Preparation for the Informal Meeting of Heads of State or Government in Lahti and also, in accordance with the House's decision, relations between the European Union and Russia following the murder of Anna Politkovskaya.
Mr President, ladies and gentlemen, first I wish to thank you sincerely for the opportunity to come here and discuss the informal summit of the Heads of State or Government in Lahti, to be held on 20 October.
We decided to hold the Lahti Summit because we want to give the Heads of State or Government of the Member States of the Union the opportunity for an open and informal debate on two themes which are important for the Union's future and for economic success: innovation and external energy relations.
We need a firm, consistent policy on building a favourable environment for innovation and on energy issues. In this way we will be able to improve conditions for economic growth and employment in the Union. If the Union does something tangible to promote welfare and prosperity, we can also expect the Union to become more acceptable in the eyes of the people. A consistent common policy on energy will at the same time strengthen the Union's credibility as an international player.
To guide the discussions at the Summit of the Heads of State or Government, two communications are being drafted by the Commission. One is on external energy relations, and the other is on innovation policy. The communications are to be released tomorrow, 12 October. They are not meant to be approved at the meeting, but they indicate those questions which we want to address at Lahti.
Before the unofficial Summit at Lahti, an Informal Tripartite Social Summit will also be held on the Friday morning. The way in which a European job market of 200 million employees will function and adapt to change is of crucial importance for Europe's future. That is why the Social Partners have a vital role to play when the goal is to strengthen European competitiveness.
Russia's President, Vladimir Putin, has been invited to the dinner following the Summit of Heads of State or Government. Discussions with the President are aimed at focusing on the strategic partnership between the EU and Russia, including cooperation on energy.
The immense challenges which the Union faces in issues of energy - securing its supply, climate change, continual price rises, and recent crises - have prompted the development of a common energy policy for the EU.
With regard to securing the supply of energy, the ever-increasing dependence on energy imports is a particular challenge for the EU. If no action is taken, it has been estimated that this dependence will grow from the present level of 50% to 70% over the next 20 years.
Before the Finnish presidential term started, the evolution of a common energy policy was discussed at two meetings of the European Council held at the beginning of the year. During the Finnish Presidency, we will focus in particular on external energy relations, and these talks will prepare the ground for a large-scale energy debate, to be held next spring, to lead to the adoption of an energy policy action plan.
Although the Lahti talks will focus on external energy relations, obviously our objective for external relations cannot be looked at as a separate issue. Among all the priority areas mentioned in the Green Paper on Energy Policy, it is close contact that stands out. Other areas include the single market in energy, solidarity between the Member States, the diversification of energy sources, energy efficiency, renewables and innovations in the domain of energy.
In external energy relations, the Member States need to reach a common understanding and establish a view concerning what sort of strategy should be adopted to make progress in relations with countries outside the EU, and what sort of common outward-looking goals the EU should have. This means that the Member States must be able to commit jointly to an agreed way forward that also covers bilateral relations, and to speak with one voice in these contexts too. In committing to common goals, the Union will also be better prepared to deal with changes in the world's energy markets.
At the Lahti energy talks we will be exchanging views on how external energy relations might be developed in the immediate future. The discussions are intended to focus mainly on three themes. The first is the principles on which EU-Russian energy relations should be based, and how they should be implemented. The second is closer relations with strategically important third countries. The third is more effective gathering of data as a basis for decision-making with regard to a common energy policy.
Russia, whose share of imports of both oil and gas is 25%, is the Union's most strategically important energy partner. In all strategic partnerships, including the one with Russia, it is important to find something which is in the interests of both parties in order to develop the partnership. The common interest in EU-Russia energy relations is obvious. The EU is dependent on imports of energy from Russia, and Russia needs long-term contracts for energy exports at market prices, as well as Western investment in the basic production of energy. Opening up the market on both sides will be a key factor.
The talks by the EU Heads of State or Government will also prepare the ground for discussions with the Russian President, Vladimir Putin, later that evening, one central theme of which is energy issues.
The purpose is to communicate to Russia the EU's objective of a binding framework agreement on energy, which would take account of the interests of both parties, reciprocity and an impartial operational environment. The talks will also certainly make reference to the challenges that the EU and Russia have in common, such as energy efficiency, where both sides stand to gain.
Extending internal energy principles to the EU's neighbouring regions, and the strategic development of relations with important third countries, are goals we must aspire to if we want to secure the supply of energy. 80% of the world's oil resources are to be found in the regions surrounding the Union. There is a whole range of instruments available to improve relations with third countries. It includes the Neighbourhood Policy Action Programmes, the agreement on energy cooperation, bilateral agreements and regional ...
(The President cut off the speaker due to technical problems)
Energy policy must be one key element in the Union's Common Foreign and Security Policy. The European Union needs enough information to practise a more coherent energy policy. In addition, it must be able to respond to external problem situations and crises connected with energy. The Union should establish a system which will help bolster cooperation between the Member States and the institutions, and enhance solidarity in issues connected with energy.
The other main topic of the Summit of Heads of State or Government is the development of a policy on innovation. It must be possible to improve the way in which research work done in Europe is exploited in the shape of commercial goods and services. Moreover, the Union must be able to introduce new technology as efficiently as they do in the countries that are our competitors. If we stick with the way we do things now, the innovation gulf between us and our major trading partners will only grow.
Production, mainly in the growing economies, is in ever greater competition with Europe, not only in industry but also in the service sectors. China and India train highly educated people for the job market far more than is the case in the EU. The markets in the growing economies, however, also mean that there is a huge potential for exports from the Union. Success can come just from an ability to create something new - in other words, innovation.
In an open market, the best commodities succeed. It is impossible to stay ahead unless there is continued investment in research and product development. The Member States of the Union are committed to increasing future investment in research and development by virtue of the decisions taken earlier on.
It is nevertheless vitally important to ensure that Europe can make good use of investment so that research work leads to new, better and commercially exploitable goods and services.
The intention at the Lahti Summit is to mention issues and challenges which call for joint action on the part of the Union. The aim is to create an environment where innovations can emerge and be adopted efficiently. In its position on the Lisbon Strategy, the European Parliament has also highlighted the importance of a policy on innovation.
To support effective innovation, there would need to be created an EU-wide strategy on immaterial rights. Immaterial rights are of major importance for a company's success and competitiveness.
One fundamental question, for example, is the quality of patents, which is a basic principle for a workable, reliable patents system. The Presidency believes that Europe must have a cost-effective patents system, but one which adheres to the notion of quality, regardless of the choice of alternative that will form the basis for developing this system.
If we can develop the patents system further, companies will be guaranteed considerable savings on the costs of patents, which can only encourage innovation and research in Europe.
Improved collaboration between universities and the business world is a precondition of a successful policy on innovation. The intention is to create a new network-based European Institute of Technology, and the Commission will be putting forward a proposal on this next week.
The partnership project between science, business and training will be characterised by excellence. The priority will be the promotion of innovation. The Presidency believes that the European Institute of Technology will allow Europe to exploit existing opportunities in companies and the scientific community more effectively.
Furthermore, cooperation between the private and public sector needs to be stepped up in order to promote competitiveness. Europe has seen the creation of the so-called Technology Platforms, company-based strategic research initiatives, which are excellent examples of partnership between the public and private sectors. To their credit, companies have indicated their willingness to invest in their selected platforms, and a similar commitment is now needed from public bodies financing research.
It is very important for innovation for the creation of European standards to be speeded up. Without a common European standard, many innovations can remain unrealised. Where, for example, would the European mobile phone market have been without the GSM standard?
The creation of pan-European technical norms for mobile phones in practice made it possible for the world's leading player in this sector to come from Europe. On the other hand, if national standards alone had been adopted as a basis for developing mobile phones, there would not have been the same sort of major, geographically huge success.
The speedy adoption of open, compatible standards is one of the keys to success in business. It will also have clear benefits for the consumer. At the same time, it will strengthen our competitive status and be a response to rapid technological development, so that the technical development solutions realised in Europe can genuinely compete with development work done elsewhere in the world.
Moving on, illegal immigration is a problem that affects the whole of the European Union. That is why we need to find solutions together. Solidarity is at its most conspicuous in the effective implementation of concrete measures. At the Lahti Summit we will be discussing illegal immigration, which has become a particular problem in the Mediterranean and the southern parts of the Union.
For us, it is important that the Union can establish a comprehensive, effective policy on immigration control, one which takes account of issues relating to both illegal and legal immigration, including integration. We must use the existing instruments effectively and think of new ways to support countries of origin and transit in their efforts to prevent illegal immigration.
Immigration issues have been on the agenda at all the Justice and Home Affairs Councils. The matter is also to be discussed next week at the informal dinner of the Ministers for Development Co-operation. The intention too is that the work of the Justice and Home Affairs Councils should serve as a basis for decisions for the European Council in December which could help the European Union to respond effectively to the problem of illegal immigration.
At a working lunch in Lahti, the serious situation in Sudan and Darfur will also be addressed.
As I said at the beginning, following the informal summit of EU Heads of State or Government, the participants will dine in Lahti with the Russian President, Vladimir Putin. This will be an excellent opportunity for an informal discussion on the development of the strategic partnership between the EU and Russia. The spectrum of our association is very broad, and it contains elements which could serve to develop the partnership further.
An example of this is international issues. The international policy agenda this autumn includes matters where cooperation between us is very important, such as the Middle East, Iran and Kosovo.
Energy is an important element in the strategic partnership, and we are expecting to hear President Putin's assessment of developments in his country's energy sector and the energy partnership between the Union and Russia.
Mr President, we were all shocked to hear the news about the death of the well-known journalist and defender of freedom of expression, Anna Politkovskaja. We are calling for a thorough investigation into this horrendous crime and for its perpetrators to be brought to justice, something which is of particular importance for Russia's progress towards the rule of law. Not only is Politkovskaja's death an appalling incident and a loss for her next of kin, but it is also a setback for freedom of speech in Russia. Furthermore, the frank and robust talks that are going on between the European Union and Russia against this background of recent events are a valuable exercise. As I have already said, the strategic partnership is a framework within which all the important issues will be discussed.
Mr President, the informal European Council next week comes at a good time. I should like to thank the Finnish Presidency, Prime Minister Vanhanen and all his team for their very important contribution.
Since the Minister made such a comprehensive presentation on behalf of the Presidency, I will focus on innovation, energy policy and immigration. I will also make a few remarks about relations between the European Union and Russia. These are all issues in respect of which the challenges we face require not just a national response, but a European response; challenges which show why, more than ever, a strong European Union is necessary, and why we need the Union to equip Europeans for globalisation.
I welcome the Presidency's decision to focus on innovation. Finland is a prime example of how innovation can boost economic growth. However, it is more than that. It is only by unlocking people's imaginations that we can tackle the major issues facing us today, such as climate change, social exclusion, demographic change and unemployment.
Even though I know you know the figures, they are worth repeating. European Union spending on research is equivalent to 1.9% of its GDP, whereas the United States currently spends 3% of its GDP. It is indicative that most of the recent Nobel Prize winners come from or work in the United States. In Europe about half of all researchers are employed by business. In the United States, that figure stands at over 80%. The truth is that Europe is falling behind in terms of innovation and research. The status quo is not an option: we need to do more in this matter. We urgently need a strategic approach which focuses on each link in the innovation chain, from the birth of new ideas and knowledge right through to their exploitation and marketing in the economic sphere.
The communication which the Commission will present at the informal summit in Lahti sets out such an approach. It pinpoints the weak links in the chain and puts forward solutions. We need financing, we need the right intellectual property framework to bring the right rewards and we need to tackle obstacles to innovation sector by sector. Above all, we need to start with a strong political message of commitment: innovation deserves encouragement, and we need a European approach for it.
Size matters on this issue. One of the big differences between us and the United States is that we have no pan-European institutions for innovation and research. The United States is much more committed to a real global approach. There are great institutions supporting innovation throughout the United States, not just in one or two states. Until now, we had nothing in Europe. Now we have the European Research Council and we are proposing the establishment of a European institute of technology. We are proposing a network system to lend a real European dimension and a real European mission to those institutions. That is why we are insisting on this approach. That is the importance of the European institute of technology. It will bring the private and public sectors closer together for cutting-edge research, become a centre of international excellence, bring together the top brains, provide a stream of top class PhDs and promote spin-offs of innovative small and medium-sized enterprises. In short, it can become a symbol of Europe's ability to work together and innovate. We have been developing the finer details of the EIT over recent months and we will bring forward a detailed proposal next week. I am confident that the Heads of State and Government and the parliamentarians here in the European Parliament will look at it in the spirit in which it is designed: yes, it is something a little different, but something which can provide an example of Europe taking a fresh direction and finding new ways to work together.
One of the fields in which I think we as European leaders can give a mission to a European institute of technology is that of energy and climate change. When we have a problem that we need help to solve, we should ask the best scientists, the best brains on our continent. Energy is one of the most important challenges we have today.
Let me now turn to the issue of energy and let me make it plain: we need to create a truly European energy policy, not 25 energy policies. It is absurd in the 21st century to go on with 25 or 27 energy policies. We need a truly European energy policy. The problems we face - high energy prices, climate change, increasing dependence on imported hydrocarbons - are global and European problems. They need European solutions. National solutions will not be enough. At Hampton Court last year, European Union leaders agreed to develop a common approach. In our Green Paper of March 2006, the Commission defined clear objectives for a European energy policy, long-term sustainability, security of energy supply and economic competitiveness. The Member States have endorsed our approach, and the reaction from stakeholders to our Green Paper has been overwhelmingly positive. The next step is a strategic energy review which the Commission will propose at the very beginning of next year. I look forward to reading the European Parliament's report on it.
It is obvious that we need coherence between the internal and external aspects of energy policy. We clearly need an effective internal market in energy. Having 25 or 27 different energy mini-markets is not the answer to the European energy challenges. However, we must link internal and external policy. Our paper for Lahti will look at the three external challenges: Russia, which I will return to; developing our energy relations with our neighbours; and creating a network to deal with external energy shocks. It is essential to build up energy cooperation with strategically important supply and transit countries. This is already happening with initiatives such as the new Energy Community Treaty and the memorandum of understanding on energy cooperation with Ukraine. We need to extend the principles of the internal energy market gradually throughout our neighbourhood. We also need to join the different areas of expertise which exist around Europe to create a more effective network to deal with external energy shocks. Of course, in the medium term, the best way to cope with energy shocks is through diversity: diversity of energy sources, of country of origin and of country of transit. Indeed, we need to mainstream energy to make it a major focus of our relations with partners worldwide.
Finally, energy efficiency is another crucial element of this strategy. I can announce to you today that next week Commissioner Piebalgs - the Commissioner for Energy - and I will propose an ambitious action plan to fulfil our commitment to save 20% of primary energy use by 2020.
Naturally, with 25% of the oil and gas consumed in the European Union coming from Russia, energy cooperation with Russia is crucial. The President-in-Office of the Council just explained why it is important. We must have a reinforced energy partnership with Russia. Such a partnership must be based on reciprocity, transparency, non-discrimination and openness to competition, including a level playing field for upstream and downstream investment. This is the only way to have a stable and secure platform for our energy relationship. The meeting with President Putin will be a chance to deliver a clear and hopefully coherent message from European Union leaders.
We see three long-term objectives in our relations with Russia: we want to see a functioning democracy and market economy in which Russia lives up to the international commitments it has undertaken; we want to see a broad and strategic EU-Russia relationship based on interdependence - Russia needs the European Union and the European Union also needs Russia - and we want to enhance our cooperation with Russia on international issues. When we talk about effective multilateralism, this is what we mean. We have set our goal of a wide-ranging agreement to follow the current partnership and cooperation agreement. There are mutual benefits to be realised in areas such as investment and market-opening, as well as in energy and energy efficiency. We both have so much to gain from a real partnership.
I also take this opportunity to express my deepest sympathy with the family of Anna Politkovskaya, who was so brutally murdered last week. I want to pay tribute to her relentless pursuit of truth. She was a great defender of freedom of expression in Russia.
(Applause)
I sincerely hope that the perpetrators of this heinous crime will be found and brought to justice.
Another point we are going to address is that of immigration. The massive arrival of illegal immigrants at the frontiers of the European Union's southern Member States is a European problem that requires a European solution. In November 2006, the Commission presented a communication with a series of practical proposals for the European Union to respond to this challenge. On that basis, the European Council adopted a global approach to migration, outlining in detail how to respond in its internal and external policies. In less than a year we have seen the start of a lot of practical action: joint operations in the Mediterranean and the Atlantic under the coordination of the borders agency, Frontex; enhanced cooperation among the law-enforcement services of the Member States; better coordination of the work of the immigration liaison offices in Africa; and dialogue with key African countries of origin and transit, both bilaterally and multilaterally. For the first time, Member States are working together in joint operations protecting the European Union's external borders under the coordination of Frontex. However, let us be frank: it is not enough; much more is needed to tackle the illegal flows effectively.
In order to strengthen the European Union's response capacity, it is of the utmost importance that all Member States of the Union work together in a spirit of solidarity, not least to assist those Member States that are, let us say, in the front line. With a view to the informal European Council to be held in Lahti on 20 October, I have written personally to the Heads of State and Government underlining the need for such solidarity. Of course, the ideal would be to have already established the Community instruments, but we have not got them yet. Of course, the ideal would be to have a European migration policy. It is absurd to have 25 or 27 migration policies in an area in which people can move around freely, because decisions taken by one country have a direct effect on the other countries. But before we have a true Community method to tackle these issues, we at least expect Member States to cooperate well among themselves.
(Applause)
We believe this is also a practical example of European solidarity.
We also need to work much more intensively with the countries of origin and transit. The implementation of the action plan agreed in Rabat in July is a key priority. The Commission will work hard to ensure proper implementation in close partnership with the countries concerned. Let us also be frank about this. Security matters are not enough. The solution to this problem will come only with our support for sustainable development in Africa. By the way, I think we have to engage in a high-level dialogue with African countries. Is it not strange that the European Union has dialogue with Asia and Latin America at the level of Heads of State and Government, but not with Africa? Is it not about time now for Europe to make a commitment to establishing a high-level dialogue with Africa? I believe we have the right and the duty to do so. That was the message I took recently to our counterparts in the African Union Commission in Addis Ababa. That is why we are also actively engaged - via our cooperation with our African partners - in looking collectively at this issue.
In European terms, we also need a European Union decision-making process. When there are urgent and serious problems, the European Union needs to be able to react appropriately. This means using the bridging clause in Article 67 of the Treaty. We cannot deny ourselves the means to deliver effective action.
To conclude, the informal European Council meeting in Lahti provides a good opportunity to take stock of the current European Union actions in the fields I have outlined and in several other fields as well. We are looking for a renewed commitment from the Heads of State and Government to deliver solutions to the real and pressing problems of the citizens of the European Union, and to deliver a Europe of results so that we can have more confidence to solve some of the very important problems in our Union.
Let me give you a final thought. A week ago I was in Darfur. Amidst the terrible conditions experienced by the people there, I saw something that I resolved to tell my friends back in Brussels: in the NGOs and other humanitarian organisations, there are so many young Europeans, so far from their homes, putting their lives at risk every day to help Africans. This is the kind of Europe of which I think we should be proud; a Europe that is ready to deliver solidarity and help, showing great courage. That is the kind of Europe I believe we all want: an open, outward-looking, generous Europe. That is the Europe we should strive for.
(Applause)
Mr President, Mrs Lehtomäki, Mr Barroso, we are deeply distressed and outraged by the assassination of Anna Politkovskaya, and we have many questions about the reasons that led to this crime being carried out. It is vital that the Russian authorities get right to the bottom of this tragedy as soon as possible, and we expect the Council to send out the message that it will stand firm in the face of this fresh blow to a profession that pays a heavy cost each year for carrying out its work. Allow me to pay tribute, through Anna Politkovskaya, to all of the journalists who risk their lives throughout the world in order to defend freedom of expression, to which we are so attached.
The Informal Meeting to be held in Lahti on 20 October will provide another opportunity to raise some recurring issues, such as competitiveness, innovation, immigration and energy policy. I fear that competitiveness and innovation will meet the same fate as sustainable development: everyone talks about it, everyone subscribes to it, but when it comes to taking concrete action, good principles go out the window. There are numerous examples of this. I could cite that of Galileo, the usefulness of which was so highly praised, but when it came to planning the budget for it, all of a sudden it was no longer a priority.
With regard to transport infrastructure and rail links, we recommend their being completed for the sake of competitiveness, but we sacrifice them on the budgetary altar. What can be said about the much-hyped ambitions in relation to research when it is clear what kind of support is actually given to innovation? I am thinking not only about financial aid, but also about the application of the laws that encourage investment in Europe and that clear the way for our SMEs to export outside European territory. I therefore expect a great deal from the Council's commitment to the European Institute of Technology, to which our President of the Commission, Mr Barroso, is, I know, very attached, as, I might add, is our Parliament. Indeed, it is no longer strong commitments that we expect from the Council, but concrete action.
Competitiveness is also the outcome of the regulations that we adopt, which must represent opportunities and not constraints. I expect the European Commission to take these principles as its starting point when it presents its 2007 legislative programme and the Council to follow that trend. I expect Parliament to have the courage to reject proposals that only deal with big ideas without doing anything specific with them. Policies, too, must be competitive, and thus effective.
Competitiveness also means striking a trade balance worldwide. Anti-dumping measures are certainly along these lines, but could we not have other strong political decisions, such as a demand for equivalent quality standards for all goods imported into the European Union?
Finally, on the energy issue, I hope that the discussions with President Putin will enable Europe to implement all of the structures necessary to guarantee the independence of its energy supply. It must also be able to equip itself with renewable energy sources so as to guarantee the independence of its energy supply from a nuclear energy perspective.
on behalf of the PSE Group. - (DE) Madam President, ladies and gentlemen, I am obliged to you, Madam President-in-Office of the Council, and to you, Mr President of the Commission, for your very exhaustive description of what you intend to discuss at the informal summit. As so often happens when summits are in the offing, we have high hopes of this one. Mrs Lehtomäki and Mr Barroso have told us marvellous things about innovation, immigration, energy policy, the partnership with Russia, and about Darfur. The whole range of our concerns has been put before us in no more than some forty minutes, and I now find it difficult to respond to all these things with the necessary brevity.
If, after the summit, we get a forty-minute summary of what happened there that is just as closely packed with achievements and decisions reached, then I will be a happy man, but I have, at the back of my mind, the fear that we will have the same experience that we almost always have, for we are good at describing our problems, but find solving them a bit more difficult. The President of the Commission is right to say that investment in innovation is indispensable, not only here, but in all the Member States, and particularly in researching and developing energy-efficient technology.
One of the crucial long-term decisions we will have to take over the coming years has to do with the question of whether achieving greater energy efficiency will enable us to cope with the exponential growth in demand for energy around the world. It is worthy of note that enhanced energy efficiency also involves us abandoning an economy founded on extravagance by means of such things as technological developments and investment in research that helps to ensure that the products we are able to develop reduce energy consumption rather than increasing it. Europe is the continent that must lead, and give good example, in this area, and that is why you are quite right to say that our policy on innovation must give priority to innovation in energy.
My second point is that both the President of the Commission and the President-in-Office of the Council are right to highlight immigration as a problem we must get on top of, but the way in which this problem is currently being addressed does nothing to solve it, and I am much obliged to Mr Barroso for describing that so graphically. I do not want to go over again what others have rightly pointed out, namely that sustainable development in what we call the Third World addresses the causes of the immigration problem, but the external borders in southern and eastern Europe are external borders in which we all share; those who manage to enter our territory are free to move anywhere within the Schengen area. Member States cannot then say that they are going to arrange these matters for themselves or that the most they will do is to address them at the intergovernmental level, but that they will not allow any of their powers to be transferred to Brussels, and that I say not least for the benefit of my own country's government, with which you, Mr Barroso, met today. Germany too must understand that this sort of thing is just not on; this is a lesson that must be learned, even by the German minister of the interior.
Let me add something to what has been said about our policy on Russia. The policy that we, together with Russia, are currently engaged in adopting will be the basis for a renewable cooperation agreement with that country. It is obvious that discussions such as that we are having today, in relation to the case of Anna Politkovskaya, will always be emotional affairs. Mr Saryusz-Wolski, for example, who is listening to me with such attentiveness, is one of those who always get particularly worked up by anything to do with Russia, and so what I have to say, I say not least to him. Is there not a great deal going on in Russia that is not to our liking? To be sure, we want - as you have said - a functioning democracy and market economy to prevail in Russia, but there is one thing about which we must not be in doubt. Quite apart from the issue of whether we are further entrenching or extending Russian democracy, Russia is - even as it is constituted today - an indispensable strategic partner for the European Union.
So let me say that we must indeed talk about the state of democracy in Russia, but we cannot talk down to that country in a lofty and schoolmasterly way. It has to be clear to us that Russia will, without a doubt, be needed as a partner in energy policy, and above all as a partner in the resolution of conflicts around the globe - be they in Iran, in the Middle East or anywhere else - and that it will try to cooperate as our equal and with equal rights, and that equal status is something that we must concede to Russia just as we do to all our other partners. So, then, while I regard dialogue about democracy as indispensable, it must be founded on a realistic assessment of the situation.
I much appreciate the President of the Commission's reference to Darfur. What that situation shows - and not for the first time - is how vital it is that the European Union, by being the peacemaker that it is, brings people together across religious, ethnic and national boundaries, and, by means of that integration, fosters peace. That is something for the export market, and if you let the wider world have it, that is something to be welcomed.
on behalf of the ALDE Group. - Madam President, Madam President-in-Office, Liberals and Democrats wish you well for Lahti. A Presidency in the second half of the year is never easy, and informal talks with 25 Heads of Government round a table are difficult to imagine. I bet you cannot even fit them all into one sauna!
On your agenda there will be important matters as diverse as energy, innovation and migration, although, as you say, the real story will be entertaining the President of the Russian Federation. We believe that the Member States must stand foursquare behind the Union flag in condemning attacks on freedom and private property in a country where one more candle of independent thought has just been extinguished. Mr Putin has clearly studied Machiavelli's dictum: 'Princes who have achieved great things have been those who have given their word lightly, who have known how to trick men with their cunning and who have overcome those abiding by honest principles.' While President Putin concedes that his country is tarnished by the murder of Anna Politkovskaya, he fails to add that 40 other journalists have been murdered in his country in recent years.
(Applause)
Liberals and Democrats pay tribute to Anna Politkovskaya. Among her criticisms of the state of freedom and democracy in Russia, she wrote, in a book called Putin's Russia: Life in a failing democracy, 'Yes, stability has come to Russia. It is a monstrous stability under which nobody seeks justice in law courts, which flaunt their subservience and partisanship, nobody in his or her right mind seeks protection from the institutions entrusted with maintaining law and order because they are totally corrupt. Lynch law is the order of the day. The President himself,' she continues, 'has set an example by wrecking our major oil company, YUKOS, after having jailed its chief executive, Mikhail Khodorkovsky. Putin considered Khodorkovsky to have slighted him personally, so he retaliated.'
Madam President-in-Office, Russia needs the European Union just as much as the European Union needs Russia. They need our market for oil and gas. We are their biggest customer. So let our Heads of State and Government talk to Mr Putin about oil and gas, but do not have them mince their words about an increasingly dictatorial regime. Let them also prepare for life without dependency on Russia through joined-up thinking on energy and the environment. In a week in which Al Gore has promoted his film on the 'inconvenient truth' of climate change, our energy policy must in any case reflect an urgent need for a change of direction.
Lahti is a follow-up to Hampton Court a year ago, where leaders approved plans to create a European energy market, raise competitiveness and educational levels and tackle the growing pressure of migration. In the past 12 months, the urgency for action in all those areas has increased. The Commission has rightly identified the needs, but Member States continue to deny the means. The Commission proposes a genuine internal market in energy, unbundling networks as we did with telecoms, creating an observatory to monitor stocks, developing a more sustainable energy mix, making energy savings. We welcome these proposals, but we need the Council to get on with them. Mr Barroso wants a European institute for technology. Get on with it, if you can raise the money! Migration is presented, on the one hand, with data showing we need to encourage migration of labour and skills, and, on the other, with media headlines stoking populist fears of uninvited guest workers taking away jobs and benefits.
To succeed the Council must act effectively, for which it needs the provisions of the Article 43 'bridging clause'. I hope the Finnish Presidency will continue to press for this. We support the Finnish Presidency and its modest and pragmatic approach to EU business. However, Madam President-in-Office, we fear you are being eclipsed already by the forthcoming German Presidency. Issues are being postponed; foreign leaders are courting Mrs Merkel. The German Foreign Ministry is taking the lead. Let us not raise excessively high expectations of what Germany can deliver, nor lower our expectations of what the Finnish Presidency can achieve. The Presidency needs to show that, in the words of the Monty Python song, 'Finland has it all'!
on behalf of the Verts/ALE Group. - (DE) Madam President, ladies and gentlemen, Anna Politkovskaya, visited this House on two occasions, at the invitation of our group, to report to us on the situation in Chechnya and the state of play as regards freedom of speech in Russia.
I really do think it is high time that we named names. Someone said that the guilty parties should be condemned; well, you will be dining with one of them tonight - with President Putin himself. Let us make an end of this constant self-deception; Russia is at present subject to a system engaged in the day-by-day curtailment of freedom of opinion, with newspapers being bought up and then disappearing from the scene, and their owners thrown into jail. That is going on day in and day out.
(Applause)
Mr Schulz is right; we do indeed need Russia, but we have to be aware of the fact that the Russia with which we have to deal is a Russia that does not shrink back from taking people out of circulation, and I can predict how its story is going to turn out, for it has already been written down in a book that is about to come out, entitled 'The Day of the Opritschnik' by Vladimir Sorokin, and I urge you to read it. In it, the author describes, from the point of view of an officer in the security services, the things that go on in Russia today, and we will read it: we will read about how some small-time crook, some small-time drug pusher gets caught, gets sentenced to 'life', gets taken off to some prison on the other side of the Urals, and then they will say, 'Look, we've caught one!' As for those, though, at whose behest the crime was committed, those who gave the money - as we have seen with the forty other journalists and the newspapers - well, nobody will ask, because nobody will be interested, for - as we saw yesterday evening on German television when Chancellor Merkel met him - we need Vladimir Putin. And why do we need Vladimir Putin? We need him because we - by which I mean Germany, with its Grand Coalition of red and green that has entered into an impossible treaty with Russia and avoided the Europeanisation of energy policy - because we have established a link with Russia. Even so, names do need to be named, and then, perhaps, we might get somewhere.
Yes, of course there have to be negotiations with Russia, but I am firmly convinced that now - yet again - is the time for us to display the necessary attitude; yes, of course we can laugh when Schalke 04 is bought by Gazprom, when Chelsea is bought by Roman Abramovich; all these things we can find amusing, just as we think it is terrific that Mr Putin is with us everywhere and turns up to watch Federal League matches every Saturday; the only problem is that the price we are paying is the price that the people of Russia have paid and the price that the people of Chechnya have paid, namely the price that you pay for doing no more than cohabiting with one of the most dangerously oppressive systems, smiling sweetly at it and otherwise looking the other way. I find it simply shameful that we look the other way. We say how appalled we are, and then we come back down to earth and say, 'Oh, Vladimir, do you think you have a problem? What makes you do these things? But it is good that you are paying your bills more promptly.' So that is all right, then. That is our attitude.
All I can say, by way of summary, is that we will resolve the energy issues, the immigration issue, and all the other issues only if - and this is where Mr Watson has got it right - we, at some point, speak frankly about what the problems are and say honestly about what we will or will not do. We must, I think, negotiate with Putin, but that does not mean that we have to dine with him like mates together.
on behalf of the GUE/NGL Group. - (FI) Madam President, Minister Lehtomäki, the Finnish government wanted to hold an EU summit in Finland, probably with the purpose of spreading the glad tidings of Finland's excellent competitiveness to others. The passage of time has brought other matters to the agenda, and, to Finland's delight, the Russian President will be attending the evening meal organised for the Heads of State or Government. The matter of investigating the murder of the journalist Anna Politkovskaja should then be raised as a test that the rule of law in Russia actually works.
(Applause)
In the name of the new liberalism, the EU's right-wing forces want to break and crush good educational systems and the good social security system. I call on the Finnish government to tell these EU new liberals that public services are the secret of Finland's excellent competitiveness. Please tell them too that the advanced liberalisation of the electricity markets in the Nordic countries has raised the price of electricity, and that the state, and not the market, has to take responsibility for energy security. Do not harp on about the Lisbon objectives. The EU will not be the world's most competitive knowledge-based economy by 2010. An economy built on dreams reminds one of Mr Khrushchev, who 50 years ago in the UN promised that the Soviet Union would surpass the standard of living in the United States of America within 10 years.
Our group fails to understand the move by the Finnish Government to ratify the defunct EU Constitution in Finland. To my government, I would say this: you are up against alien forces, the same way you were when you insisted that the EU should decide on a common penal code with a qualified majority. That way, you would be wiping out the historical memory of nations. I send my greetings to the Prime Minster, Mrs Lehtomäki. Hold your head high for the rest of the presidential term. You could even try to think for yourself sometimes, instead of always being a kind of warm-up act for the next presidency, a far bigger one than Finland. To Mr Barroso, I would say that in several cases there is no proper legal basis for implementing his very ambitious ideas, although there is certainly room in the world for ambitious ideas.
on behalf of the UEN Group. - Madam President, I too would like to join with my colleagues in thanking the President-in-Office and President Barroso for their presentations here today. I will deal with the easy questions first of all and then go on to the more difficult ones facing the summit.
We have a right to tell the Russians that we demand standards of them with regard to freedom of expression, freedom of accountability and the freedom and the security of human life when people question and challenge authority. As Mr Watson rightly said, 40 journalists have been killed in Russia in the last two and a half years. Interestingly enough, not one person has been arrested in connection with those 40 deaths; not one person has been convicted in connection with those 40 deaths. If we are to expect that suddenly action will be taken because of the horrific gunning-down of Anna Politkovskaya in recent days, I think we are like ostriches sticking our heads in the sand. Only when real engagement and dialogue takes place with Russia can we guarantee a relationship of equality between the EU and Russia, despite our dependence on Russia for energy, despite Russia's dependence on us for markets, and despite the interaction that there is in geopolitical terms between eastern Europe and Russia.
I think that what we really have to do is show courage now in laying down clear standards and guidelines of what we expect from our partners with regard to their relationships. This is not just about the death of the journalist, horrific as that is; it is not just about Chechnya; it is also about Russian treatment of Georgia in the recent past and what they have done. While the Russian authorities condemn Chechen resistance fighters on the one hand, on the other hand they support 'resistance fighters' in parts of Georgia. They have put the economy of Georgia under tremendous strain, not just in economic terms but also in human terms, deporting hundreds of thousands of Georgians from Russia back to their home country, denying them access to education and to businesses which they legitimately own and control within Russia. All for the sake of 'clarification'.
My next point touches upon the European institute for technology, research and development and what is required for that. I am a great supporter of President Barroso's plan with regard to the necessity for Europe to take the lead and take the leap from the 20th century into the 22nd century with regard to what we need to do for research and development and investment in technology.
But first, before that can happen, we must ensure that the intellectual property rights and patenting rights are protected to allow for innovation to take place, to allow for investments to be made. It is easy to build the structure of a building to house an institute of technology. It is more difficult to put in place the legislative framework to allow for this to happen.
Finally, Madam President - if I may be allowed the same latitude as the other group chairmen were allowed - when we speak about energy and common energy policy and energy needs, one of the biggest opportunities that we are denying ourselves is the renewable energy that we can create and grow on our land. When farmers are suffering because of bad deals made by Peter Mandelson at the WTO talks, or when agriculture is under threat, then we need to invest in renewable energy.
on behalf of the IND/DEM Group. - (DA) Madam President, Anna Politkovskaja's Danish friend cannot obtain a visa for Russia, and I have asked Mr Solana to raise this matter at a suitable opportunity.
I turn now to the Finnish Presidency. I love Finland. I sit on chairs, and put flowers in vases designed by Alvar Aalto and use a Nokia phone. I have had respect for Finnish politicians ever since I was a young man and I have cooperated with your foreign minister in the EEA and with your prime minister in the Convention. Now, I have to ask with some dismay: what has happened to Finland? How on earth can Finnish politicians persuade themselves to ratify a Constitution that has been rejected in France and the Netherlands and therefore no longer exists? Is it true that it is members of the Centre party's parliamentary group who are to vote against their own conviction? The great majority of Finnish voters are opposed to the Constitution, yet you force it through without a referendum. Shame on you! Instead of submitting to Mr Vanhanen's whip and adopting a new policy of Finlandisation whereby Finland turns itself into Germany's seventeenth state, you should start afresh with a new directly elected Convention, referendums in all the countries and a document that the electorate can happily vote for.
Finland currently has 7.8% of the votes necessary for achieving a blocking minority in the Council of Ministers, so the other countries are obliged to listen to Finland. That is precisely why we have a valuable culture of consensus in the Council of Ministers. The Constitution would introduce double majority voting, with the result that we should be voting on the basis of population figures. That would cause the Finnish portion of a blocking minority to fall from 7.8% to 3.3%, so there would no longer be any need to listen to Finland and other small EU countries. The German share of the vote would correspondingly increase from 32% to 51%. Germany and Turkey would thus be able to determine the speed at which an enlarged EU developed. A double majority would destroy the EU's culture of consensus, and the removal of the national Commissioners would make it difficult to get the EU to operate properly on a day-to-day basis. Nokia would no doubt get by, but the many small and medium-sized companies and local authorities would miss having contact through the Finnish cabinet when there was no longer a Finnish Commissioner at the table. Moreover, the rotation system would only, of course, continue until, true enough, the turn of the wheel replaced France with Malta. Stick to one Commissioner for each Member State and to the culture of consensus in the Council of Ministers instead of adopting the rejected draft Constitutional Treaty.
(NL) Madam President, as has already been said, the European Heads of State or Government will, when they meet in Lahti on 20 October, also be broaching the subject of immigration. The question is, however, what conclusions they will draw. Two weeks ago, yet another tragedy struck before the European coasts, involving ill-fated asylum seekers. Yet again, the blame rests with unscrupulous traffickers prepared to take huge amounts of money off people in order to bring them to Europe in search of their fortune. Yet again, the capsizing of a vessel of illegals off the coast of Lampedusa claimed casualties; the bulk of passengers and crew could only just be saved. In order to prevent such tragedies from happening again - off Lampedusa, off the Canary Islands and anywhere along our external borders - Europe has to send out clear signals, for desperate times call for desperate measures. We must come down hard on people-traffickers. The penalties cannot be tough enough. This should go hand in hand with a strict asylum policy, one that demonstrates to the rest of the world that Europe is serious about protecting its borders. That is why I should like to take this opportunity to congratulate the Swiss on the sensible choice they have made in all their cantons to tighten up legal conditions for immigration and asylum, because, paradoxically, in these matters, firm, humane and fair policy is the best way.
I should therefore like to express the hope that the European Heads of State or Government, at the informal Lahti summit, will ponder the Swiss example, for Europe must learn to listen to its people where major social issues are concerned. We have, for example, seen the arrogance with which the eurocracy wants to persevere with a constitution that was rejected by the bulk of the people, such as in France and the Netherlands. When the people have their say, their opinions are often wholly incompatible with the decisions taken over their heads by an elite unfamiliar with the real world. This is without a doubt also the case for the pressing issue of immigration.
Madam President, I think the best way to honour Anna Politkovskaya's work is to read her book Putin's Russia, as Mr Watson has indicated.
We need to be aware that systematic intimidation, harassment and murder of independent journalists, as well as the lack of any results from any investigations, have created a climate of impunity in which killers seem not to fear the law. Such a trend is seriously damaging to Russia's reputation as a Council of Europe Presidency State. It also casts doubt on our common values. Therefore, I would like to ask the Presidency of the EU Council to raise this issue at the forthcoming Lahti summit.
The PPE-DE Group also calls on the Commission and the EU Member States to take a principled stand in insisting on the restoration of the freedom of the press and respect for independent journalists as among the main prerequisites for renewing the PCA agreement next year. Only when the EU sends a clear signal that we value the life of this courageous woman not less than oil and gas will things start to change in Russia.
(Applause)
The only way truly to honour Anna Politkovskaya's passionate commitment to truth, justice and human dignity is to launch a common effort to make real her dream of a democratic Russia where citizens will not need to pay with their lives for telling the truth.
(DE) Madam President, Madam President-in-Office of the Council, Mr President of the Commission, there is no doubt about it: where our relations with Russia are concerned, we are in a very tricky position. The murder of Mrs Politkovskaya may be the most recent, but it is not the only one, for such things are not a particularly rare occurrence. That is something that embarrasses us, but it should embarrass Russia even more - much more, in fact.
I would like to say something about three problem areas in which our relations with Russia are beset with difficulties. Firstly, as already mentioned, there is human rights and freedom of opinion. What we find particularly regrettable is that Russia does not realise that it is itself harmed by the abuse of freedom of opinion and of human rights that goes on within it. These things may perhaps harm us as well by interfering with our relations with Russia, but it is Russia itself that is most harmed, in that it is hindered from developing in a positive and democratic way.
Secondly, there is the neighbourhood policy, and, while we are not, today, discussing South Ossetia and Transnistria, it is nonetheless also the case that we in the European Union find Russia's policy in respect of its neighbours unacceptable.
It is not acceptable that it should be Russia that decides what is to become of the peoples of South Ossetia or of Transnistria. That is for the people who live there to decide for themselves, and they must decide that freely rather than under duress or in response to military pressure - perhaps even exerted by Russia, and so we will have to speak in quite frank terms to Russia about this.
Lastly, there is the energy issue, and, while I agree with all those who have spoken out in favour of a common energy policy - as, indeed, the President of the Commission did quite plainly and unmistakeably - I wonder how many of those who applaud today would have applauded if we had said, a year ago, that we needed a common energy policy. And will they all applaud when they are told that they, too, need to rearrange their own preferences in line with one? The fact is that, while we are demanding a common energy policy, nothing has yet been said about what it should be like, and, when we start doing something about improving energy efficiency, developing alternative forms of energy and taking the appropriate action in transport and housing, there will be many who will get up and say, 'no, that was not what we meant'.
Back to Russia, though. Our problem today is that relations between the EU and Russia where energy policy is concerned are unbalanced, that Russia - under Putin - is, unfortunately making energy policy more and more into a political power issue rather than doing as we do and treating it as an economic factor, and if we want to do business with Russia, it really does have to be only on condition that we and it negotiate together as equal partners.
One thing that Russia must bear in mind is that the energy reserves - the gas reserves in particular - are running out; they will not be exhausted today, but they will be in eight or ten years' time, perhaps lasting as long as twelve, and the question arises of what Russia will do then. It is also in Russia's own interests that it should be aware of the fact that it needs our technology, our know-how and our money, and that it should therefore work at building up a relationship of equality where energy policy is concerned. If we, on energy issues, deal with one another as equals, we will also arrive at the right solutions. If we do not, then it is not just the European Union that will suffer the consequences, but Russia as well. It follows that Russia should recognise where its real, long-term interests lie. It has much to learn from dialogue with us, with the European Union.
(FR) Madam President, Anna Politkovskaya knows why she is dead. The postscript to her last book is entitled: 'Am I scared?' Why did she write? She wrote because she believed that words can save lives. She knew that she was in danger; she had been kept locked up; she had been the victim of a poison attempt; and she regularly received death threats. She was executed simply because she was telling the truth.
In her book, 'Chechnya: Russia's disgrace', she writes: 'Putin and his people have given their blessing to something that no country can accept, namely a form of corruption based on the bloodletting of thousands of victims, an army ravaged by military anarchy, a chauvinistic attitude within the government apparatus that is passed off as patriotism, wild rhetoric about a strong State, and official, popular racism against the Chechens, the fall-out of which extends to other Russian peoples. Putin's Russia now produces new pogrom enthusiasts on a daily basis, and attacks against the Caucasians have become routine.' Do you know when she wrote that text? She wrote it in 2003, and what do we see happening today? We see raids, arbitrary arrests and persecutions of the Georgians and of the human rights NGOs, which, I might add, have just lodged a complaint.
How does Mr Putin respond? Mr Putin declares that the measures taken against the Georgians are appropriate and that the State agents are acting in accordance with Russian law. Mrs Politkovskaya never stopped denouncing human rights violations. I hope that the 25 will have the courage to say to Mr Putin what that woman alone had the courage to say and that they will not merely utter a few fine words about the investigation ...
(PL) Madam President, the Finnish Presidency has declared the implementation of an energy partnership between the European Union and Russia. I would like to ask how it intends to achieve this. So far it has been less a question of partnership than of the 'Finlandisation' of EU-Russia relations.
The EU's policy towards Russia is mainly one of concessions, and it is also ambiguous in its positions. This is often at the cost of the new Baltic Member States, as well as Poland. A textbook example of this is the German-Russian agreement to build a north European gas pipeline at the bottom of the Baltic Sea. Russia is skilfully using its position as a monopolist on the European energy market. Operating the principle of 'divide and rule', Russia is making agreements with stronger states over the heads of weaker ones, and the EU meekly accepts this. So far we have not even managed to get Russia to ratify the European Energy Charter, a fundamental EU document relating to the energy market.
The informal summit between the Heads of State or Government in Lahti in which the Russian president is to participate should bring about a change to this state of affairs. In this matter more than any other, the EU must speak up with a single voice and from a decisive negotiating standpoint.
(FI) Madam President, my city of birth, Lahti, may be the stage for an important event when it hosts the EU summit. The subject-matter is most apt for Lahti, an area which for a long time has had a high profile as a centre of excellence in environmental technology - because there is no point talking about energy without energy efficiency. The most effective way of quickly increasing self-sufficiency in energy is to improve energy efficiency and conservation. When we hold the energy dialogue with Russia, we also need to say that it is not politically wise to increase our dependence on Russia for energy any further.
In the light of the climate challenge, we need all the resources we can muster. All low-emission energy must be given the credit it is due. It is high time we did away with the idea that renewable energy and emission-free nuclear power are somehow opposed to each other. This is an illusion: it is something that is more in the mind than what is actually the case when it comes to practical attitudes to energy.
I have asked the Finnish Minister for Trade and Industry to include the re-examination of Bulgaria's accession conditions on the Lahti agenda. I am alluding to the unfair and unnecessary decision to close four of the six nuclear reactors at Kozloduy. When we look at the criteria behind the decision today, we can see that the condition imposed on Bulgaria in Helsinki seven years ago is now obsolete. It is also unreasonable in view of European energy policy objectives. Improvements have been made, and the Council's working group has itself stated that the power plants meet safety conditions. Even so, they have to be closed by the end of the year.
If Finland does not address the problem now, there will be a shortage of energy not only in Bulgaria but also in its neighbouring countries, whose electricity needs Bulgaria has met these last five years. The Commission's claim that these reactors could be improved in economic terms has proven wrong. Kozloduy produces electricity at less than two cents per kilowatt-hour. Closing them can be partially compensated for, and that will be through the use of power plants burning lignite, the dirtiest of all energy sources. Consequently, EU cash is being used to switch from a cleaner technology to a dirtier one. That is madness.
In asking for the case to be re-examined, I am not saying that we should renege on the agreement, but rather that we should examine it in the light of current information, so that there could be flexibility on the closure date. Why should Bulgaria increase its greenhouse gas emissions when it has an alternative which has been found to be safe?
(FI) Madam President, ladies and gentlemen, he who speaks here of Finlandisation may be thinking of himself. It may be a long journey for him to get to Finland's level in terms of democracy and its economy, because we are at the forefront of Europe.
(Applause)
This has come about through hard work. Come, follow us! The themes at Lahti are investment and innovation. They are Finland's priorities too. The Union's level of investment in research and development is totally inadequate. The Barcelona objectives have been achieved by just two countries: one of them is Finland, the other Sweden. I am ashamed of the short-sightedness of Europe's leaders. Europe is in a constitutional crisis and spiritually powerless at the same time. We are just not coping in many areas because our investment in research lags behind that of our competitors, and soon the East will catch us up.
Out of this fragmented scientific arena we urgently need to build an efficient, straightforward and high-level European area of research. Through cooperation and collaboration we will succeed. We will be an area where the sun is setting unless we put innovation quickly into practice. As far as the founding of a European Institute of Technology is concerned, the project lacks money and direction. As rapporteur, my own opinion is: let there be innovation and the transfer of innovation into practical realisation; then our standard of living will improve.
We regard Russia as a strategic partner, and we will renew the Partnership and Co-operation Agreement. The shocking murder of the journalist Anna Politkovskaja does not sit well with the Russia which we are hoping will become a better partner for the European Union. She fought against corruption and violence; even the country's government says she did. Why was Politkovskaja not given protection? Everyone knew about the death threats. This serious matter needs to be raised at Lahti.
Europe is becoming more and more dependent on imports of energy. Dependence is growing at a phenomenal rate. As our problem is security of supply, and Russia has a problem with good customers - that is, a problem securing long-term agreements which can help the country invest in the energy infrastructure - I propose a solution where we strike a major deal and address both these issues at the same time. That way, the markets will open up both in Russia and the European Union under the same rules; that is, an energy agreement will be ratified in the same package. This way, we will create energy security for both parties and, obviously, especially for ourselves.
(FI) Ladies and gentlemen, Russia's energy resources and our desire to secure deliveries of oil and gas must not be allowed to blur our vision when it comes to the worsening state of democracy and civil rights in Russia. Civil society is in dire circumstances there. Following the murder of Anna Politkovskaja, this should at last be obvious to everyone.
Human rights violations, assaults and even murder do not just target political opposition but also minority nationalities, dozens of which exist in Russia. The Mari Nation is one, and the European Parliament has also turned its attention to the outrages it has experienced.
The conflicts relating to nationality are also connected with Anna Politkovskaja's murder. She was murdered because she told the truth about what is happening in Chechnya.
On the very next day after the murder, thousands of Finns gathered in front of the Russian embassy for a candlelit demonstration, the like of which had never been seen before. I hope that the Finnish Government, as the country to hold the Presidency of the EU Council of Ministers, will express to Russia just as clearly its shock and the concern that we feel. Human rights must be at the core of Russian relations.
in writing. - (SV) Madam President, next week's Lahti Summit will deal with the issue of a common energy policy. This is another example of the fixity of purpose with which the political establishment, for purposes concerned purely with political power, exploits a variety of social problems in order to promote the EU's positions. In reality, there is very little reason to conduct energy policy at EU level.
We are at a stage in history when it is beginning to appear quite certain that the emissions of greenhouse gases resulting from human combustion of carbon and hydrocarbons are causing climate change. We need to find ways of resolving this situation. Yet no one in a position of power in the EU is able to decide which types of energy we should choose in order to secure a sustainable energy supply for the future. What is more, the requirements of the different countries vary widely. Certain countries have the greatest possible interest in finding methods of separating and storing carbon dioxide from the combustion of coal and oil. Some countries are prepared to allow themselves to become dependent on natural gas from Russia, while others would rather pin their hopes on nuclear power, water power, wind and wave power, biomass or geothermal energy. There are various ways by which all of them can reduce their energy consumption. In so doing, countries must be free to experiment and try out a variety of routes. It is through such institutional competition between countries that progress occurs. The idea of the EU prescribing how much of each type of energy is to be used is an absurd notion that is dangerous for the future of Europe.
Madam President, I am very happy that the President-in-Office has confirmed that discussions at Lahti will centre on the whole question of energy. Like the last speaker, Mr Lundgren, I hope that climate change will also be a core part of these discussions.
The protection of the citizen and his or her environment needs to be put at the centre of energy policy. Climate change and its possible repercussions, air pollution in cities, the deterioration of the urban environment and all the other pollution nuisances of which we are aware have a strong impact on our citizens in their everyday lives in economic, social and health terms.
We know that the planet is now 0.6oC warmer today than it was a hundred years ago. We know that by 2020 our environment will have warmed up by another 0.8oC. That global warming will lead to extraordinary weather conditions such as storms, extra rain and floods. We hear from the experts that water levels could rise by up to a metre. If that happens, countries like Bangladesh and - nearer to home - the Netherlands will face catastrophe. This is how important it is. Last winter we witnessed a crisis in Ukraine - who will witness another crisis this evening when they play Scotland at football! - and we saw the first interruption in our gas supplies for 40 years.
We get 22% of our gas from Russia, and this is a dangerous position for the EU to be in because, following that crisis last year, we discovered that some of the newer Member States only had 24 hours of reserve supplies. As Mr Barroso said on the subject of immigration, in terms of energy we cannot go on with 25 - soon to be 27 - disparate and completely separate energy policies. We have to centralise and have a coherent energy policy run from the centre.
(Applause)
(FR) Madam President, Madam President-in-Office of the Council, Mr President of the Commission, the most recent summits in Tampere and Luxembourg again showed the limits of European immigration policy and the limits of solidarity amongst European governments. We therefore hope that you will be able, in Lahti, to at last tackle the underlying causes of immigration.
If we want to have fewer people arriving on our southern borders, the answer is not, and never will be, to increase patrols and speed up return flights. I have met these immigration applicants: all the hope of their family and of their village rests on them and some of them would prefer death to failure. Combating illegal immigration, therefore, does not mean condemning these victims by sending them back to a destiny from which they were trying to escape; it means targeting the people who organise the trafficking, who deceive people by holding out the prospect of a better future in Europe, and targeting those who exploit them in Europe.
Should we not also make European policy on visas more flexible? That is the way to fight against clandestine activity. If it is true that we need workers, we need people with rights, not slaves. We have to accept that regularisations may be necessary in order to fight against the exploiters. Trafficking in human beings can only be combated effectively if we take action against undeclared employment and the exploitation of migrants in our own countries.
We also have to admit that we have been paying for Africa for a long time, we have to admit that our codevelopment policies have not been fair, and we have to allow for massive development of poor countries. Until now Europe has been happy just to make declarations of good intentions. We have to invest massively in these countries and also help to create public services that are accessible to everyone and to set up businesses that will pay their employees fairly, which, it has to be said, is not always the case at present. Workers are often exploited by European businesses in their own country and that, I repeat, is something that we must not be afraid to say.
Finally, our Member States have to realise that we must work together and that we will not be able to really do anything by each keeping ourselves to ourselves. Let us go beyond our national selfishness which is leading straight into disaster.
Madam President, well, here we go again: another Heads of State Summit, another discussion about our competitiveness - or, should I say, lack of competitiveness - and another complete waste of time! We have been here before haven't we? Do you remember, in March 2000, the Lisbon Agenda? I sat here and I heard this wonderful pronouncement that the EU was going to become the most competitive and dynamic knowledge-based economy in the world by 2010. It is not going very well, is it, Mr Barroso? I do not think you are going to meet those targets in the course of the next three and a half years!
And then we heard it last summer, when Mr Blair came here. He stood up and told us that we had to face the challenge of globalisation, and we could only do that if Europe became competitive, if we started to invest more money in research and development. And, of course, nothing has happened again. If you really want to improve competitiveness, then what you will do this weekend is look at the 91 000 pages of close-type legislation that make up the acquis communautaire and decide to get rid of a substantial chunk of it. If you were serious about making Europe competitive, if you were serious about moving into the modern world, that is what you would do.
I am amused that Denmark is to be the economic study for the weekend. Well, I understand that, because they have got the highest rate of employment in the European Union. I wonder whether that is because they have got their own currency - they are able to manage their own fiscal and monetary policy. In fact, unemployment figures outside the eurozone are half those inside the eurozone. So the real conclusion this weekend is that we should be doing far less at European level, because everything the EU touches turns to disaster.
(PL) Madam President, the meeting between our leaders and President Putin will be an opportunity to raise the issue of secure energy supplies, and to express our extreme - and I repeat our extreme - concern at the state of Russian democracy and respect for human rights.
Too many times our politicians have buried their heads in the sand, and too many times they have accepted meaningless explanations from the Russian side, until finally the conscience of Russian journalism, Anna Politkovskaya, was brutally murdered by shots to the head, like Galina Starovoytova before her. These two victims mark the beginning and the end of the process of the retreat from democracy in Russia. Mrs Starovoytova's death in 1998 marked the beginning of the retreat from democratic standards in that country, because she was a symbolic figurehead, the leader of the St Petersburg democrats. The murder of Mrs Politkovskaya is a blow to what remains of the free press in Russia. Whoever ordered the killing knew that the victim was a person of unyielding character, a symbol of truth and independent journalism.
I did not know Anna Politkovskaya personally, although I did have the pleasure of working with Galina Starovoytova, and always admired her courage. For this reason, in view of their sacrifice, and before we feel the effects of Russia's retreat from democracy on our own heads, I appeal for respect for human rights and civil freedoms in Russia to be made a condition of further political dialogue with that country.
(PT) Madam President, there are some very important issues on the Lahti agenda such as energy policy, illegal immigration, competitiveness and innovation. It is inevitable, however, that the issue of freedom of the press should also be addressed. Democracy, freedom and human rights are essential issues at a summit of this importance, due to be attended by President Putin at a time when the murder of the Russian journalist Anna Politkovskaya is uppermost in our minds.
The European Council must call on President Putin to bring the perpetrators of this heinous crime to justice. At a time when Europe is facing the effects of climate change and rising oil prices, energy efficiency must, as a matter of urgency, be stepped up. Furthermore, dependence on fossil fuels must be reduced to help the economy, the environment and the quality of life of Europe's citizens.
The EU must diversify the sources and suppliers of its energy and must prioritise renewable energy so as to honour its obligations under the Kyoto Protocol. The idea of linking innovation to competitiveness makes perfect sense for the Finnish Presidency and for my country, Portugal. Harnessing innovation to boost competitiveness is one of the approaches of the Lisbon Strategy put forward by the Portuguese Presidency in 2000.
Eight examples of best practice, selected by the European authorities, were presented a few days ago at the first meeting of the national coordinators of the Lisbon Agenda. Portugal deserves praise for the Company in One Hour project.
Mr President, the murder of Anna Politkovskaya is a threefold tragedy. It is personal - a tragedy for her family - but it is also a tragedy for Russian society, because it is a sign of an emerging development in that large country, and it is a tragedy for democracy, because it was a murder of an important democratic element in Russia. It was a step down the ladder which is weakening democracy in that country.
It was said earlier here today that we should be realistic about democracy in Russia. I do not know what the speaker really meant, but let us indeed be realistic about democracy in Russia: if we do not stand up for democracy in Russia, we will leave people like Anna Politkovskaya and thousands of others on their own. If we do not stand up for democracy and the rule of law in Russia, we will not strengthen the forces in Russia that can make Russia a better country and a better partner. Not standing up for democracy will not make Russia a better partner in energy policy or in any other area.
(Applause)
Not calling for democracy and the rule of law does not make Russia a better society. Russia will be a credible energy partner only when democracy is stronger and when the rule of law is stabilised. That is what it means to be realistic about democracy in Russia, and let that be stated here today.
Mr Barroso, some of the competences we have in the European Union - the internal market for energy policy, the trans-European networks, competition rules and trade policy - are the instruments that we must use with relation not only to Russia but also to other parts of the world. They are the best basis for the future energy policy of the European Union. Let us use them and let us go forward step by step.
(PL) Mr President, the European Union must face up to the political, economic and cultural challenges of recent times. Firstly, the time has come to form a common European energy policy consisting of measures on the scale of the European policy on heavy industry after World War II. Secondly, the European Union must give a unified response to the problems of mass illegal immigration of people from all over the world, which is having a considerable impact on some countries. Finally, we have to achieve a real breakthrough in developing scientific research, new technologies, competitiveness and economic innovation within the Member States. In Europe we are currently in need of courage, vision and a forward-looking strategy. We need to deepen integration and achieve a truly common and unified policy in these three areas.
I would like to express my satisfaction at the fact that President Putin was invited to the summit in Lahti, and at the efforts to forge a strategic partnership with Russia. At the same time, however, our agreement with Russia should not be pursued at the cost of tolerating violations of human rights and media freedom. Russia is a land of immeasurable mineral wealth, but above all it is a land of people such as the murdered journalist Anna Politkovskaya, a journalist whose courage and honesty is a symbol of civic Russia, and whose activities should become a symbol and an inspiration for the whole of Europe.
(DE) Mr President, ladies and gentlemen, I find today's debate on the one hand a sobering experience, but am also, on the other, refreshed and reinvigorated by it. Many of those who have spoken in it have put forward factual analyses, have set the right goals and have told hard-hitting truths, but what comes next? What action shall we now take? Confidence is built not by analysis on its own, but only by action.
There are three messages I want to give the President of the Council to take with him to the Summit. The first is that, if he has listened to us, he will have heard us telling him not to treat his talks with Vladimir Putin as just 'business as usual', not to reduce the summit to a meeting about energy policy, but instead, also to talk about all the things that have been mentioned today. Secondly, we urge him to put before us a timetable detailing when we can expect to have the EU internal market in energy of which President Barroso spoke, and thirdly, we want him to give us a timetable for when the European Union will become a research area.
Turning to energy policy, the partnership with Russia is only a part of the energy policy that Europe needs. Our priority is greater independence where energy is concerned. We favour above all the prioritisation of research on the reduction of energy consumption and the creation of sources of renewable energy, and that is our great contribution to more innovation. We urge you to make it easier for small and medium-sized enterprises to participate in innovation and enable their representatives to take part in the tripartite dialogue.
Do not forgot how this year started with the reduction of gas supplies to Ukraine, nor that the most recent major event in Russia was the murder of a critical journalist, which attracted far more public attention than the many similar murders that preceded it.
I want to focus my remarks on one of the key topics for the summit: innovation. I notice that not many speakers have talked about it today. I just want to encourage both the President-in-Office and President Barroso to make sure that this remains at the heart of the discussions. As you pointed out, President Barroso, there could not be a better place than Finland to have that discussion.
I was pleased that in both your speeches you talked about the main competition coming from China, India and the other Asian economies. We have to start looking outside and to start building on the real strengths of our technology. One of the things I particularly want to appeal to you to promote in your summit - something with which to engage Europe's leaders - is to energise and use the power of public authorities. They are spending billions of euros of public money on developing new services, but I do not think that many of them are thinking about how they use that money to generate innovation and to push forward the new products and services that European industry and companies are willing to provide.
Let us take Nokia as a good example, because you will be in Finland, the home of Nokia, for your summit. Wireless networks, wireless innovation, wireless services: these are the sort of things that we should be developing for health, for education, for raising the quality of public services, for transforming the quality of experience the citizens have in interacting with us. That is something that I would like you to put firmly on your agenda with the European leaders, because if we can achieve that we will make some serious moves forward. We know that other countries are doing that, particularly the United States.
In conclusion, I notice, President Barroso, that we see your European institute of technology on the agenda. I hope you will convince us that it is a worthwhile investment. I am not yet convinced, because I think many universities are already doing what you want to do - it is a lot of money.
Let us put innovation at the heart of what we do at the summit, and I hope that you will give it the importance that it deserves.
(PL) Mr President, I agree wholeheartedly with the statements of my colleagues from the Group of the European People's Party (Christian Democrats) and European Democrats on the situation of democracy in Russia, and I do not wish to repeat their arguments, to which I give my full support. I would like to raise two other questions, and to congratulate the Finnish Presidency for preparing two items for the informal summit in Lahti, namely energy and innovation. In energy we need a common policy, both within the European Union, to establish a common energy market, and outside it, for example joint European negotiations with the partners who supply our oil and gas. This is extremely important. We need to ensure that there is no repetition of the situation where one Member State's negotiations, for example, concerning supplies of oil or gas from Russia, place other Member States in an extremely unfavourable position.
It is extremely important that we approach our common energy policy in this way: this will be a major step towards creating a common foreign policy. There is, however, another aspect to our external policy regarding energy: Ukraine's pipelines are currently in a bad state of repair, and they are the last route for energy supplies from the east which is independent of Gazprom. It is important that we invest in these pipelines, and that we make every effort to secure the funds necessary for such an investment.
On the issue of innovation, I would like to raise just three points. In the first place, we need a responsible economic policy whereby innovation is adopted by industry, which we do not have on our continent. And that means an economic strategy. The second point is the issue of a European patent: we need to have our own European patent. Thirdly I believe there is a need for a European Institute of Technology which will serve innovation. I personally support Mr Barroso's idea and believe that we now have the opportunity to finally sort things out.
(DE) Mr President, Mr President of the Commission, Mrs Lehtomäki, I very much welcome the communication on innovation that the Commission will be publishing next week. It represents one of the first serious attempts at drawing up an EU strategy for the positioning of Europe in the context of globalisation, and so I believe that it will be the most important item on the agenda at the informal meeting in Lahti.
Innovation is, in particular, characteristic of small and medium-sized enterprises, and the communication takes that fact into account. As the Minister has said, innovation calls for European standards, and there are many fields in which much remains to be done on that front. For that to happen, we need - as you yourself said, Mr President of the Commission - to spend more on research and investment. Much as I rejoice in Finland's good example, I also have to point out that my own region, Baden-Württemberg, spends 3.6% of its gross domestic product per annum on research and development, which is a good deal more than either the USA or Japan do.
We also need more confidence in our own abilities, and that is at the heart of this communication. We have to say more about what we in Europe will, together, be able to achieve once our structures have been revised, even in a globalised world. We have an outstanding internal market, which - while we do have to further extend it - does nonetheless offer us protection. We do need more self-confidence in our dealings with Russia and China, but we also need to know where, within the European Union, we need to undertake reforms in order to remain competitive, and the innovation strategy offers an excellent basis for that.
It has also been said that a more innovative approach to the award of public contracts is needed, and examples of what is meant by this have been given. These things are already being done in my region. I believe that there are some splendid possibilities for putting Europe in a better position to cope with globalisation, and I also believe that this informal summit in Lahti should help to develop - perhaps in the coming year - a globalisation strategy for the European Union that will enable us to convince the public that this Europe of ours has a chance in a globalised world.
(LT) Mr President, we must have clarity, here in Brussels, when speaking about Lahti. The beginning of today's session revealed how disunited, polarised and easily manipulated we are. The European Parliament appeared to be unable to react immediately, with a joint document, to a terrible crime in Moscow, so as not to disturb the Russian president touring Europe. This is just one more indication that the European Union does not have its own European policy in respect of Russia, and that we, in Europe, implement only a pro-Russian policy in this respect. The cajoling of leaders does a disservice to Russia if anybody is still to believe that Russia could become a European country rather than Europe becoming a political annex to undemocratic Russia.
We are only talking about Europe's united Energy Strategy, but we are closing our eyes to the fact that Russia will never allow this to happen as it already has its Trojan horse in the middle of Europe. The supporters of Mr Schroeder and others suffering from political blindness will continue to destroy a united Europe.
Unfortunately, here in Parliament we have only one option - to talk openly about the deliberate moral surrender of influential Europeans. The Russian president is the one who is absolutely open when he says that European values are unsuitable for his Russia and his regime. According to Russian politicians, Europe can simply throw out its Energy Charter together with the Human Rights Charter, since Europe will sign anything dictated by Russia anyway. This was voiced in Sochi and on various other occasions. Such is the real partnership and the common space. This is the common space where journalists are murdered and we do not dare to question if this common space is for us. We nevertheless get irritated about North Korea and Iraq, instead of simply recognising that both buttons, the one in Teheran and the other in Pyongyang, are pressed by the same player somewhere in between.
We should at least try to understand that Anna Politkovskaya, the last brave journalist, was murdered not only by Putin's Russia, but by conformist Europe as well.
(Applause)
(PL) Mr President, it is appalling that the road to civil freedom and respect for fundamental human rights needs to be paved with the killing of innocent people.
Today we are discussing the murder of Mrs Politkovskaya, the woman who unflinchingly exposed the crimes committed against the Chechen people by the Russians. But let us remember that, before her, others lost their lives in the struggle against dictators, for example the Ukrainian journalist Mr Gongadze or the Lebanese journalist Mr Kassir. In these cases, did the state do everything to protect those who exposed the connection between public structures and criminals? Or did hatred for their uncompromising behaviour and their writing lead to a closing of eyes, to a washing of Pilate's hands, to the indifference of the state to their fate and the threat of death that hung over their heads?
Russia has always produced great figures who have swum against the tide of dictatorship and risked their lives to expose the crimes and iniquities of their governments. We only need to think of such names as Kravchenko, Bukovsky, Sakharov or Solzhenitsyn. Should we as citizens of the free world always abandon these people to their fate? No, we did not support Mrs Politkovskaya enough during her lifetime. Let us support her after her death.
I believe that the investigation into this crime should be conducted under international supervision, as happened in the case of the murder of Lebanon's prime minister Rafik Hariri. I cannot imagine the European Union signing a cooperation agreement with Moscow without this crime being investigated, and without those who ordered it and who carried it out being put on trial. The European Union should either give priority to commitments to freedom and civil and human rights, or to economic and energy interests.
Mr President, the hour of truth has come. We must be uncompromising. We owe it to the murdered journalist.
(MT) Mr President, I hope that next week's summit will discuss the letter sent to the Finnish Presidency by no less than eight Heads of Government, who wrote to you about illegal immigration. Although summer is over, and one now expects the flow to abate, it is common knowledge that we had a crisis, and that it is still there. If we remain passive, we will be facing even greater problems next year. I must say that during the last few days we witnessed the first concrete steps in our bid to convince European countries to tackle the problem of illegal immigration in unison. Firstly, last week saw the start of patrols in the Mediterranean. I can see Mr Frattini here, whose role I wish to acknowledge. I hope that these Mediterranean patrols send out a clear message that the Mediterranean is not an open sea, free for all, where organised crime ferries immigrants to Europe unimpeded. Secondly, we took a vote in the Committee on Budgets whereby we increased substantially the budget for the Frontex Agency to almost EUR 35 million, so that it can strengthen its operations at our external borders. I hope the Council is willing to support us, rather than reducing the budget for Frontex as it has already tried to do. How can the Council say it is conducting the struggle against illegal immigration in a serious manner, if, at the same time, it allows European governments to act in a niggardly manner and try to reduce the budget in this area rather than increase it? Thirdly, it appears that agreement will be reached this week about the four European immigration-related funds, which will operate as from next January. I am satisfied with the adoption of measures such as the emergency clause, which enables the European Union to extend immediate financial help in emergency situations. Much remains to be done, if we want people to feel that Europe is indeed taking into consideration their feelings about illegal immigration. Parliament has spoken and so has the Commission. The Council is now expected to do its part. Thank you.
Mr President, listening to Mr Landsbergis's football fan club giving him applause, I hope the fan club of the Finnish national team in a European state called Kazakhstan is as strong as his, because we are 25 minutes into the match and it is still 0-0, so we need a little bit of help!
First of all I support the Finnish Presidency and its agenda for Lahti. With regard to external energy, you know what you need to do: you need to thank Mr Putin for the fact that it is actually on the agenda, because at about this time last year he was squeezing the Ukrainian pipelines a little bit and that is the reason we are actually talking about it in Lahti. So give him a big thank-you when he gets there.
Second, with regard to innovation, this is not product placement but the truth is that we spend about EUR 4 billion a year on innovation and research and development. That is less than Nokia spends on research and development per year. I hope that makes the leaders of the European Council think.
My third point relates to EU-Russia relations. It is funny to listen to the debate here, apart from the murder case, of course. Sometimes it seems to me that we are much quicker to criticise the United States than we are Russia, and perhaps in the latest case we should deal with Russia as a superpower much like the United States.
I want to support the President of the Commission very strongly on EIT. I think there are a lot of misunderstandings around the concept. It is a network which I think would work quite well. Everyone agrees on the problem, now it is a question of how we are going to find a solution. I think we need public and private partnerships, much like the MIT in the United States. In that sense I hope that this initiative of yours will go through.
Finally, the problem with informal European Councils is that you usually get very few practical things out of them. President-in-Office, if you come out of that meeting with three things, I think it will have been a success. One: a green light for the EIT; two: some patent legislation, or at least a promise to have it; and three: a common energy policy. If you do not get these results I think future informal European Councils will be as empty as this Chamber is today.
Mr President, I would like to thank the European Parliament for its valuable contribution during this discussion today. I can assure you that I will convey the message to the Prime Minister for him to look at during the preparations for the Lahti Summit.
It is of course true that innovation and competitiveness have been on the European agenda for some time, but it is now our aim to turn this discussion into action, at least to open the door to the way forward. Action is what is really needed at the moment.
In the framework of the strategic partnership that we have with Russia, all the issues can and will be discussed. I am sure that the very important points you have raised during this discussion will also be discussed during the meetings. I am very happy that you will have an opportunity to continue the discussion on the results of the Lahti Summit with the Prime Minister of Finland later this month, on 25 October in Strasbourg. I thank you very much and look forward to having some 'deliverables' from the Lahti Summit.
Mr President, first of all let me welcome the broad support that was given for the agenda for innovation, for a European institute of technology, for a common energy policy and for a European immigration policy. But let me tell you that we need to deliver that message outside this room, because, as some of you said, there are still some misunderstandings.
Let me just mention the EIT. It is interesting that everybody agrees that in Europe we are not doing enough in terms of innovation; there are not enough links between the universities and the research centres and the world of the economy, business and practical projects. But when an idea comes to change that situation, immediately there is resistance. It is amazing! Everybody then says, 'but we have excellent universities!' - of course we have excellent universities! But if we have excellent universities, why are we falling behind the Americans and others? Something is wrong. The status quo is not an option. We cannot go on with business as usual.
I know we have excellent universities. Universities were created in Europe. They are a European creation, but we are not taking advantage of the full benefits or the full potential of our European dimension. Let us be frank: some of our universities are still very corporatist, very closed. We need a European dimension. Even the biggest Member States lack the dimension to promote the global culture we need now to face the challenges of this 21st century. Therefore, the idea is network-based. It is not a huge bureaucratic institution; it is network-based, building on the principles of excellence, on what all excellent universities and excellent research centres are doing, but with a view to connecting businesses with research so that we can promote innovation.
At the Commission I met with the leaders of the most important European companies that are driving research in the world. I got great support for the idea and I could name some of the companies. Two of those leaders in European business came from the United States, and they told me at the meeting that their biggest shock when they came to Europe was to discover that, unlike in the United States where they have American institutions for the whole of America, in Europe we do not have that. Only now are we starting with the European Research Council. So we have great institutions to promote research in Germany, Britain, France and Sweden. We have great things, but we are missing a European dimension. We are missing a European mission to give them the real tools they need to compete with the best. That is why I believe this is a great idea. I hope that, not only will it be supported in general, but that it will be supported when we come forward with practical proposals. That is why I hope to have your support when we come forward next week with a practical proposal on the EIT, and I hope for your support when in January we come forward with a really ambitious energy package.
My final point concerns coherence. The best way to negotiate with Russia is from a coherent and unified position. If we want to be credible when we discuss matters with Russia or other partners, we have to show them that we are able to have a coherent policy ourselves. We cannot discuss energy with them in a serious manner if we have 25 different energy policies. It would not be credible, let's face it.
The first thing to do if we want to be seen from outside as credible, is to put our own house in order and to have a real joint approach to energy. The same, of course, applies to other issues. But I strongly agree that the fight against climate change is a crucial element in our energy policy and we should recall that the European Union is a key player in that field. We are, in fact, leading in the world. I can tell you that when we discuss this matter with our American friends, with our Russian partners, or with the Chinese or Indians, we always put this question at the forefront of our negotiations. It is important to do what we can, but also to involve others in those efforts. But what all these issues show - from innovation to immigration, to energy, to the fight against climate change - is a strong argument for Europe. In the age of globalisation, even the biggest Member States do not have the means to tackle those challenges. So if you want a strong Europe, we are going in the right direction. A strong Europe is not bureaucratic, but has a common approach to those issues.
We should also speak with one voice on human rights, and I hope that this is the message which comes out from Lahti: the European leaders may come from different political and ideological backgrounds, from different national situations, but they are ready to build a strong Europe together and they are ready to speak with one voice to the outside world. That is what I am hoping for from Lahti.
That concludes the debate.
(PT) Quite apart from important international issues, the next European Council is set to include the so-called 'innovation policy', the proposed 'common energy policy', and 'illegal immigration', issues for which working documents have yet to be tabled. We shall return to these issues in due course.
Apparently, two debates have been left off the agenda: one on our 'functional' or 'assimilation-related' 'absorption capacities', that is to say the enlargement to include Croatia and Turkey, and the other on the so-called institutional reform (the composition of the Commission and Parliament, and the Council's decision-making process). This debate concerns setting the rules of the game, which are always imposed by, and in the interests of, the major EU powers.
Another debate absent from the agenda concerns the attempts to (re)impose the so-called 'European Constitution', which has already been rejected. Hitherto, and despite numerous attempts to do so, there is still disagreement over what can now be done to resurrect the, revamped or otherwise, 'European Constitution'. Yet its proponents reflect, prepare the ground and set up think tanks while they wait for the French elections and the German Presidency, with the latter expected to present the (pseudo) 'way forward'.
The more they dither, the less the workers and the people are aware of the real significance and primary objectives of the EU. |
Name: 85/329/EEC: Commission Decision of 28 June 1985 on precautionary measures with regard to durum wheat
Type: Decision_ENTSCHEID
Subject Matter: trade policy; prices
Date Published: 1985-06-29
Avis juridique important|31985D032985/329/EEC: Commission Decision of 28 June 1985 on precautionary measures with regard to durum wheat Official Journal L 169 , 29/06/1985 P. 0094 - 0095*****COMMISSION DECISION of 28 June 1985 on precautionary measures with regard to durum wheat (85/329/EEC) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Economic Community, and in particular Articles 5 and 155 thereof, Having regard to Council Regulation (EEC) No 2727/75 of 29 October 1975 on the common organization of the market in cereals (1), as last amended by Regulation (EEC) No 1018/84 (2), Whereas the marketing year for durum wheat begins on 1 July: whereas the Council has not, to date, adopted the prices for that product for the 1985/86 marketing year, in accordance with Article 3 (1) of Regulation (EEC) No 2727/75; whereas the Commission, in compliance with the tasks entrusted to it by the Treaty, is obliged to adopt the precautionary measures essential to ensure continuity of operation of the common agricultural policy as regards durum wheat; whereas these measures are taken as a precaution and are without prejudice to the Council's price decisions for the 1985/86 marketing year; Whereas by Decision 85/309/EEC (3) the Commission decided to apply, in respect of durum wheat in certain Member States, and for intervention operations carried out before 1 July 1985, the intervention price fixed by Regulation (EEC) No 1019/84 (4) for the 1984/85 marketing year; whereas, as from 1 July, this price should be applied for the whole of the Community and for durum wheat sent for intervention as from 1 July 1985; Whereas the threshold price for durum wheat is a price derived from the target price, which price should be fixed by the Council; whereas, in order to ensure continuity of operation of the import and export arrangements for durum wheat and for durum wheat groats and meal, a price to be used as a basis for calculation both for the fixing of the levies and for the adjustments to be made in the event of advance-fixing of the levy and of the refund should be calculated; whereas account being taken of the retention of the intervention price at a level that is unaltered, prices to be used as a basis for calculation should also be applied in respect of durum wheat and durum wheat groats and meal at the same levels as the threshold prices fixed by Commission Regulation (EEC) No 1413/84 (5); Whereas the intervention and threshold prices for the abovementioned products are the subject of monthly increments; whereas these monthly increments are one of the key factors in the operation of the current intervention arrangements and in external trade in the products in question; whereas, accordingly, the arrangements laid down by Council Regulation (EEC) No 1020/84 (6) should be applied; Whereas the aid for durum wheat is a key factor in the existing arrangements for that product; whereas, account being taken of the arrival of the new crop, and in the light also of the fact that the operative event with regard to entitlement to the aid is considered to have taken place on 1 July of the marketing year in question, the aid should be applied at the level fixed for the 1984/85 marketing year; whereas, however, as regards Greece, the aid should be aligned with the level of Community aid applicable in France and Italy during the 1984/85 marketing year in accordance with Article 68 of the Act of Accession of 1979, HAS ADOPTED THIS DECISION: Article 1 1. The intervention agencies shall supply, when buying in durum wheat, an intervention price equal to that fixed by Regulation (EEC) No 1019/84 for the 1984/85 marketing year, adjusted on the basis of the premiums and penalties provided for by Commission Regulation (EEC) No 1570/77 (1). 2. In calculating the adjustments to be made in the event of advance fixing of the import levies and of the export refunds, the price to be used for the month of import or export, shall be equal to the threshold price fixed for the 1984/85 marketing year at: - 352,67 ECU per tonne for durum wheat, and - 547,09 ECU per tonne for durum wheat groats and meal. 3. The prices referred to in paragraphs 1 and 2 shall be adjusted as from 1 August 1985 by the same amounts as the monthly increments fixed by Regulation (EEC) No 1020/84. 4. In Greece, France and Italy the agencies designated by the Member States shall, in accordance with Article 10 of Regulation (EEC) No 2727/75, pay an amount of aid for durum wheat of 101,31 ECU per hectare. 5. The provisions of this Article shall be applied without prejudice to the decisions to be taken by the Council in accordance with Articles 3, 6 and 10 of Regulation (EEC) No 2727/75. Article 2 This Decision is addressed to the Member States. Done at Brussels, 28 June 1985. For the Commission Frans ANDRIESSEN Vice-President (1) OJ No L 281, 1. 11. 1975, p. 1. (2) OJ No L 107, 19. 4. 1984, p. 1. (3) OJ No L 163, 22. 6. 1985, p. 52. (4) OJ No L 107, 19. 4. 1984, p. 4. (5) OJ No L 136, 23. 5. 1984, p. 5. (6) OJ No L 107, 19. 4. 1984, p. 6. (1) OJ No L 174, 14. 7. 1977, p. 18. |
Exhibit 4.58 The Loan Agreement (the "Agreement") is entered into as of March 29, 2011 among the following parties in Beijing, the People's Republic of China (the "PRC"): LENDER: Zhengtong Information & Technology (Shanghai) Co., Ltd. Address: 138#, 4-5th Building, 37 Nong, Zhangjiabin Road, New District, Shanghai, P.R.C. BORROWER A: Zhiwei Zhao Address: Block C938-941#，International Enterprise Building,Financial StreetNo. 35, Xicheng District, Beijing, PRC. ID No.: 110102196307100139 BORROWER B: Jun Wang Address: Block C938-941#，International Enterprise Building,Financial StreetNo. 35, Xicheng District, Beijing, PRC. ID No.: 370102197012163311 Borrower A and Borrower B are collectively referred to as the "Borrowers". WHEREAS, 1. The Borrowers desire to establish Shanghai Stockstar Wealth Magagement Co., Ltd. (the “Company”), whose registered capital will be RMB30, 000, 000, and Borrower A and Borrower B will respectively hold 55% and 40% of the equity interest in the Company. 2. The Borrowers desire to borrow a loan (the “Loan”) from the Lender to invest in the Company. 3. The Lender agrees to provide the Loan to Borrowers. THEREFORE, in accordance with the principle of sincere cooperation, mutual benefit and joint development, through friendly negotiation, the Parties hereby enter into the following agreements. ARTICLE 1. LOAN 1.1 Lender agrees to provide the Loan to Borrowers as follows: providing RMB16, 500, 000 to Borrower A, and RMB12, 000, 000 to Borrow B. 1 1.2 Term for such Loan shall be ten (10) years which may be extended upon the agreement of the Parties (the "Term"). 1.3 Notwithstanding the foregoing, in the following circumstances, Borrowers shall repay the Loan regardless if the Term has expired: (1) Borrowers decease or become a person without legal capacity or with limited legal capacity; (2) Borrowers commit a crime or are involved in a criminal act; or (3) Lender or its designated assignee can legally purchase Borrower's interest in the Company under the PRC law and Lender chooses to do so. 1.4 Subject to the satisfaction of the conditions precedent as specified in Article 2, Lender shall remit the amount of the Loan direct to the bank account designated by Borrowers payment within 7 days after receiving the written request of payment of Borrowers. Borrowers shall send a written receipt of the Loan to Lender within 1 day after receiving the Loan. 1.5 The Loan shall only be used by Borrowers to the contribution of the registered capital of the Company. Without Lender's prior written consent, Borrowers shall not use the Loan for any other purpose or transfer or pledge their interests in the Company to any third party. 1.6 Borrowers can only repay the Loan by transferring all of their interests in the Company obtained by using the Loan to Lender or a third party designated by Lender when such transfer is permitted under the PRC law. 1.7 Lender and Borrowers hereby jointly agree and confirm that Lender has the right to, but has no obligation to, purchase or designate a third party (legal person or natural person) to purchase all or part of Borrowers' shares in the Company at a price equal to the amount of the Loan when such purchase is allowed under the PRC law. If Lender or the third party assignee designated by Lender only purchases part of Borrowers' interest in the Company, the purchase price shall be reduced on a pro rata basis. 1.8 In the event when Borrowers transfer their shares in the Company to Lender or a third party transferee designated by Lender, (i) if the actual transfer price paid by Lender or the third party transferee equals or is less than the principal amount of the Loan, the Loan shall be deemed as interest free; or (ii) if the actual transfer price paid by Lender or the third party transferee is higher than the principal amount of the Loan, the amount exceeding the principal amount of the Loan shall be deemed as an interest accrued on the Loan and paid by Borrowers to Lender in full. 2 ARTICLE 2. CONDITIONS PRECEDENT TO DISBURSEMENT The following conditions must be satisfied before the Loan is disbursed to Borrowers: 2.1 Lender has received the request of payment sent by Borrowers pursuant to Article 1.4; 2.2 Borrowers and Lender have executed the Share Pledge Agreement to the satisfaction of Lender; 2.3 Borrowers and Lender have executed the Option Purchase and Cooperative Agreement to the satisfaction of Lender; 2.4 The above Share Pledge Agreement and the Option Purchase and Cooperative Agreement have been and remain effective. The parties to the contracts or agreements have not materially breached any term or condition thereof, and all the necessary governmental approval, consent, authorization and registration have been obtained or completed. 2.5 The representations and warranties specified in Article 3 herein is true and accurate on the date of Lender's receiving the request of payment and the date of making the payment. 2.6 Borrowers have not materially breached any terms or conditions hereof. ARTICLE 3. REPRESENTATION AND WARRANTIES 3.1 Lender hereby represents and warrants to Borrowers that: (1)Lender is a company registered and validly existing under the laws of China; (2)Lender has full right, power and all necessary approvals and authorizations to execute and perform this Agreement; (3)the execution or performance of this Agreement shall not violate any significant contract or agreement to which the Lender is a party or by which the Lender is or its assets are bounded; (4)this Agreement shall constitute the legal, valid and binding obligations of Lender, which is enforceable against Lender in accordance with its terms upon its execution. 3.2 Borrowers hereby represent and warrant to Lender that: 3 (1)Borrowers have full right, power and all necessary and appropriate approval and authorization to execute and perform this Agreement; (2)the execution or performance of this Agreement shall not violate any significant contract or agreement to which the Borrowers are parties or by which the Borrowers or their assets are bounded; (3)this Agreement shall constitute the legal and valid obligations of Borrowers, which is enforceable against Borrowers in accordance with its terms upon its execution; and (4)there are no legal or other proceedings before any court, tribunal or other regulatory authority pending or threatened against Borrowers. ARTICLE 4. CONFIDENTIALITY Without prior approval of the parties, any party shall keep confidential the content of the agreement, and shall not disclose to any other person the content of the agreement or make any public disclosure of the content hereof. However, the article does not make any restrictions on (i) any disclosure made in accordance with relevant laws or regulations of any stock exchange market; (ii) any disclosed information which may be obtained through public channels, and is not caused so by the defaulting of the disclosing party; (iii) any disclosure to shareholders, legal consultants, accountants, financial consultants and other professional consultants of any parties; or (iv) disclosure made to one party's potential buyer of shares/assets, other investors, debt or share financing providers, and the receiving party shall make proper confidentiality undertakings (in the event that the transfer party is not Lender, the approval from Lender shall be obtained as well). ARTICLE 5. GOVERNING LAW AND LIABILITY FOR BREACH 5.1 The execution, validity, interpretation, performance, implementation, termination and settlement of disputes of this Agreement shall be governed by the laws of People's Republic of China. 5.2 Any violation of any provision hereof, incomplete performance of any obligation provided hereunder, any misrepresentation made hereunder, material concealment or omission of any material fact or failure to perform any covenants provided hereunder by any Party shall constitute an event of default. The defaulting Party shall assume all the legal liabilities pursuant to the applicable laws. ARTICLE 6. SETTLEMENT OF DISPUTES 4 6.1 Any dispute arising from the performance of this Agreement shall be first subject to the Parties' friendly consultations. If such consultation fails, such dispute can be submitted to arbitration. 6.2 The arbitration shall be administered by the Beijing branch of China International Economic and Trade Arbitration Commission in accordance with the then effective arbitration rules of the Commission in Beijing. 6.3 The arbitration award shall be final and binding on the Parties. The costs of the arbitration (including but not limited to arbitration fee and attorney fee) shall be borne by the losing party, unless the arbitration award stipulates otherwise. ARTICLE 7.MISCELLANEOUS 7.1 This Agreement shall take effect after the execution of the Parties. 7.2 Upon the effectiveness of the agreement, the parties shall fully perform the agreement. Any modifications of the agreement shall only be effective in written form, through consultations of the parties. 7.3 This Agreement is executed in three (3) counterparts. Each Party shall each hold one counterpart. (The reminder of this page is intentionally left blank.) 5 [Execution page only] LENDER: Zhengtong Information & Technology (Shanghai) Co., Ltd. (Seal) Authorized Representative (Signature): BORROWER A: Zhiwei Zhao (Signature): BORROWER B: Jun Wang (Signature): 6
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Name: Commission Regulation (EEC) No 2892/80 of 7 November 1980 amending Regulation (EEC) No 2391/80 on the application of the additional measures applicable to holders of long-term contracts for certain table wines for the 1979/80 wine-growing year and amending Regulation (EEC) No 2325/80
Type: Regulation
Date Published: nan
No L 299/ 12 Official Journal of the European Communities 8 . 11 . 80 COMMISSION REGULATION (EEC) No 2892/80 of 7 November 1980 amending Regulation (EEC) No 2391 /80 on the application of the additional measures applicable to holders of long-term contracts for certain table wines for the 1979/80 wine-growing year and amending Regulation (EEC) No 2325/80 Whereas the Management Committee for Wine has not delivered an opinion within the time limit set by its chairman , THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Economic Community, Having regard to Council Regulation ( EEC) No 337/79 of 5 February 1979 on the common organiza tion of the market in wine ( ] ), as last amended by Regulation (EEC) No 1 990/80 (2), and in particular Article 12 (4) thereof, Whereas the quantities of table wine available at present are greatly in excess of the normal level when the market is in balance ; whereas the most appro priate means for re-establishing balance , by reducing the supply, is distillation ; Whereas steps should also be taken to ensure that sale of the alcohol produced by distillation of table wines does not upset the market for that product ; Whereas it seems that the intervention measure which best complies with the two above requirements is the distillation provided for under Article 12 of Regula tion (EEC) No 337/79 , since it involves a precise limit on the maximum quantity of table wine that may be distilled ; whereas a decision to apply the said Article 12 has already been taken during the present marketing year by Commission Regulation (EEC) No 2391 /80 (3 ) ; whereas Article 1 ( 1 ) (a) and (2) (a) of the said Regulation allows holders of long-term storage contracts for table wines of types A I , R I and R II and for wines in close economic relationship with them to undertake distillation of up to 50 % of the quantity of wine contracted for ; whereas in view of the situation described above , the said percentage should be fixed at 100 for table wines of type A I and at 74 for table wines of types R I and R II ; Whereas the long-term storage contracts subject to the provisions of the said Regulation expire on or before 15 November 1980 ; whereas, in order that this Regu lation may have the anticipated effect on the table wine market, it is necessary to replace the time limits provided for in Articles 4 ( 1 ) and 10 ( 1 ) of Commis sion Regulation (EEC) No 2325/80 (4 ) by a single date, and to provide for the necessary adjustments to the storage contracts referred to in Article 2 (2) (b) thereof ; HAS ADOPTED THIS REGULATION : Article 1 Regulation (EEC) No 2391 /80 is hereby amended as follows : 1 . In Article 1 ( 1 ) (a), ' 50 % ' is replaced by ' 100 % '. 2 . In Article 1 (2) (a), ' 50 % ' is replaced by '74 % '. Article 2 Where use is made of the additional distillation possi bilities provided for in Article 1 , the storage contracts already concluded, as referred to in Article 2 (2) (b) of Regulation (EEC) No 2325/80 , shall be considered, with effect from the date of entry into force of this Regulation , as covering only the quantity of wine not so distilled . Article 3 Regulation (EEC) No 2325/80 is hereby amended as follows : 1 . Article 4 ( 1 ) is replaced by the following : ' 1 . Applications for approval of the contracts referred to in Article 1 of Regulation (EEC) No 343/79 shall be made not later than 31 December 1980 .' 2 . The first subparagraph of Article 10 ( 1 ) is replaced by the following : ' 1 . The contracts referred to in Article 2 (2) (b) must be concluded not later than 31 December 1980 .' Article 4 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 1 November 1980 . (!) OJ No L 54, 5 . 3 . 1979 , p. 1 . ( 2 ) OJ No L 195, 29 . 7 . 1980 , p. 6 . ( 3 ) OJ No L 245, 17. 9 . 1980 , p . 8 . h) OJ No L 234 , 5 . 9 . 1980 , p . 17 . 8 . 11 . 80 Official Journal of the European Communities No L 299 / 13 This Regulation shall be binding in its entirety and directly applicable in all Member States . Done at Brussels , 7 November 1980 . For the Commission Finn GUNDELACH Vice-President |
Title: Someone handing out my phone number for their medical bills
Question:I have had a cellphone number for the last three years that has been getting calls from debts collectors. The frequency of these calls were about once a week for the first year which dialed back to about 1 call every two weeks the second year. Now it is down to about once every two months. I asked the last collector how long the debt had been active, and the debt had been recently bought meaning that the former owner of the phone is still handing out the phone number for numerous medical bills.
Using my phone number on a Best Buy loyalty card, I saw the individuals information flash on the screen as he had not updated his number from mine. Finally, after three years I have obtained his information.
Here is my question. As this man is handing out my number for medical bills for procedures that had happened within the last year- what are my options for legal recourse? He is obviously scamming the system, and a simple letter to his house asking him to knock it the hell off seems less than a slap on the wrist. I debated on just giving the debt collectors his current information, but that also seems light as he has gotten off the hook for three years.
TLDR; Former owner of my phone number has been handing out my number for the last three years and I have been dealing with his debt collection calls. What are my legal options.
Answer #1: Debt collectors are fairly easy to shake. Just send them written notice that they are no longer allowed to call this phone number. Keep record of the date the notice was sent. If they get bold enough to call you, file an FDCPA complaint, and your phone should be silent from them on out. |
Exhibit 99.1 Employers Holdings, Inc. Investor Presentation November, 2010 1 Safe Harbor Disclosure This slide presentation is for informational purposes only.It should be read in conjunction with our Form 10-K for the year 2009, our Form 10-Qs and our Form 8-Ks filed with the Securities and Exchange Commission (SEC), all of which are available on the “Investor Relations” section of our website at www.employers.com. Non-GAAP Financial Measures In presenting Employers Holdings, Inc.’s (EMPLOYERS) results, management has included and discussed certain non-GAAP financial measures, as defined in Regulation G.Management believes these non-GAAP measures better explain EMPLOYERS results allowing for a more complete understanding of underlying trends in our business.These measures should not be viewed as a substitute for those determined in accordance with GAAP.The reconciliation of these measures to their most comparable GAAP financial measures is included in this presentation or in our Form 10-K for the year 2009, our Form 10-Qs and our Form 8-Ks filed with the Securities and Exchange
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Exhibit 10.2
EXECUTION VERSION
FIRST AMENDMENT
First Amendment, dated as of April 8, 2013 (this “Amendment”), to the Credit
Agreement dated as of September 10, 2012 (as amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”), among TOTAL SYSTEM
SERVICES, INC. (the “Borrower”), the several lenders from time to time party
thereto (the “Lenders”), JPMORGAN CHASE BANK, N.A., as administrative agent (in
such capacity, the “Administrative Agent”) and the other agents party thereto.
WHEREAS, the Borrower, the Lenders and the Administrative Agent are parties to
the Credit Agreement, and the Borrower has requested that the Credit Agreement
be amended as set forth herein;
WHEREAS, as permitted by Section 10.01 of the Credit Agreement, the Required
Lenders and the Administrative Agent are willing to agree to this Amendment upon
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises contained herein, the parties
SECTION 1. Defined Terms. Unless otherwise defined herein, capitalized terms
are used herein as defined in the Credit Agreement as amended hereby.
SECTION 2. Amendment to Section 1.01 (Defined Terms). Section 1.01 of the
Credit Agreement is hereby amended by deleting “5.0%” and inserting “7.5%” in
the definition of “Consolidated EBITDA”.
SECTION 3. Amendment to Section 1.03 (Accounting Terms). Section 1.03(a) of
the Credit Agreement is hereby amended by (1) inserting “and Calculations” in
the Section heading immediately after “Accounting Terms”, and (2) inserting the
following language at the end of subsection (a):
“For the avoidance of doubt, for purposes of calculating any financial ratio as
used in the financial covenants set forth in Section 7.09, if at any time during
the applicable Measurement Period for such financial covenant, the Borrower or
any Subsidiary shall have consummated the Acquisition or other purchase or
acquisition (including through a merger or consolidation) of all of (or, to the
extent the applicable Person becomes a Subsidiary, a majority of) the equity
interests of another Person or all or substantially all of the property, assets
or business of another Person or of the assets constituting a business unit,
line of business or division of another Person, then such financial ratio shall
be determined after giving pro forma effect to the Acquisition or other purchase
or acquisition (including any Consolidated EBITDA, Consolidated EBITDAR,
Indebtedness, Consolidated Interest Charges or Rental Expenses acquired,
incurred or assumed in connection therewith) as if such transaction had occurred
on the first day of such Measurement Period.”
- 2 -
SECTION 4. Amendment to Section 7.01 (Liens). Section 7.01(a) of the Credit
Agreement is hereby amended by (1) deleting “or” at the end of subsection
(v) thereof, (2) inserting “or” at the end of subsection (vi) thereof, and
(3) inserting the following new subsection (vii) immediately after subsection
(vi):
“(vii) a Negative Pledge contained in any agreement evidencing or governing
Indebtedness (including credit facilities and debt securities) otherwise
permitted to be incurred under this Agreement, so long as the Borrower
determines in good faith (after consultation with the Administrative Agent) that
such Negative Pledge, taken as a whole, is no more restrictive in any material
respect than the restrictions in Section 7.01(b), or that such Negative Pledge
is otherwise in a form customary for similar agreements for comparable borrowers
or issuers at such time; and”
SECTION 5. Amendment to Schedule 10.02. The U.S. taxpayer identification
number of the Borrower listed on Schedule 10.02 is hereby replaced by the
following U.S. taxpayer identification number: 58-1493818.
SECTION 6. Representations and Warranties. On and as of the date hereof, the
Amendment, (i) each of the representations and warranties set forth in Article V
of the Credit Agreement are true and correct in all material respects on and as
of the date hereof (except to the extent that any such representation or
warranty expressly relates to a specified earlier date, in which case such
of such earlier date) and (ii) no Default or Event of Default shall have
SECTION 7. Condition to Effectiveness. This Amendment shall become effective
on the date on which the Administrative Agent (or its counsel) shall have
received from the Borrower, the Administrative Agent and the Required Lenders
either a counterpart of this Amendment signed on behalf of such party or written
evidence satisfactory to the Administrative Agent (which may include telecopy or
other electronic transmission of a signed signature page of this Amendment) that
such party has signed a counterpart of this Amendment.
SECTION 8. Continuing Effect; No Other Amendments or Consents.
(a) Except as expressly provided herein, all of the terms and provisions of
the Credit Agreement are and shall remain in full force and effect. The
amendment provided for herein is limited to the specific subsection of the
Credit Agreement specified herein and shall not constitute a consent, waiver or
amendment of, or an indication of the Administrative Agent’s or the Lenders’
willingness to consent to any action requiring consent under any other
provisions of the Credit Agreement or the same subsection for any other date or
time period. Upon the effectiveness of the amendment set forth herein, each
reference in the Credit Agreement to “this Agreement,” “the Agreement,”
“hereunder,” “hereof” or words of like import referring to the Credit Agreement,
and each reference in the other Loan Documents to “Credit Agreement,”
“thereunder,” “thereof” or words of like import referring to the Credit
Agreement, shall mean and be a reference to the Credit Agreement as amended
hereby.
(b) The Borrower agrees with respect to each Loan Document to which it is a
party that all of its obligations and liabilities under such Loan Document shall
remain in full force and effect on a continuous basis in accordance with the
terms and conditions of such Loan Document after giving effect to this
Amendment.
(c) The Borrower and the other parties hereto acknowledge and agree that
this Amendment shall constitute a Loan Document.
- 3 -
SECTION 9. Expenses. The Borrower agrees to pay or reimburse the
Administrative Agent for all its reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of this
Amendment, and any other documents prepared in connection herewith and the
consummation and administration of the transactions contemplated hereby,
SECTION 10. Counterparts. This Amendment may be executed in any number of
counterparts by the parties hereto (including by facsimile and electronic (e.g.,
“.pdf”, or “.tif”) transmission), each of which counterparts when so executed
shall be an original, but all the counterparts shall together constitute one and
the same instrument.
SECTION 11. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
and delivered by their proper and duly authorized officers as of the day and
TOTAL SYSTEM SERVICES, INC., as Borrower
By: /s/ James B. Cosgrove Name: James B. Cosgrove Title: Group Executive &
Treasurer
[Signature Page to First Amendment]
By: /s/ Robert D. Bryant Name: Robert D. Bryant Title: Vice President
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., as
a Lender
By: /s/ Lillian Kim Name: Lillian Kim Title: Director
REGIONS BANK, as a Lender By: /s/ Donald Dalton Name: Donald Dalton
FOR LENDERS REQUIRING A
SECOND SIGNATURE LINE:
U.S. BANK, NATIONAL ASSOCIATION, as a Lender By: /s/ Robert C. Mayer, Jr.
Name: Robert C. Mayer, Jr. Title: Vice President
FOR LENDERS REQUIRING A
SECOND SIGNATURE LINE:
SYNOVUS BANK, as a Lender By: Jason E. Gaylor Name: Jason E. Gaylor Title:
SVP
FIFTH THIRD BANK, as a Lender By: /s/ Kenneth W. Deere Name: Kenneth W.
Deere Title: Senior Vice President
FOR LENDERS REQUIRING A
SECOND SIGNATURE LINE:
as a Lender
By: /s/ Sheldon Pinto Name: Sheldon Pinto Title: Authorized Signatory
as a Lender
By: /s/ Brian Buck Name: Brian Buck Title: Director
as a Lender
By: /s/ Hichem Kerma Name: Hichem Kerma Title: Director
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Exhibit 10.2
SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL
TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL
HAS BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
TWO ASTERISKS (**).
GAS GATHERING AGREEMENT
THIS GAS GATHERING AGREEMENT (this "Agreement") is made and entered into
as of this 1st day of May 2006 (the "Effective Date"), by and between Chesapeake
Exploration Limited Partnership, hereinafter referred to as "Producer", and
MarkWest Pinnacle L.P. hereinafter referred to as "Gatherer".
WHEREAS, Producer and Gatherer are parties to the following agreements,
as amended, (the "Original Agreements") which they desire to terminate and
replace with this Agreement:
(1)The Natural Gas Purchase Agreement dated April 1, 2002 between Chesapeake
Exploration Limited Partnership, formerly BRG Petroleum Corporation, and
MarkWest Pinnacle L.P.
(2)The Natural Gas Purchase Agreement dated December 1, 2002 between Chesapeake
Exploration Limited Partnership, previously EXCO Resources, and MarkWest
Pinnacle L.P.
(3)The Gathering Agreement dated April 1, 1993, between Chesapeake Exploration
Limited Partnership, previously EXCO Resources, and MarkWest Pinnacle L.P.
(4)The Gas Purchase Agreement dated January 20, 2004 between Chesapeake
Exploration Limited Partnership, formerly EXCO Resources, and MarkWest Pinnacle
L.P.
(5)The Natural Gas Purchase Agreement dated April 1, 2004 between Chesapeake
Exploration Limited Partnership, formerly Kaiser Francis Oil Company and
MarkWest Pinnacle L.P.
(6)The Gas Transportation Agreement dated April 1, 2004 between Chesapeake
MarkWest Pinnacle L.P.
WHEREAS, Gatherer owns, operates, and maintains a gas gathering system,
compression facilities and natural gas processing facilities, all such
facilities in the aggregate hereinafter referred to as the "System" which System
is located in Rusk and Nacogdoches Counties, Texas and Gatherer has constructed
or shall cause to be constructed gathering facilities to receive and gather
Producer's Gas at the Receipt Point(s) and deliver gas to Producer or for
Producer's account at the Delivery Point(s) under the terms and conditions
herein; and
WHEREAS, Producer represents that it owns or controls certain Natural
Gas produced or to be produced and saved from the wells, lands, leaseholds and
other sources within the bounded area depicted on Exhibit "A" attached hereto
and made a part of this Agreement ("Area Dedication") which Producer has
requested Gatherer to receive and gather at the Receipt Point(s) and deliver to
Producer or for Producer's account at the Delivery Point(s), subject to the
provisions hereof;
covenants and agreements contained herein, Gatherer and Producer hereby agree as
follows:
Article I.
DEFINITIONS
Except as otherwise provided, the following terms as used herein shall
have the meaning set forth below:
1.1 "MCF" shall mean one thousand (1,000) cubic feet of Gas.
1.2 "BTU" shall mean British thermal unit, which is the quantity of
heat required to raise the temperature of one (1) pound avoirdupois of pure
water from fifty-eight and five tenths degrees Fahrenheit (58.5°F) to fifty-nine
and five tenths degrees Fahrenheit (59.5°F) at standard pressure.
1.3 "MMBTU" shall mean one million British thermal units (1,000,000
BTU's).
1.4 "Gas" or "Natural Gas" includes gas well gas produced from wells
classified as gas wells by any governmental authority having jurisdiction,
casinghead gas produced from oil wells so classified, and flash gas vaporized
from crude oil and condensate therefrom after production.
1.5 "Gas Unit" shall mean a drilling unit or proration unit as defined
by field rules and administrative processes of the Texas Railroad Commission.
1.6 "Day" shall mean a period of twenty-four (24) consecutive hours
commencing at 9:00 o'clock a.m. Central time on one calendar day and ending at
9:00 o'clock a.m. Central time on the following calendar day.
1.7 "Month" shall mean the period commencing on the first Day of a
calendar month and ending on the first Day of the next calendar month.
1.7 "Well" shall mean Producer's owned and/or controlled interest in
any well productive of gas which is completed within the Area Dedicated.
1.8 "System" shall mean all delivery, compression, gathering,
measurement, treating, processing, dehydration facilities, and other related
facilities constructed by or used by Gatherer to receive Producer's Gas at the
Receipt Point(s) and deliver gas for Producer's account at the Delivery
Point(s). For the purposes of Sections 6.3 and 15.1 herein, "System" shall also
be construed to include all of Gatherer's delivery, compression, gathering,
facilities constructed by or used by Gatherer to receive Gas from other parties
on pipelines contiguously connected to pipelines used by Gatherer to receive
Producer's Gas. Also for the purposes of Sections 6.3 and 15.1 herein, "System"
shall also be construed to include all of Gatherer's associated and related Gas
Gathering, Purchase, Transportation, Compressor Lease, Gas Sales, Right-of-Way,
and real property Agreements and/or Contracts as well as all permits, imbalance
positions, and working capital adjustments necessary to operate the physical
assets of the system.
1.9 "Receipt Point(s)" shall mean the interconnect of Producer's
production battery(ies), where Producer shall deliver Producer's Gas to Gatherer
and Gatherer shall receive Producer's Gas in accordance with the terms of this
Agreement. The MMBTU of the gas measured at the Receipt Point(s) shall be
determined on a water saturated basis at Standard Base Conditions. From the
Effective Date forward, the following connection and Receipt Point guidelines
will apply:
1.9.1For Gas Units that have existing Wells and Receipt Point(s) located
therein, Producer will be responsible for laying flowlines needed to connect
future Wells behind existing Receipt Points.
2
1.9.2For Gas Units that do not have existing Wells and Receipt Point(s),
Gatherer will be responsible for extending and expanding its system as needed to
gather Gas at the initial Receipt Point for the additional Gas Unit. Once the
initial Receipt Point for a Gas Unit is established, Producer will be
responsible for laying flowlines needed to connect future Wells behind the
initial Gas Unit Receipt Point.
1.10 "Delivery Point(s)" shall have the meaning prescribed in
Article III, Paragraph 3.2 herein. Gatherer shall redeliver Producer's Gas to
Producer or to Producer's designee for Producer's account to these meters on a
dry MMBTU basis at Standard Base Conditions.
1.11 "Assumed Atmospheric Pressure for Measurement and Testing" shall
mean fourteen and one half pounds per square inch absolute (14.5 psia) at the
Receipt Point(s).
1.12 "Standard Base Conditions" shall mean a pressure of fourteen and
sixty five hundredths pounds per square inch absolute (14.65 psia) at a
temperature of sixty degrees Fahrenheit (60°F).
1.13 "Inferior Liquids" shall mean mixed crude oil, slop oil, salt
water, nuisance liquids, and other liquids recovered by Gatherer in its System.
Revenues from Inferior Liquids, drips, and other gathering system liquids will
be retained by Gatherer to defray costs of treating and handling; Gatherer will
not allocate or pay for those liquids.
1.14 "NGPL" shall mean Natural Gas Pipeline of America, a subsidiary of
Kinder Morgan Energy Partners, L.P.
Article II.
SCOPE OF AGREEMENT
2.1 Gatherer agrees to construct, maintain, and operate (or cause
others to construct, maintain, and operate) pipelines and related facilities
required to enable Gatherer to receive Gas from Producer at the Receipt Point(s)
and deliver a thermally equivalent quantity of Gas to Producer or for Producer's
account at the Delivery Point(s) in accordance with the terms of this Agreement
within the Area Dedication.
2.2 Gatherer shall have sole responsibility for construction,
maintenance, and operation of its System consistent with performing its
obligations wherein Gatherer can extend the System, add to or remove components
from the System, and operate the System in the manner Gatherer determines to be
in its best interest. Gatherer shall operate the System or cause it to be
operated, as the System may exist from time to time, in a manner consistent with
general industry practice, but shall not be prevented thereby from being
innovative or achieving cost efficiencies as it may deem necessary. Gatherer
shall be responsible for carrying out all obligations stated in this Agreement;
provided, however, if Producer believes Gatherer is in default of any obligation
contained herein, Producer shall so notify Gatherer in writing giving full
particulars thereof. Except as otherwise noted herein, Gatherer shall have
thirty (30) days after receipt of notice from Producer in which to cure such
default, if any.
2.3 Producer shall dedicate all of Producer's owned and controlled Gas
produced and saved from the Wells, lands, leaseholds and other sources within
the bounded area depicted on Exhibit "A".
2.4 Producer shall construct, maintain, and operate (or cause others
to construct, maintain, and operate) pipelines and related facilities to enable
the Gas from the Wells to be collected at production batteries located within
each Gas Unit and delivered to Gatherer's Receipt Point(s). Producer shall
select the location of Receipt Points to utilize as it connects future Wells.
Producer shall provide estimates to Gatherer as to the expected maximum flow and
timing of such flow at each Receipt Point to assist Gatherer in selecting the
proper pipeline size required for the connection.
2.5 **
3
2.6 **
2.7 Prior to October 1, 2006, Gatherer shall assist Producer in
connecting Wells to Gatherer's System or to Producer's central battery(ies). The
connection location shall be mutually agreed upon prior to Gatherer beginning
construction. Producer shall reimburse Gatherer 100% for all Well connect costs
incurred after May 1, 2006 and prior to October 1, 2006. The only exception to
the foregoing being, Producer shall be responsible for all well connects which
were or would have been associated with that certain Gas Transportation
Agreement dated April 1, 2004 between Chesapeake Exploration Limited
Partnership, formerly Kaiser Francis Oil Company and MarkWest Pinnacle L.P. On
October 1, 2006 and through the term of this Agreement, Producer shall be
responsible for all well connects and Gatherer shall only be responsible for the
Receipt Point connections.
2.8 Gatherer shall operate a dewpoint control treating facility to
meet the forty-five (45) degree hydrocarbon dew point required by NGPL. Should
the hydrocarbon dew point required by NGPL become less than forty-five
(45) degrees, Gatherer and Producer shall work in good faith to determine a
solution to the new hydrocarbon dew point requirement. This solution shall
include a change in Fees to offset the capital expenditure and operating costs
that shall be born upon the Gatherer in meeting the new hydrocarbon dew point
specification as well as an agreed upon mechanism for passing through the keep
whole economics resulting from the additional extraction of liquids from the
Gas.
Article III.
RECEIPT AND DELIVERY OF GAS
3.1 The Receipt Point(s) for Producer's Gas delivered to Gatherer
shall be at the interconnection of Gatherer's central delivery point (CDP) meter
at or near Producer's production battery facilities delivering Gas from the
Wells located within Producer's Gas Unit.
3.2 Delivery Point shall be at the outlet flange of Gatherer's
measurement facilities at the point of interconnection between Gatherer and NGPL
pipeline at either of the two delivery points into NGPL, as follows:
NGPL PIN 902922 "Cornerstone" Nacogdoches County, Texas NGPL PIN 900523
"Hunter" Nacogdoches County, Texas
Or any other future delivery points on Gatherer's System that Gatherer and
Producer mutually agree upon.
3.3 Gatherer shall measure the quantity of gas received at each
Receipt Point measured in MMBtu's and shall redeliver a thermally equivalent
quantity of gas, less a **% fuel and loss allowance, for Producer's account at
the Delivery Point(s).
Article IV.
OPERATIONAL IMBALANCE AND CASH BALANCING
4.1 All gas quantities shall be delivered to Gatherer at the Receipt
Point(s) and redelivered to Producer (or on behalf of Producer) at the Delivery
Point(s) as nearly as practicable at uniform hourly and daily rates of flow. The
parties recognize that certain gas imbalances may occur between the quantity of
gas received by Gatherer for the account of Producer and the quantity of gas
redelivered by Gatherer for the account of Producer. During each month the
parties agree to cooperate with each other and with any interconnecting pipeline
to remedy any imbalance as soon as either party becomes aware of an imbalance.
At the end of each month, any imbalance in MMBTU between the quantity of gas
received by Gatherer hereunder from all Receipt Point(s), less the applicable
fuel and loss as outlined herein, and redelivered by Gatherer hereunder at the
Delivery Point(s) shall be balanced by means of a payment to Producer from
Gatherer or a payment to Gatherer from Producer, as
4
applicable, valued at the Cash-out price. To the extent that Producer's Receipt
Point(s) quantities, less the applicable fuel and loss, are greater than
Producer's Delivery Point(s) quantities ("Due Producer"), Gatherer will make a
payment to Producer for the imbalance based on the difference between Receipt
Point(s) quantities, less the applicable fuel and loss, and the Delivery
Point(s) quantities multiplied by the Cash-out price. To the extent that
Producer's Receipt Point(s) quantities are less than Producer's Delivery
Point(s) quantities ("Due Gatherer"), Gatherer will invoice Producer for the
imbalance based on the difference between Receipt Point(s) quantities, less the
applicable fuel and loss, and the Delivery Point(s) quantities multiplied by the
Cash-out price. The Cash-out price shall be determined using the month's pricing
in which the imbalance was generated. The Cash-out price shall be equal to the
month's arithmetic average of the monthly posted average price as published in
Platts Gas Daily Price Guide for the month in which the imbalance was generated,
in the section entitled "Monthly averages of daily midpoints" for NGPL-Texok.
Should the information necessary to calculate the Cash-out price cease to be
available, Gatherer and Producer will work in good faith to determine a
comparable substitute publication and/or daily posting(s) providing equivalent
data.
4.2 Producer shall be solely responsible for submitting appropriate
nominations for redelivery of Gas, less the applicable fuel and loss, at the
Delivery Point and for any and all delivery imbalances occurring with respect to
Producer's Gas which is moving under Producer's pipeline transportation
agreement to the extent that such imbalances are caused by Producer's failure to
make proper and timely nominations. Producer shall indemnify and hold Gatherer
harmless from any and all costs, expense, liabilities, or damages (including
without limitation, pipeline imbalances, penalties, court costs, and attorney
fees) arising due to any such pipeline imbalances on Producer's pipeline
timely nominations. Gatherer shall indemnify and hold Producer harmless from and
against any and all costs, expense, liabilities, or damages (including without
limitation, pipeline imbalances, penalties, court costs, and attorney fees)
arising due to any such pipeline imbalances under Producer's pipeline
transportation agreement caused by Gatherer's failure to properly and timely
give effect to Producer's nominations, however, Gatherer shall not be
responsible for eliminating any imbalances between Producer and any third party.
Furthermore, Gatherer shall not be obligated to deviate from its standard
operating and accounting procedures to reduce or eliminate any such imbalances.
Article V.
ADDITIONAL RECEIPT POINTS
5.1 Gatherer shall use commercially reasonable efforts to construct
pipelines and measurement equipment to connect and be prepared to receive gas
from Producer's well(s) at the Receipt Point(s) developed within the Area
Dedication when Producer's batteries are completed and ready to flow. Producer
agrees to provide to Gatherer, Producer's battery locations and drilling and
completion schedule sufficiently in advance to allow Gatherer to acquire
rights-of-way and to order and install the necessary facilities to be prepared
to receive Producer's gas.
5.2 Gatherer shall construct, or cause to be constructed with
reasonable promptness and diligence at its sole risk, cost, and expense, such
additions and/or extensions of the System as are necessary and adequate to
receive Gas from Producer. Producer agrees that it shall construct, or cause to
be constructed with reasonable promptness and diligence at its sole risk, cost,
and expense, those of Producer's facilities as are necessary and adequate to
deliver Producer's Gas into the System.
5.3 In the event Producer plans to construct a new central battery
that is greater than ** feet from Gatherer's System, Producer shall notify
Gatherer in writing of the additional Receipt Point, and Gatherer shall begin
the right-of-way acquisition process to help expedite the flow of production. In
consideration of Gatherer beginning to acquire right-of-way prior to completion
of the central battery, Producer shall fully indemnify Gatherer for all
reasonable costs incurred by Gatherer in obtaining the
5
right-of-way in the event the central battery is not installed. Producer shall
pay any such invoice to Gatherer within fifteen (15) days after receipt thereof.
5.4 In the event Producer deems the central battery, that is greater
than ** feet from Gatherer's System, to be economically productive, Producer and
Gatherer shall discuss Producer's potential offset drilling locations, plans and
schedule, and production profiles so that Gatherer may endeavor to properly size
the extension of Gatherer's System to accommodate such future drilling. Upon
completion of the discussion, Gatherer shall construct, or cause to be
constructed with reasonable promptness and diligence the extension of the
System.
Article VI.
RECEIPT PRESSURE
6.1 Producer shall deliver Gas to Gatherer at the Receipt Point(s) at
a pressure sufficient to effect delivery into Gatherer's gathering system,
against the pressure prevailing therein from time to time; provided, however,
that Producer shall not be required to deliver Gas at a pressure greater than
**.
6.2 (a) Gatherer agrees to maintain a Monthly Average Receipt Point
pressure (hereinafter, the "MARP") for each Receipt Point each month as follows:
The MARP consists of the following values: (i) the sum of daily average
individual Receipt Point pressures divided by (ii) the number of days in the
subject month, with the final result equaling the MARP for that Receipt Point of
not greater than ** at each Receipt Point. Gatherer's agreement to maintain the
MARP below ** will commence October 1, 2006. The MARP shall commence to be
calculated for the October 2006 production.
(b) The average daily Receipt Point pressure and number of days for a
Receipt Point, whose operation on a given day is affected by a force majeure
condition, shall not be used in calculating the MARP.
(c) **
(d) **
(e) In the event Producer believes the penalties due per the terms of
this section have been incorrectly calculated or applied, Producer shall only
have 90 days from the end of a given month to notify Gatherer of the error and
seek correction.
(f) Notwithstanding any other provision of this Section, if
Producer's operations result in delivery of free liquids at any Receipt Point,
then based upon notice as set forth in Article XVII and confirmation that
Producers Receipt Point flowed free liquid into the System, then the Receipt
Point's pressure obligation set forth in this Article is suspended for the
relevant month and Producer shall reimburse Gatherer the reasonable cost to
dispose of any produced water which was inadvertently flowed into the system.
(g) **
6.3 **
6.4 Should Chesapeake Exploration Limited Partnership sell its oil and
gas leasehold interests covered by this agreement, and wish to assign this
Agreement to an unaffiliated third party as a result of a segregated asset sale,
transfer or trade, **. All other terms and conditions of this Agreement shall
survive any such assignment. **.
Article VII.
COMPRESSOR STATION INLET PRESSURE
7.1 Gatherer shall operate compression within normal operating range
of pressures, volumes, and compression ratios for such compression facilities
based on the volume of gas available at each
6
respective compressor facility. Gatherer's obligation to operate the compression
facilities shall be limited to Gatherer's ability to do such within normal
operating limitations, as determined by Gatherer, of such compressors and the
daily operating conditions of the System.
7.2 (a) Gatherer will maintain a Monthly Average Compressor Station
Inlet Separator Pressure ("MASP") each month of not greater than ** as measured
at the electronic pressure recorder located at the compressor station inlet
separator of each of the two (2) facilities used to provide compression (each
"Compressor Facility"). Gatherer's agreement to maintain the MASP shall commence
October 1, 2006.
(b) The MASP consists of the following values: (i) the sum of daily
average inlet separator pressure at each individual Compressor Facility divided
by (ii) the number of days in the subject month, with the final result equaling
the MASP for such month for that Compressor Facility. The average daily inlet
separator pressure and number of days for a Compressor Facility whose operation
on a given day is affected by a force majeure condition shall not be used in
calculating the MASP.
(d) In the event Producer believes the penalties due per the terms of
seek correction.
7
Article VIII.
MEASUREMENT
8.1 Gatherer shall measure the Gas delivered by Producer hereunder
using electronic flow meters, which Gatherer has installed or caused to be
installed at the Receipt Point(s). Measurement shall be made by Gatherer in
accordance with the requirements of applicable provisions in ANSI/API 2530,
"Orifice Metering of Natural Gas" (American Gas Association Gas Measurement
Committee Report No. 3) of the Natural Gas Department of the American Gas
Association, as amended from time to time, or by any other method commonly used
in the industry and mutually acceptable to the parties. EFM equipment will be
designed and installed in accordance to the procedures set forth in the Manual
of Petroleum Standards, Chapter 21.1 (Latest Revision). Producer will have
access to Gatherer's metering equipment and information received from such
metering equipment at reasonable hours. In addition, Producer shall have the
right to install check measurement / monitoring equipment at the (1) Receipt
Point(s), (2) Compressor Station Inlet Separators, and (3) Delivery
Point(s)—including the right to install Producer's check measurement equipment
on the Gatherer's meter tube(s). All such check measurement equipment shall be
installed so such equipment will not interfere with the operations of Gatherer's
equipment.
8.2 The accuracy of Gatherer's measuring equipment shall be verified
by test, and a chromatographic analysis shall be conducted, using means and
methods generally acceptable in the gas industry once every six (6) months for
Receipt Points which make less than 500 mscfd, every three (3) months for
Receipt Points which make between 501 - 1000 mscfd, and every one (1) month for
Receipt Points that make 1001 mscfd or more. Measuring equipment found to be
registering inaccurately shall be adjusted to read accurately. Gatherer shall
give Producer two (2) days notice of upcoming tests. If Producer fails to have a
representative present, the results of the test shall nevertheless be considered
accurate until the next test. Gatherer shall, upon written request of Producer,
conduct a test of Gatherer's measuring equipment, provided that in no event
shall Gatherer be required to test its equipment more frequently than once a
month. All tests of such measuring equipment shall be made at Gatherer's
expense, except that Producer shall bear the expense of tests made at Producer's
request.
8.3 If for any reason, any measuring equipment is inoperative or
inaccurate by more than two percent (2%) in the measurement of Gas, then the
volume of Gas delivered by Producer to Gatherer during the period of such
inaccuracy shall be determined on the basis of the best data available using the
first of the following methods which is feasible:
(i.)By using the registration of any check measuring equipment installed and
accurately registering; or
(ii.)By using a percentage factor to correct the error, if the percentage of
error is ascertainable by calibration, test, or mathematical calculations; or
(iii.)By comparing deliveries made during preceding periods under similar
delivery conditions when the meter was registering accurately.
8.4 An adjustment based on such determination shall be made for such
period of inaccuracy as may be definitely known or, if not known, then for one
half (1/2) the period since the date of the last meter test. In no event,
however, shall any adjustment extend back beyond ninety (90) days from the date
the error was first made known by one party hereunder to the other.
8.5 Each party shall have the right to inspect the other party's
equipment, charts, and other measurement or test data during business hours; but
the reading, calibration, and adjustment of such equipment and changing of
charts shall be done by the party installing and furnishing same. Unless the
parties agree otherwise, each party shall preserve all its original test data,
charts, and other similar records for a period of two (2) years.
8
Article IX.
GAS QUALITY AND SPECIFICATIONS
9.1 All Gas tendered to Gatherer at the Receipt Point(s) shall be
commercially free of dust, rust, gum and gum forming constituents, dirt,
paraffin, impurities, and other solid or liquid matter which might interfere
with its merchantability or cause injury to or interference with the proper
operation of the lines, meters, regulators and other appliances through which it
flows and shall conform to the following specifications (the "Specifications")
and shall be free of Inferior Liquids:
(i.) Oxygen None (ii.) Free Water None (iii.) H2S No more than one
quarter (1/4) grain per one hundred (100) cubic feet of gas (iv.) Heating
Value No less than 1000 BTU per cubic foot (v.) Total Sulfur Including
mercaptan and hydrogen sulfide, not to exceed one half (1/2) grain per one
hundred (100) cubic feet of gas (vi.) Temperature No more than one hundred
twenty degrees Fahrenheit (120°F) and no less than sixty degrees Fahrenheit
(60°F) (vii.) Carbon Dioxide No more than two percent (2%) by volume (viii.)
Nitrogen No more than two percent (2%) by volume
9.2 If, at any time during the term of this Agreement, either party
ascertains that such Gas fails to meet the Specifications, such party shall
immediately notify the other of the extent of the deviation from the
Specifications. Producer shall determine the expected duration of such failure
and notify the Gatherer of the efforts Producer is undertaking to remedy such
deficiency. In the event Producer cannot (or elects not to) remedy such
deficiency, Gatherer may, as its sole remedy, refuse to accept delivery of such
Gas. In such case, Producer may immediately terminate this Agreement as to the
affected Gas.
9.3 If Gatherer can blend Gas failing to meet the specifications
(vii.) Carbon Dioxide and (viii.) Nitrogen with other Gas across the gathering
system and such blending causes the composite Gas composition to meet the
Specifications; Gatherer agrees to do so, as long as such blending does not
cause undue operational problems.
Article X.
GATHERING and DEHYDRATION FEE, LINE LOSS, COMPRESSION, AND FUEL CHARGE
10.1 For the services provided by Gatherer hereunder, Producer shall pay
Gatherer a gathering, compression, hydrocarbon dew point processing, and
dehydration fee ("Fees") for each MMBTU of Gas delivered to Gatherer by Producer
at the Receipt Point(s) as set forth below.
Tiers
Quantity (MMBTU/d)
Fee ($ per MMBTU)
** ** $ ** ** ** $ ** ** ** $ **
An elaboration of the Fee structure set forth above, is as follows: The
aggregated monthly quantity of all of the Producer's Receipt Points shall be
summed and divided by the number of days for the given production month. From
the calculation, a MMBTU per day quantity shall result and the first **
Mmbtu/day shall be assessed a Fee of **, the next **Mmbtu/day shall be assessed
a Fee of **, and all remaining quantities greater than **Mmbtu/day shall be
assessed **.
9
10.2 Additionally, Producer shall pay Gatherer a 2006 well connect
recovery fee of $** per MMBTU of Gas delivered by Producer to Gatherer beginning
May 1, 2006 **.
10.3 Gatherer shall assess a deemed fuel and line loss charge of ** on
all volumes of Gas delivered by Producer to Gatherer during each Month at each
Receipt Point, calculated on a MMBTU basis. The volume of Gas attributable to
such deemed fuel and line loss charge shall be deducted from, and shall not be
included in, the imbalance volumes being cashed out under the provisions of
Article IV of this Agreement.
Article XI.
BILLING, PAYMENT, AND REPORTING
11.1 On or before the fifteenth (15th) of each Month, Gatherer shall
render an invoice to Producer for the preceding Month. Gatherer shall provide
Producer with information to support Gatherer's invoice identified as to
Producer's Receipt Point(s) and showing the total quantity of Gas delivered
hereunder, the amount due therefore, and information sufficient to explain and
support any adjustments made by Gatherer in determining the amount billed.
Producer shall pay Gatherer or Gatherer shall pay Producer, as the case may be,
at the address shown hereunder within 30 days of receipt of invoice. If the
correct amount is not paid when due, interest on any unpaid and undisputed
portion shall accrue at an interest rate equal to two percent (2%) plus the
prime rate as quoted by the Wall Street Journal, or at the highest rate
permitted by applicable law, whichever is lower, from due date until date paid.
If default with respect to undisputed charges continues after thirty (30) days
written notice from Gatherer to Producer, Gatherer may suspend receipt of Gas
hereunder without prejudice to any other available remedies at law or in equity.
11.2 If any overcharge or undercharge in any form whatsoever shall at
any time be found relative to any invoice delivered whether outstanding or paid,
Gatherer shall refund any amount of overcharge or Producer shall pay any amount
of undercharge, as the case may be, within thirty (30) days after final
determination thereof; provided, no retroactive adjustment shall be made beyond
a period of twenty-four (24) months from the month of production for which the
overcharge or undercharge was made.
11.3 Both parties hereto shall have the right at any and all reasonable
times to examine the books and records of the other party to the extent
necessary to verify the accuracy of any statement, charge, computation, or
demand made pursuant to this Agreement. Prior to such examination, the party
requesting it shall execute a mutually acceptable confidentiality agreement if
Article XII.
TAXES
12.1 Producer shall pay or cause to be paid all production taxes imposed
with respect to the Gas delivered and gathered hereunder.
12.2 Gatherer shall pay all ad valorem or other similar taxes, fees, or
assessments imposed by any state or federal authority with respect to the System
and ownership thereof. Producer shall pay all other severance, gathering or
other similar taxes, fees, or assessments imposed by any state or federal
authority with respect to the Gas delivered hereunder. Further, Producer
represents that it has timely filed, or shall timely file, any and all reports
which it is required to file with respect to production or severance taxes to be
paid hereunder. Producer shall indemnify and hold Gatherer harmless with respect
to Producer's failure to file any and all such reports or with respect to
Producer's failure to pay any and all taxes which Producer is obligated to pay
pursuant to the terms of this Agreement.
10
Article XIII.
CONTROL, POSSESSION, AND TITLE
13.1 Producer shall indemnify and hold Gatherer harmless from liability
with respect to Producer's Gas or Producer's operations to deliver such Gas
prior to the Gas being delivered into the System. Gatherer shall indemnify and
hold Producer harmless from liability with respect to the Gas delivered into the
System after receipt thereof by Gatherer and prior to delivery thereof at the
Delivery Point except for any such liability relating to the title to such Gas
that shall remain with Producer.
13.2 Producer warrants title to or the right to deliver all Gas
delivered or caused to be delivered hereunder. Producer warrants that such Gas
is free from all liens and adverse claims of every kind and agrees to indemnify
Gatherer from all suits, actions, debts, accounts, damages, costs, losses, and
expenses arising from or out of adverse claims of any or all persons, including
governmental entities, as to title to said Gas or as to royalties or charges
thereof. Title to the Gas delivered or caused to be delivered by Producer to
Gatherer hereunder at the Receipt Point(s) shall remain with Producer and shall
not pass to nor vest in Gatherer.
13.3 Gatherer shall be entitled to and shall own all condensate and
pipeline drip collected on the System. Producer shall not have any right, title,
or interest in liquid hydrocarbons extracted from the Gas. Producer represents
that the Gas delivered under this Agreement is free of rights to extract liquid
hydrocarbons in favor of Producer or any other third party. Further, all Gas
purchased, sold, gathered, or transported under this Agreement shall not be
subjected to processing for extraction of liquid hydrocarbons (other than by
conventional mechanical separation) prior to delivery at the Receipt Point(s).
Article XIV.
FORCE MAJEURE
14.1 If either party is rendered unable, wholly or in part by Force
Majeure, to carry out its obligations under this Agreement, then the obligations
of the affected party, except for payment due, so far as they are affected by
such Force Majeure, shall be suspended during the continuance of any inability
so caused, but for no longer period. Such cause shall, to the extent possible,
be remedied with all reasonable dispatch. The affected party shall give notice
and full particulars of such Force Majeure in writing by mail or telecopy or
other electronic facility to the other party as soon as practicable after the
occurrence of the cause relied on.
14.2 The term Force Majeure as employed herein shall mean acts of God;
strikes, lockouts, or other industrial disturbances; acts of the public enemy,
wars, blockades, military action, earthquakes, fires, storms or storm warnings,
crevasses, floods, or washouts; arrests and restraints of governments and
people; civil disturbances; explosions, breakage or accident to machinery or
lines of pipe (including any compression or processing facilities located on the
System); the necessity for testing or making repairs or alterations to machinery
or lines of pipe; freezing of wells or lines of pipe; inability to obtain
easements and/or rights-of-way; inability of any party hereto to obtain
necessary materials, supplies, or permits due to existing or future rules,
regulations, orders, laws, or proclamations of governmental authorities (both
Federal and State) including both civil and military; and any other causes
whether of the kind herein enumerated or otherwise, and whether caused or
occasioned by or happening on account of the act or omission of one of the
parties hereto or some persons or concern not a party hereto, not within the
control of the party claiming suspension and which, by the exercise of due
diligence, such party is unable to prevent or overcome.
14.3 It is understood and agreed that the settlement of strikes or
lockouts shall be entirely within the discretion of the party having the
difficulty, and that the above requirement that any Force Majeure shall be
remedied with all reasonable dispatch shall not require the settlement of
strikes or lockouts by
11
acceding to the demands of the opposing party when such course is inadvisable in
the discretion of the party having the difficulty.
14.4 Should an event of Force Majeure render Gatherer unable to take
delivery of any of Producer's Gas at the Receipt Point(s) for a period exceeding
five (5) consecutive calendar days or greater upon mutual agreement of both
parties, then Producer may, upon not less than three (3) days prior written
notice to Gatherer, temporarily deliver its Gas to a third party for
transportation and/or processing; provided, however, that Producer's Gas shall
be delivered to Gatherer upon the earlier of the end of the temporary sale or on
the first Day of the Month following the Month that the Force Majeure event is
rectified.
14.5 Should an event of Force Majeure render Gatherer unable to take
delivery of any of Producer's Gas at any of the Receipt Point(s) for a period
exceeding thirty (30) consecutive calendar days, then unless Gatherer reimburses
Producer, within 5 days of receipt of an invoice from Producer, for all out of
pocket third party costs incurred by Producer to purchase and construct the
required facilities to move Producer's gas to an alternate market during the
Force Majeure event, Producer may, upon not less than three (3) days prior
written notice to Gatherer, permanently deliver its Gas to an alternate party
for transportation and/or processing for those Receipt Point(s) impacted by the
Force Majeure event and will be released from further obligation to make
deliveries for those impacted Receipt Points under this agreement.
Article XV.
TERM
15.1 This Agreement shall be effective May 1, 2006, and shall continue
in full force and effect until April 30, 2016 ("Primary Term"), whereupon
Producer shall have the option to exercise one of three options by giving notice
prior to January 1, 2016. Producer may elect to i) terminate this agreement by
providing ** written notice, ii) extend the term until ** ("Extended Term"),
after which this Agreement shall be automatically renewed for successive renewal
terms of one (1) month each, unless terminated by either party with at least
thirty (30) days prior written notice or iii) **.
Article XVI.
ASSIGNMENTS
16.1 This Agreement shall extend to and be binding upon the parties
hereto, their successors, and assigns. The rights of the parties may be assigned
or conveyed in whole or in part from time to time; provided, however, neither
party shall assign this Agreement without the prior written consent of the other
party which consent shall not be unreasonably withheld. All assignments and
conveyances shall be subject to this Agreement and shall not relieve the
assignor of its duties hereunder. No transfer of, or succession to, the interest
of any party hereto, either in whole or partially, shall affect or bind the
other party until the first Day of the Month following the Month in which the
other party shall have received written notification thereof. Finally, the
conditions addressed under paragraph 6.4 shall apply to any assignment made by
Producer.
Article XVII.
NOTICES
17.1 Except as herein otherwise provided, any notice, request, demand,
payment, invoice, statement, or bill provided for in this Agreement or any
notice which either party may desire to give to the other shall be in writing
and mailed by registered mail or ordinary mail to the post office address of the
party intended to receive the same, as the case may be, as follows or to such
other address as either party shall designate by written notice to the other
party.
12
If to PRODUCER:
For Notices and Requests:
CHESAPEAKE EXPLORATION LIMITED PARTNERSHIP
Attn: Gas Contract Administration
6100 North Western Avenue
Oklahoma City, Oklahoma 73118
Statements, Bills, Invoices, or Payments:
CHESAPEAKE EXPLORATION LIMITED PARTNERSHIP
Attn: Gas Control
6100 North Western Avenue
If to GATHERER:
For Notices and Requests
MARKWEST PINNACLE L.P.
2500 City West, Ste. 740
Houston, Texas 77042
Attn: Bert Dillmann (email: [email protected])
For Statements, Bills, or Invoices
MARKWEST PINNACLE L.P.
6655 S. Lewis, Ste. 350
Tulsa OK 74136
Attn: Matt Daniel (email: [email protected])
For Payments
Wire:
MARKWEST PINNACLE L.P.
**
13
Article XVIII.
MISCELLANEOUS
18.1 The interpretation and performance of this Agreement shall be
governed by and construed in accordance with the laws of the State of Texas.
18.2 This Agreement contains the entire understanding of the parties
superseding all other agreements, whether oral or written, express or implied.
As a result of the parties entering into this Agreement, the Original Agreements
have been terminated and replaced by this Agreement. This Agreement may not be
changed orally, but only by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification, extension, or discharge is
sought. Every covenant, term, and provision of the Agreement shall be construed
simply according to its fair meaning and not strictly for or against any party.
Any waiver of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent breach by Producer or Gatherer.
18.3 Fees as specified in Section 10.1 and Penalties as specified in
Section 6.2 and 7.2 shall be subject to an annual adjustment. The annual
adjustment shall be equal to the lesser of:
(i.)**
(ii.)**
The annual adjustment shall begin on January 1, 2007.
18.4 Producer, to the extent it can do so, hereby grants to Gatherer the
right to use (along with the right to ingress and egress) Producer's leaseholds,
properties, and premises underlying the System in order to carry out the
provisions of this Agreement with the right to remove same before or after the
expiration of this Agreement and the right to free access at all reasonable
times to any part of said leaseholds, properties, and premises.
18.5 The captions in this Agreement are for the convenience of the
parties in identification of the provisions hereof and shall not constitute a
part of this Agreement nor be considered in the interpretation of this
Agreement, and the following shall apply:
(i.)This Agreement was prepared jointly by the parties hereto and not by any
party to the exclusion of the other;
(ii.)Failure to exercise any right or rights hereunder shall not be considered a
waiver of such right or rights in the future.
18.6 Each party agrees that it shall maintain this Agreement and the
contents thereof in strict confidence, and that it shall not cause or permit
disclosure thereof to any third party without the express written consent of the
other party; provided, however, that disclosure is permitted in the event and to
the extent such party is required by a court or agency exercising jurisdiction
over the subject matter thereof, by order or by regulation.
14
duly executed in several counterparts, each of which is an original, as of the
PRODUCER:
CHESAPEAKE EXPLORATION LIMITED PARTNERSHIP
By:
/s/ JAMES C. JOHNSON
Title:
Vice President—Marketing
GATHERER:
MARKWEST PINNACLE L.P.
By:
/s/ FRANK SEMPLE
Frank Semple
Title:
President and CEO
15
EXHIBIT A
**
16
GAS GATHERING AGREEMENT
EXHIBIT "B" (Page 1 of 2)
BY AND BETWEEN
CHESAPEAKE EXPLORATION LIMITED PARTNERSHIP
AND
MARKWEST PINNACLE L.P.
Attached to and made a part of Gas Gathering Agreement entered into as
of May 1, 2006, by and between Chesapeake Exploration Limited Partnership
("Producer"), and MarkWest Pinnacle, L.P. ("Gatherer").
**
17
QuickLinks
GAS GATHERING AGREEMENT
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Name: Commission Regulation (EC) No 1385/1999 of 28 June 1999 amending Regulation (EEC) No 2999/92 laying down detailed rules for the application of the specific measures for the supply of processed fruit and vegetables to Madeira and to determine the forecast supply balance for the period 1 July 1999 to 30 June 2000
Type: Regulation
Subject Matter: trade; foodstuff; regions of EU Member States
Date Published: nan
Avis juridique important|31999R1385Commission Regulation (EC) No 1385/1999 of 28 June 1999 amending Regulation (EEC) No 2999/92 laying down detailed rules for the application of the specific measures for the supply of processed fruit and vegetables to Madeira and to determine the forecast supply balance for the period 1 July 1999 to 30 June 2000 Official Journal L 163 , 29/06/1999 P. 0007 - 0008COMMISSION REGULATION (EC) No 1385/1999of 28 June 1999amending Regulation (EEC) No 2999/92 laying down detailed rules for the application of the specific measures for the supply of processed fruit and vegetables to Madeira and to determine the forecast supply balance for the period 1 July 1999 to 30 June 2000THE COMMISSION OF THE EUROPEAN COMMUNITIES,Having regard to the Treaty establishing the European Community,Having regard to Council Regulation (EEC) No 1600/92 of 15 June 1992 concerning specific measures for the Azores and Madeira with regard to certain agricultural products(1), as last amended by Commission Regulation (EC) No 562/98(2), and in particular Article 10 thereof,(1) Whereas the quantities of products eligible for the specific supply arrangements are determined by means of periodic forecast balances which may be revised according to the essential requirements of the market taking into account local production and traditional trade flows;(2) Whereas Commission Regulation (EEC) No 2999/92(3), as last amended by Regulation (EC) No 1124/1999(4), lays down the detailed rules for the application of the specific measures for the supply of processed fruit and vegetables to Madeira and the forecast balance fixing the quantities eligible for the specific supply arrangements for the period 1 July 1998 to 30 June 1999;(3) Whereas valuation of the requirements of the Madeiran market for the period 1 July 1999 to 30 June 2000 has led to establishment of a forecast supply balance as in the Annex;(4) Whereas the supply arrangements are applicable from 1 July; whereas, as a result, provision should be made for this Regulation to apply immediately;(5) Whereas the measures provided for in this Regulation are in accordance with the opinion of the Management Committee for products processed from Fruit and Vegetables,HAS ADOPTED THIS REGULATION:Article 1The Annex to Regulation (EEC) No 2999/92 is replaced by the Annex to this Regulation.Article 2This Regulation shall enter into force on the day following its publication in the Official Journal of the European Communities.It shall apply from 1 July 1999.This Regulation shall be binding in its entirety and directly applicable in all Member States.Done at Brussels, 28 June 1999.For the CommissionFranz FISCHLERMember of the Commission(1) OJ L 173, 27.6.1992, p. 1.(2) OJ L 76, 13.3.1998, p. 6.(3) OJ L 301, 17.10.1992, p. 7.(4) OJ L 135, 29.5.1999, p. 39.ANNEX"ANNEXForecast supply balance covering processed fruit and vegetable products for Madeira for the period 1 July 1999 to 30 June 2000>TABLE>" |
EXHIBIT 5.1 Law Offices of Joseph L. Pittera 1308 Sartori Avenue Suite 109 Torrance, California 90501 Telephone (310) 328-3588 Facsimile (310) 328-3063 E-mail: [email protected] Global Quest Ltd. 103-1602 Gogi 3 Sujigu, Yonginsi Geong Gido, Korea Ladies and Gentlemen: We have acted as counsel to Global Quest Ltd, a Nevada corporation (the “Company”), in connection with the filing by the Company of Amendment No. 1 to the registration statement on Form S-1/A with the Securities and Exchange Commission (the “Registration Statement”) relating to an aggregate of 3,050,000 shares of the Company’s Common Stock, $0.001 par value per share, to be offered pursuant to the Registration Statement at a price of $0.02 per share,which are being registered by the selling security holders. In our opinion, the shares to be offered pursuant to the Registration Statement have been duly authorized and issued in the manner specified in the Registration Statement and therefore the Common Shares are validly issued, fully paid for and non-assessable. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name in the prospectus constituting a part thereof in connection with the matters referred to under the caption “Legal Matters” in such prospectus.The filing of this consent shall not be deemed an admission that the undersigned is an “expert” within the meaning of the Securities Act of 1933, as amended. Sincerely yours, /S/ Joseph Pittera Joseph Pittera
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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 8, 2010 TEXAS INSTRUMENTS INCORPORATED (Exact name of registrant as specified in charter) DELAWARE 001-03761 75-0289970 (State or other jurisdiction of incorporation) (Commission file number) (I.R.S. employer identification no.) 12 P.O. BOX 660199 DALLAS, TEXAS 75266-0199 (Address of principal executive offices) Registrant’s telephone number, including area code: (972)995-3773 Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the 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 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)) ITEM 7.01.Regulation FD Disclosure The Registrant's news release dated June 8, 2010, regarding the Registrant's outlook for the second quarter of 2010 attached hereto as Exhibit 99 is incorporated by reference herein. ITEM 9.01. Exhibits Designation of Exhibit in this Report Description of Exhibit 99 Registrant’s News Release Dated June 8, 2010 (furnished pursuant to Item 7.01) “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This report includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as TI or its management “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates” or other words or phrases of similar import. Similarly, statements in this report that describe the Company’s business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those in forward-looking statements. We urge you to carefully consider the following important factors that could cause actual results to differ materially from the expectations of TI or its management: • Market demand for semiconductors, particularly in key markets such as communications, entertainment electronics and computing; • TI’s ability to maintain or improve profit margins, including its ability to utilize its manufacturing facilities at sufficient levels to cover its fixed operating costs, in an intensely competitive and cyclical industry; • TI’s ability to develop, manufacture and market innovative products in a rapidly changing technological environment; • TI’s ability to compete in products and prices in an intensely competitive industry; • TI’s ability to maintain and enforce a strong intellectual property portfolio and obtain needed licenses from third parties; • Expiration of license agreements between TI and its patent licensees, and market conditions reducing royalty payments to TI; • Economic, social and political conditions in the countries in which TI, its customers or its suppliers operate, including security risks, health conditions, possible disruptions in transportation networks and fluctuations in foreign currency exchange rates; • Natural events such as severe weather and earthquakes in the locations in which TI, its customers or its suppliers operate; • Availability and cost of raw materials, utilities, manufacturing equipment, third-party manufacturing services and manufacturing technology; • Changes in the tax rate applicable to TI as the result of changes in tax law, the jurisdictions in which profits are determined to be earned and taxed, the outcome of tax audits and the ability to realize deferred tax assets; • Changes in laws and regulations to which TI or its suppliers are or may become subject, such as those imposing fees or reporting or substitution costs relating to the discharge of emissions into the environment or the use of certain raw materials in our manufacturing processes; • Losses or curtailments of purchases from key customers and the timing and amount of distributor and other customer inventory adjustments; • Customer demand that differs from our forecasts; • The financial impact of inadequate or excess TI inventory that results from demand that differs from projections; • The ability of TI and its customers and suppliers to access their bank accounts and lines of credit or otherwise access the capital markets; • Impairments of our non-financial assets; • Product liability or warranty claims, claims based on epidemic or delivery failure or recalls by TI customers for a product containing a TI part; • TI’s ability to recruit and retain skilled personnel; and • Timely implementation of new manufacturing technologies, installation of manufacturing equipment and the ability to obtain needed third-party foundry and assembly/test subcontract services. For a more detailed discussion of these factors, see the "Risk Factors" discussion in Item 1A of the Company's most recent Form 10-K.The forward-looking statements included in this report on Form 8-K are made only as of the date of this report, and the Company undertakes no obligation to update the forward-looking statements to reflect subsequent events or circumstances. 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. TEXAS INSTRUMENTS INCORPORATED Date: June 8, 2010 By: /s/ KEVIN P. MARCH Kevin P. March Senior Vice President and Chief Financial Officer
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Name: Commission Regulation (EEC) No 594/86 of 28 February 1986 laying down detailed rules for the application of accession compensatory amounts applicable to trade in products covered by Regulations (EEC) No 3033/80 and (EEC) No 3035/80
Type: Regulation
Subject Matter: agricultural policy; distributive trades; Europe
Date Published: nan
1.3.86 Official Journal of the European Communities No L 58/9 COMMISSION REGULATION (EEC) No 594/86 of 28 February 1986 laying down detailed rules for the application of accession compensatory amounts applicable to trade in products covered by Regulations (EEC) No 3033/80 and (EEC) No 3035/80 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 , import and granted on export ; whereas this also applies , mutatis mutandis, for certain provisions of the abovementioned Regulation where accession compen satory amounts are granted by the Member State of import ; Whereas , where accession compensatory amounts are levied by the Member State of export, this must be indicated on the Community transit document laid down by Commission Regulation (EEC) No 223 /77 of 22 December 1976 on provisions for the implementa tion of the Community transit procedure and for cer tain simplifications of that procedure (6), as last amended by Regulation (EEC) No 1209/85 ( 7 ); where as provision should be made for an endorsement on the said document in the cases in point ; Whereas the measures provided for in this Regulation are in accordance with the opinions of all the Manage ment Committees concerned , HAS ADOPTED THIS REGULATION : Having regard to Council Regulation (EEC) No 467/86 of 25 February 1986 laying down general rules regard ing the system of accession compensatory amounts for cereals ('), and in particular Article 8 thereof, and the corresponding provisions of the other Regulations lay ing down general rules regarding the system of acces sion compensatory amounts for agricultural products , Whereas , Commission Regulation (EEC) No 623/ 86 (2), lays down , in accordance with the provisions of Articles 53 ( 1 ) and 213 ( 1 ) of the Act of Accession , the accession compensatory amounts applicable to goods covered by Council Regulation (EEC) No 3035/80 (3 ) exported to the Kingdom of Spain or the Portuguese Republic from the Community of Ten and the acces sion compensatory amounts applicable to imports into the Community of Ten of goods covered by Council Regulation (EEC) No 3033/80 (4) from the Kingdom of Spain or the Portuguese Republic ; whereas the acces sion compensatory amounts applicable in trade between the two Member States and between the two new Member States and third countries have also been laid down ; whereas , however, certain detailed rules of application should be laid down for accession compen satory amounts applicable to trade of the sort ; Whereas Commission Regulation (EEC) No 548/86 ( 5 ), lays down detailed rules for applying the system of accession compensatory amounts referred to in Arti cles 72 and 240 of the Act of Accession ; whereas it should be specified that certain provisions of that Regulation are to apply where accession compensatory amounts for goods covered by Regulations ( EEC) No 3033 /80 and (EEC) No 3035/80 are levied on Article 1 1 . This Regulation lays down detailed rules for the application of compensatory amounts , hereafter called 'accession compensatory amounts ', set out in Articles 53 ( 1 ) and 213 ( 1 ) of the Treaty of Accession of Spain and Portugal . 2 . For the purposes of this Regulation : (a) 'goods ' shall mean : goods covered by the provisions of either : Council Regulation (EEC) No 3033 /80 of 11 November 1980 laying down the trade arrangements applicable to certain goods resulting from the processing of agricultural products , or Council Regulation (EEC) No 3035/80 of 11 November 1980 laying down general rules for granting export refunds on certain agricul tural products exported in the form of goods not covered by Annex II to the Treaty , and the criteria for fixing the amount of such refunds . ') OJ No L 53 , 1.3 . 1986, p. 25 . 2 ) OJ No L 59, 1.3 . 1986, p. 1 . 3 ) OJ No L 323 , 29 . 11 . 1980, p. 27 . 4) OJ No L 323 , 29 . 11 . 1980, p. 1 . 5 ) OJ No L 55 , 1.3 . 1986, p. 52 . (6 ) OJ No L 38 , 9 . 2 . 1977 , p . 20 . ( 7 ) OJ No L 124,9 . 5 . 1985 , p . 19 . No L 58/ 10 Official Journal of the European Communities 1 . 3 . 86 à à ¾Ã ¹Ã à à à ¹Ã ºÃ ¬ Ãà ¿Ã à ± Ãà à ¿Ã à à à à ·Ã à ·Ã Ãà ¿Ã à à à ¿Ã à ½ à µÃ ¹Ã Ãà à ±Ã à ¸Ã µÃ ¯ : à à à à à à ½ à à à ºÃ ± à à ½Ã ¿Ã ¼Ã ± à à ¿Ã à ½Ã à ¿Ã à ºÃ à ¬Ã à ¿Ã à à ¼Ã à »Ã ¿Ã à Ãà à ¿Ã ¿Ã à ¹Ã à ¼Ã ¿Ã .' 'Accession ' compensatory amount charged : EEC of 10 - name of new Member State of destination .' 'montantes compensatorios de "adhesià ³n" per cibido : CEE de los diez nombre del nuevo Estado miembro de destino .' (b) ' export declaration ' shall mean either : the export declaration mentioned in Regula tion (EEC) No 2102/77 , or any other declaration , prescribed without pre judice to specific customs provisions by the Member States , to be submitted to the customs authorities at the time of completion of cus toms export formalities with a view to applying accession compensatory amounts . (c) 'Community of Ten ' shall mean : the Community as composed at 31 December 1985 . (d ) 'New Member State ' shall mean : the territory of the Kingdom of Spain , with the exception of the Canary Islands , Ceuta and Melilla, and the Portuguese Republic . 'Montants compensatoires "Adhà ©sion" perà §u : CEE à dix - nom du Nouvel Etat membre de destination .' ' Importi compensativi adesione riscossi : CEE a 10 - nome del nuovo Stato membro .' 'compenserend bedrag toetreding geheven : EEG- 10 - naam van de nieuwe Lid-Staat van bestemming .' 'Montante compensatà ³rio "Adesà £o" cobrado : CEE dos Dez - nome do Novo Estado-mem bro de destino .'Article 2 The provisions of Articles 2 and 3 of Regulation (EEC) No 548/86 shall apply to accession compensatory amounts . Article 3 When accession compensatory amounts are granted by the exporting Member State , the provisions of Arti cles 5 to 9 of Regulation (EEC) No 548/86 shall apply . 2 . When goods accompanied by a community transit or proof of Community status document contain ing one of the endorsements mentioned in para graph 1 are released for home use in a Member State other than that indicated by the endorsement on this document, it shall be considered as coming from the Member State of destination originally provided for. 3 . If the new Member State of destination originally provided for, as indicated on the transit document mentioned in paragraph 1 , has a price level below that of the Member State of actual destination , then the latter shall charge the accession compen satory amount applicable to trade carried out between the two Member States . 4 . When goods accompanied by a community transit or proof of Community status document contain ing one of the endorsements mentioned in para graph 1 are released for home use in a Member State other than that originally provided for, no accession compensatory amount may be granted . Article 4 When the importing Member State grants the accession compensatory amount the provisions of Articles 5(1 ) and (3 ), 6 and 9(1 ) and (2) of Regulation (EEC) No 548/86 shall apply mutatis mutandis. The provisions of this Article shall apply without pre judice to the simplified procedures for imports . Article 5 When the exporting Member State charges the acces sion compensatory amount : 1 . The Community transit or proof of Community status document used for the product for which customs export formalities have been completed and for which an accession compensatory amount should be charged shall contain in the 'description of goods ' box one of the following : Article 6 When goods are imported into a Member State which has a price level higher than the Member State of departure and the Community transit document does not contain one of the endorsements mentioned in Article 5 paragraph 1 , the accession compensatory amount shall be charged by the Member State of actual destination . 'Tiltrà ¦delsesudligningsbelà ¸b obkrà ¦vet : De Ti - Den nye bestemmelsesmedlemsstats navn .' Article 7 1 . When goods are reimported into the Member State of departure after being exported to another Member 'Beitrittsausgleichsbetrà ¤ge erhoben : Zehnerge meinschaft - Name des neuen Bestimmungs mitgliedstaates .' 1.3.86 Official Journal of the European Communities No L 58/ 11 State , the provisions of Council Regulation (EEC) No 754/76 ('), shall apply , mutatis mutandis, in the reimporting Member State to the products which meet the requirements laid down in Article 2 (2 ) of that Regulation . 2 . The provisions of the following shall apply, mutatis mutandis, in the case of accession compensatory amounts to be charged in respect of intra-Com munity trade : Council Regulation (EEC) No 1430/79 (2), Council Regulation (EEC) No 1697/79 (3 ), 2 . The following provisions shall apply in the case of trade between Portugal and Spain , on the one hand, and third countries on the other : in the case of exports, the amounts specified in the Regulation fixing the accession compensatory amounts in respect of trade in goods covered by Regulations (EEC) No 3033/80 and (EEC) No 3035/80 shall be granted if they are preceded by a plus sign and charged if they are preceded by a minus sign , in the case of imports , the amounts specified in the Regulation fixing the accession compensatory amount in respect of trade in goods covered by Regulations (EEC) No 3033/80 and (EEC) No 3035/80 shall be charged if they are preceded by a plus sign and granted if they are preceded by a minus sign . 3 . For trade between Portugal and Spain the amounts specified in the Regulation fixing the accession com pensatory amounts in respect of the trade in goods cov ered by Regulations (EEC) No 3033/80 and (EEC) No 3035/80 shall be granted upon export or charged upon import, as the case may be, by the Member State in which the prices of the basic agricultural products concerned are higher. Council Directive 79/623/EEC (4). Article 8 1 . The following provisions shall apply to trade between the Community of Ten on the one hand and Portugal and Spain on the other : in the case of exports , the amounts specified in the Regulation fixing accession compensatory amounts in respect of the trade in goods covered by Regulations (EEC) No 3033 /80 and (EEC) No 3035/80 shall be granted if they are preceded by a plus sign and charged if they are preceded by a minus sign , in the case of imports , the amounts specified in the Regulation fixing accession compensatory amounts in respect of the trade in goods covered by Regulations (EEC) No 3033/80 and (EEC) No 3035 /80 shall be charged if they are preceded by a plus sign and granted if they are preceded by a minus sign . A rticle 9 This Regulation shall enter into force on 1 March 1986 . This Regulation shall be binding in its entirety and directly applicable in all Member States . Done at Brussels , 28 February 1986 . For the Commission Frans ANDRIESSEN Vice-President (') OJ No L89, 2 . 4 . 1976, p. 1 . Q OJ No L 175 , 12 . 7 . 1979 , p. 1 . ( <) OJ No L 197 , 3 . 8 . 1979, p. 1 . ( 4 ) OJ No L 179 , 17 . 7 . 1979 , p. 31 |
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 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 14, 2011 CampbellGlobal Trend Fund, L.P. (Exact name of registrant as specified in its charter) Delaware 333-166321 27-1412568 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) c/o Campbell & Company, Inc. 2850 Quarry Lake Drive Baltimore, Maryland 21209 (Address of principal executive offices) (410) 413-2600 (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: [ ] 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)) Item5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. Please see attached press release dated June15, 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 thereunto duly authorized. CAMPBELLGLOBAL TREND FUND, L.P. By: /s/ Theresa D. Becks Theresa D. Becks Chief Executive Officer Campbell & Company, Inc.,General Partner June15, 2011
Exhibit Index Exhibit Number
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[bristowlogo.jpg]
Exhibit 10.1 – Option Award Letter
June xx, 2009
[Name]
[Location]
Dear [name]:
Effective as of June 4, 2009 (the “Award Date”), Bristow Group Inc. (the
“Company”) hereby grants to you a nonqualified stock option (“Option”) to
purchase [number of shares] Shares of common stock of the Company, $.01 par
value (“Common Stock”), in accordance with the Bristow Group Inc. 2007 Long Term
Incentive Plan (the “Plan”).
Your Option is more fully described in the attached Appendix A, Terms and
Conditions of Employee Nonqualified Stock Option Award (which Appendix A,
together with this letter, is the “Award Letter”). Any capitalized term used and
not defined in the Award Letter has the meaning set forth in the Plan. In the
event there is an inconsistency between the terms of the Plan and the Award
Letter, the terms of the Plan control.
The price at which you may purchase the Shares of Common Stock covered by the
Option is $_____ per Share (“Exercise Price”) which is the Fair Market Value of
a Share of Common Stock on the Award Date. Unless otherwise provided in the
attached Appendix A, your Option will expire on June 4, 2019 (“Expiration
Date”), and will become vested and exercisable in installments (the “Number of
Shares Exercisable”) as follows, provided that you have been continuously
employed by the Company from the Award Date through the respective “Vesting
Date”:
Vesting Date
Number of Shares Exercisable
June 4, 2010
000
June 4, 2011
000
June 4, 2012
000
Note that in most circumstances, on the date(s) you exercise your Option, the
difference between the exercise price and the Fair Market Value of the stock on
the date of exercise multiplied by the number of Shares you purchase, will be
taxable income to you. You should closely review Appendix A and the Plan
Prospectus for important details about the tax treatment of your Option. This
Option is subject to the terms and conditions set forth in the enclosed Plan,
this Award Letter, the Prospectus for the Plan, and any rules and regulations
adopted by the Compensation Committee of the Company’s Board of Directors.
This Award Letter, the Plan and any other attachments should be retained in your
files for future reference.
Very truly yours,
Hilary S. Ware
Vice President Global Human Resources
Enclosures
Bristow Group Inc.
2000 West Sam Houston Parkway South, Suite 1700 , Houston , Texas 77042 ,
United States
t (713) 267 7600 f (713) 267 7620 www.bristowgroup.com
Appendix A
Terms and Conditions of
Employee Nonqualified Stock Option Award
June 4, 2009
The Option granted to you by Bristow Group Inc. (the “Company”) to purchase
Shares of common stock of the Company, $.01 par value (“Common Stock”), is
subject to the terms and conditions set forth in the Bristow Group Inc. 2007
Long Term Incentive Plan (the “Plan”), the enclosed Prospectus for the Plan, any
rules and regulations adopted by the Compensation Committee of the Company’s
Board of Directors (the “Committee”), and this Award Letter. Any capitalized
term used and not defined in the Award Letter has the meaning set forth in the
Plan. In the event there is an inconsistency between the terms of the Plan and
the Award Letter, the terms of the Plan control.
1. Exercise Price
You may purchase the Shares of Common Stock covered by the Option for the
Exercise Price stated in this Award Letter. The Exercise Price of the Option
may not be reduced, except as otherwise provided in Section 5.5 of the Plan and
provided further that any such reduction does not cause the Option to become
subject to Code Section 409A.
2. Term of Option
Your Option expires on the Expiration Date. However, your Option may terminate
prior to the Expiration Date as provided in Section 6 of this Appendix upon the
occurrence of one of the events described in that Section. Regardless of the
provisions of Section 6 of this Appendix, in no event can your Option be
exercised after the Expiration Date.
3. Vesting and Exercisability of Option
(a) Unless it becomes exercisable on an earlier date as provided in Sections 6
or 7 of this Appendix, your Option will become vested and exercisable in
installments with respect to the Number of Shares Exercisable on the respective
Vesting Date as set forth in this Award Letter.
(b) The number of Shares covered by each installment will be in addition to the
number of Shares which previously became exercisable.
(c) To the extent your Option has become vested and exercisable, you may
exercise the Option as to all or any part of the Shares covered by the vested
and exercisable installments of the Option, at any time on or before the earlier
of (i) the Option Expiration Date or (ii) the date your Option terminates under
Section 6 of this Appendix.
(d) You may exercise the Option only for whole Shares of Common Stock.
4. Exercise of Option
Subject to the limitations set forth in this Award Letter and in the Plan, your
Option may be exercised by written or electronic notice provided to the Company
as set forth below. Such notice shall (a) state the number of Shares of Common
Stock with respect to which your Option is being exercised, (b) unless otherwise
permitted by the Committee, be accompanied by a wire transfer, cashier’s check,
cash or money order payable to the Company in the full amount of the Exercise
Price for any Shares of Common Stock being acquired plus any appropriate
withholding taxes (as provided in Section 8 of this Appendix), or by other
consideration in the form and manner approved by the Committee pursuant to
Sections 5 and 8 of this Appendix, and (c) be accompanied by such additional
documents as the Committee or the Company may then require. If any law or
regulation requires the Company to take any action with respect to the Shares
specified in such notice, the time for delivery thereof, which would otherwise
be as promptly as possible, shall be postponed for the period of time necessary
to take such action. You shall have no rights of a stockholder with respect to
Shares of Common Stock subject to your Option unless and until such time as your
Option has been exercised and ownership of such Shares of Common Stock has been
transferred to you.
1
As soon as practicable after receipt of notification of exercise and full
payment of the Exercise Price and appropriate withholding taxes, a certificate
representing the number of Shares purchased under the Option, minus any Shares
retained to satisfy the applicable tax withholding obligations in accordance
with Section 8 of this Appendix, will be delivered in street name to your
name of your beneficiary in accordance with the Plan) or, at the Company’s
option, a certificate for such Shares will be delivered to you (or, in the event
of your death, to your beneficiary in accordance with the Plan).
5. Satisfaction of Exercise Price
(a) Payment of Cash or Common Stock. Your Option may be exercised by payment in
cash (including cashier’s check, money order or wire transfer payable to the
Company), in Common Stock, in a combination of cash and Common Stock or in such
other manner as the Committee in its discretion may provide.
(b) Payment of Common Stock. The Fair Market Value of any Shares of Common
Stock tendered or withheld as all or part of the Exercise Price shall be
determined in accordance with the Plan on the date agreed to by the Company in
advance as the date of exercise. The certificates evidencing previously owned
Shares of Common Stock tendered must be duly endorsed or accompanied by
appropriate stock powers. Only stock certificates issued solely in your name
may be tendered in exercise of your Option. Fractional Shares may not be
tendered in satisfaction of the Exercise Price; any portion of the Exercise
Price which is in excess of the aggregate Fair Market Value of the number of
whole Shares tendered must be paid in cash. If a certificate tendered in
exercise of the Option evidences more Shares than are required pursuant to the
immediately preceding sentence for satisfaction of the portion of the Exercise
Price being paid in Common Stock, an appropriate replacement certificate will be
issued to you for the number of excess Shares.
6. Termination of Employment
(a) General. The following rules apply to your Option in the event of your
death, Disability (as defined below), retirement, or other termination of
employment.
(1)
Termination of Employment. If your employment terminates for any reason other
than death, Disability or retirement (as those terms are used below), your
Option will expire as to any unvested and not yet exercisable installments of
the Option on the date of the termination of your employment and no additional
installments of your Option will become exercisable. Your Option will be
limited to only the number of Shares of Common Stock which you were entitled to
purchase under the Option on the date of the termination of your employment and
will remain exercisable for that number of Shares for the earlier of 90 days
following the date of your termination of employment or the Expiration Date.
2
(2)
Retirement. If your employment terminates by reason of retirement under a
retirement program of the Company or one of its subsidiaries approved by the
committee after you have attained age 62 and have completed five continuous
years of service (as determined by the Committee), your Option will become 100%
vested and fully exercisable as to all of the Shares covered by the Option and
will remain exercisable until the Expiration Date.
(3)
Death or Disability. If your employment terminates by reason of Disability,
your Option will become 100% vested and fully exercisable as to all of the
Shares covered by the Option and will remain exercisable until the Expiration
Date. If your employment terminates by reason of your death, your Option will
become 100% vested and fully exercisable as to all of the Shares covered by the
Option and will remain exercisable by your beneficiary in accordance with the
Plan until the Expiration Date. For purposes of this Appendix, Disability shall
have the meaning given that term by the group disability insurance, if any,
maintained by the Company for its employees or otherwise shall mean your
complete inability, with or without a reasonable accommodation, to perform your
duties with the Company on a full-time basis as a result of physical or mental
illness or personal injury you have incurred for more than 12 weeks in any 52
week period, whether consecutive or not, as determined by an independent
physician selected with your approval and the approval of the Company.
(4)
Adjustments by the Committee. The Committee may, in its sole discretion,
exercised before or after your termination of employment, declare all or any
portion of your Option immediately exercisable and/or make any other
modification as permitted under the Plan.
(b) Committee Determinations. The Committee shall have absolute discretion to
determine the date and circumstances of termination of your employment and make
all determinations under the Plan, and its determination shall be final,
Acceleration Upon Change in Control. Notwithstanding any contrary provisions of
this Award Letter, upon the occurrence of a Change in Control (as defined below)
prior to your termination of employment, your Option will immediately become
100% vested and fully exercisable as to all Shares covered by the Option and the
Option will remain exercisable until the Expiration Date. A Change in Control
of the Company shall be deemed to have occurred as of the first day any one or
more of the following conditions shall have been satisfied:
(a)
of Shares representing 35% or more of the combined voting power of the then
however, that for purposes of this clause (a), the following acquisitions shall
not constitute a Change in Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any acquisition by any
or any corporation or other entity controlled by the Company, or (iv) any
acquisition by any corporation or other entity pursuant to a transaction which
complies with subclauses (i), (ii) and (iii) of clause (c) below; or
3
(b)
Individuals who, as of the Effective Date of the Plan, are members of the Board
constitute at least a majority of the Board of Directors of the Company;
provided, however, that for purposes of this clause (b), any individual becoming
a director subsequent to the date hereof whose election, or nomination for
election by the Company’s stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board, shall be
(c)
Consummation of a reorganization, merger, conversion or consolidation or sale or
Combination, (i) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the then outstanding combined voting
power of the then outstanding voting securities entitled to vote generally in
the election of directors of the corporation or other entity resulting from such
Business Combination (including, without limitation, a corporation or other
entity which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding Company
Voting Securities, (ii) no Person (excluding any corporation or other entity
resulting from such Business Combination or any employee benefit plan (or
such Business Combination) beneficially owns, directly or indirectly, 35% or
to the extent that such ownership existed prior to the Business Combination, and
(iii) at least a majority of the members of the board of directors of the
agreement, or of the action of the Board of Directors of the Company, providing
for such Business Combination; or
(d)
Approval by the stockholders of the Company of a complete liquidation or
of the Company.
(a) You should review the Bristow Group Inc. 2007 Long Term Incentive Plan
Prospectus for a general summary of the federal income tax consequences of your
receipt of this Option based on currently applicable provisions of the Code and
related regulations. The summary does not discuss state and local tax laws or
your Incentive Award herein. You are advised to consult your own tax advisor
regarding the application of the tax laws to your particular situation.
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(b) The Option is not intended to be an “incentive stock option,” as defined in
(c) This Award Letter is subject to your making arrangements satisfactory to the
Committee to satisfy any applicable federal, state or local withholding tax
liability arising from the grant or exercise of your Option. You can either
make a cash payment to the Company of the required amount or you can elect to
satisfy your withholding obligation by having the Company retain Shares of
Common Stock having a Fair Market Value on the date tax is determined equal to
the amount of your withholding obligation from the Shares otherwise deliverable
to you upon the exercise of your Option. You may not elect to have the
Company withhold Shares of Common Stock having a value in excess of the minimum
statutory withholding tax liability. If you fail to satisfy your withholding
obligation in a time and manner satisfactory to the Committee, the Company shall
payable to you prior to transferring any Shares of Common Stock to you pursuant
to this Option.
(d) In addition, you must make arrangements satisfactory to the Committee to
other jurisdiction arising from your Incentive Award hereunder. You may not
elect to have the Company withhold Shares having a value in excess of the
minimum withholding tax liability under local law. If you fail to satisfy such
withholding obligation in a time and manner satisfactory to the Committee, no
Shares will be issued to you or the Company shall have the right to withhold the
required amount from your salary or other amounts payable to you prior to the
delivery of the Common Stock to you.
There are no restrictions imposed by the Plan on the resale of Shares of Common
Stock acquired under the Plan. However, under the provisions of the Securities
Act of 1933 (the “Securities Act”) and the rules and regulations of the
Securities and Exchange Commission (the “SEC”), resales of Shares acquired under
the Plan by certain officers and directors of the Company who may be deemed to
be “affiliates” of the Company must be made pursuant to an appropriate effective
registration statement filed with the SEC, pursuant to the provisions of Rule
144 issued under the Securities Act, or pursuant to another exemption from
registration provided in the Securities Act. At the present time, the Company
does not have a currently effective registration statement pursuant to which
such resales may be made by affiliates. There are no restrictions imposed by
the SEC on the resale of Shares acquired under the Plan by persons who are not
affiliates of the Company; provided, however, that all employees, this Award
Letter and the Option and its exercise hereunder are subject to the Company’s
policies against insider trading (including black-out periods during which no
sales are permitted), and to other restrictions on resale that may be imposed by
the Company from time to time if it determines said restrictions are necessary
or advisable to comply with applicable law.
Income recognized by you as a result of this Award Letter or the exercise of the
Option or sale of Common Stock will not be included in the formula for
calculating benefits under any of the Company’s retirement and disability plans
or any other benefit plans.
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11. Compliance with Laws
This Award Letter and any Common Stock that may be issued hereunder shall be
subject to all applicable federal and state laws and the rules of the exchange
on which Shares of the Company’s Common stock are traded. The Plan and this
Award Letter shall be interpreted, construed and constructed in accordance with
the laws of the State of Delaware and without regard to its conflicts of law
provisions, except as may be superseded by applicable laws of the United States.
12. Miscellaneous
(a) Not an Agreement for Continued Employment or Services. This Award Letter
shall not, and no provision of this Award Letter shall be construed or
to continue your employment with or to continue providing services to the
Company, or the Company’s affiliates, Parent or Subsidiaries or their
affiliates.
(b) Community Property. Each spouse individually is bound by, and such spouse’s
interest, if any, in the grant of this Option or in any Shares of Common Stock
is subject to, the terms of this Award Letter. Nothing in this Award Letter
shall create a community property interest where none otherwise exists.
(c)Amendment for Code Section 409A. This Incentive Award is intended to be
exempt from Code Section 409A. If the Committee determines that this Incentive
Award may be subject to Code Section 409A, the Committee may, in its sole
discretion, amend the terms and conditions of this Award Letter to the extent
necessary to comply with Code Section 409A.
If you have any questions regarding your Option or would like to obtain
additional information about the Plan or the Committee, please contact the
Company’s General Counsel, Bristow Group Inc., 2000 W. Sam Houston Parkway
South, Suite 1700, Houston, Texas 77042 (telephone (713) 267-7600). Your Award
Letter, the Plan and any other attachments should be retained in your files for
future reference.
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